How will Italy handle the shift to a concentrated retail market?

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Retail brings in more than 90 percent of the Italy’s annual gross gambling yield, with gaming machines accounting for a large proportion of this figure. But as Italy’s municipalities try to agree on a standard regulatory framework for betting shop licensing, legal experts predict increased restrictions on the horizon.


Despite the hype about Italy’s rapidly growing online sector, retail in the country still accounts for the lion’s share of all gaming revenues. The appetite for betting products is high – and the customer base for machine-based products is arguably even higher – but operators and regulators face challenges in an increasingly condensed market.

Speaking at ICE 2017, Emmanuele M. Cangianelli, project manager and founding partner at MAG Business Advisory, said operators must face up to the issues posed by an increasingly concentrated environment if they are to succeed in Italy’s retail sector.

Currently, retail gambling accounts for 94.5 percent of Italy’s regulated market, with gross gambling revenue (GGR) in retail premises reaching €17.2bn in 2016. A significant proportion of this – 59 percent – comes from the 10,200 gaming machines located in dedicated betting shops, arcades, pubs and petrol stations around Italy.

Amusement with prizes (AWP) machines consistently make up around 40 percent of the retail market, with next generation technology making them easier for operators to control remotely and allowing for greater numbers. In the next few years, Cangianelli predicts, numbers of these gaming machines could swell to 35,000 in the regulated segment of the market, and up to 50,000 unregulated and black market machines.

“The key question then is how to manage the slow change to a much more concentrated market,” he stated.

European bookmakers are increasingly keen to take advantage of Italy’s burgeoning online market, but many are also looking with interest at its more mature – and potentially lucrative – retail sector. With an extensive customer base and advances in technology allowing for streamlined operations, a licensed retail premise can be a good first step for operators looking to move into the region.

Nevertheless, the increased concentration of betting products in both licensed and unlicensed premises could create challenges for businesses, particularly in terms of the negative media coverage and political sensitivity surrounding the industry. Municipalities and local authorities – who are currently in charge of setting regulations for gambling machines – have found it hard to agree on rules relating to opening hours and distances from sensitive locations such as churches and schools, said Cangianelli.

“Trying to offer more entertaining offer with low stakes and low winnings in venues that are not dedicated points of sale could be one regulatory solution,” he explained.

The Italian government has been attempting to move to a standardised regulatory framework since 2015, when it drafted the Stability Law, a piece of legislation that called for a national tender on the granting of new betting shop and arcade licenses. However, the implementation of the bill has been repeatedly delayed due to disagreements between various local authorities.

Rodolfo La Rosa, a partner at BakerMcKenzie, said he expected any new tender to include a cap on the number of gaming machine licences granted throughout the country, as well as a blanket ban on AWPs from unlicensed premises such as petrol stations and pubs.

“Until and unless an agreement can be reached, we will not have this tender for the retail gaming market,” he added. “But this agreement will certainly call for a significant reduction in the numbers of AWPs and the banning of all AWPs from the non-dedicated points of sales.”

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