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410,000 Italian gaming AWPs shall be replaced in the next 2 years creating opportunities for new entrants in a market that will face a major revolution. According to the gaming press, the number of authorizations issued so far by the Italian gambling regulator on AWPs is of 410,000 which following the recent regulatory changes represents both an opportunity and a risk.
A revolution for the AWPs market
This is relevant for two reasons
- Because as a consequence of the so called Stability Law approved at the end of 2015, any new AWP authorization can now be issued only as a replacement of an existing authorization. Therefore operators that want to launch a new gaming machine have to dismiss an existing machine and
- Because from 1 January 2017 only authorizations for the new remotely operated AWPs can be issued and by the end of 2017, all the current AWPs shall be replaced by new remotely operated AWPs.
What is the impact of the new taxation?
As previously discussed, the Stability Law increased the taxation on AWPs to 17.5% of the turnover with a lowering of the minimum payout from 74% to 70%. The consequence of such change was a rush for the certification of the games with a lower payout. And apparently over 70 games have already been approved by the regulator with a 70% payout.
But the main question is the impact of the new taxation on the AWP market. This is a sector that – unlike what happens with video lotteries which are mainly directly operated by licensees – is controlled by a much longer line of entities i.e. we have the licensee, the entity renting the machines, the distributor, the entity managing the network of machines and the actual operator. With an increase of the taxation on AWPs and the consequential lowering of the margins, the risk is that some of these entities will disappear leading to a model of business that is more similar to the one in place for video lotteries. This is why the industry of the AWPs is trying to negotiate and sort with issue with the Italian gambling regulator.
An opportunity for foreign suppliers?
The difficulty of local entities might create an interesting opportunity for foreign suppliers since
- The replacement of the 410,000 machines might create a major demand for this new product and Italian suppliers might not have the technology and the capabilities to handle it and
- The launch of remotely operated AWPs will come with an upgrade of their technology enabling the offering of more dynamic games from foreign suppliers.
At the same time, the Stability Law provides that the Government will reach by the end of April 2016 an agreement with regions and municipalities as to the location of gaming halls putting an end to the current uncertainty on the matter.
