A recent report on the Italian gaming market, “L’ Italia in Gioco,” from the Italian research institute Eurispes, indicates that there are about 90,000 video lottery terminals (VLTs) presently active in the world, accounting for 4 percent of all of the world’s gaming machines. VLTs are mainly located in the United States, with 22,200 in Montana, 21,200 in West Virginia, 14,000 in Louisiana and 13,000 in New York and Canada. They are found marginally in Europe, which has about 10,000 terminals, mostly in Sweden and the Czech Republic. If these numbers are reliable, the launch of the new VLT network in Italy, with more than 56,000 machines, will have to be considered almost a revolution—the second performed by this country, after the creation of an online gaming market through licensing.
The birth certificate of this operation is Decree n.39/2009, nicknamed “Abruzzo,” which is now Law n. 77/2009. The law calls for “urgent provisions in favor of people hit by the April 2009 earthquake in the Abruzzi region, and other urgent Civil Protections interventions,” and it establishes the experimental start of a remote-controlled gaming system made up of VLTs located at dedicated sites. Operators that already hold licenses (10 to date) to run amusement with prize gaming machines (AWPs, but “Newslots” according to the AAMS definition) disciplined by the Police Act (TULPS) have been authorized by the State Monopoly (AAMS) Decree of Aug. 6, 2009, to live test the new VLT machines. Each of the 10 operators had to indicate the number of VLTs it wanted to install, but this number had to be within the limit of 14 percent of its existing AWPs. The operators had to pay 15,000 euros per machine, or better per “right of exercise” of each VLT requested. AAMS, on the basis of the operators’ requests and after verifying the payments of the first installment of the 15,000 euro payment, authorized the setup of the VLTs in compliance with the New Gaming System as determined by the TULPS.
On Sept. 15, 2009, AAMS officially announced that the testing of the New Gaming System would end by March 30, 2010, and that, therefore, by that date operators would have to confirm the number of VLTs they requested and obtained and the payment of the second installment of the fee, to be executed by June 30, 2010. Just days before this writing, the March deadline was postponed to April 30, 2010.
In the meantime, preparations have been ongoing feverishly—dealings between operators, landlords, parlors, shops, stores, wharehouses, existing gaming halls and so on; and multilingual discussions of cross interests betweeen primary state licencees and experienced traditional slot machines operators. Investments to take part in “Operazione VLT” at any level are substantial, and even obtaining credit (or getting bonded) is not so easy any more. Also, the 10 Newslot licencees had to apply for bank and/or market credit, and the weaker of them will be obliged to find agreements with the stronger. As far as foreign players are concerned, apart from one or two giants of this sector, nobody seems to want to dare to venture in as a protagonist, only trying to sell machines here and there instead. AAMS, meanwhile, is preparing to launch the tender that will assign the licenses to those who intend to enter the gaming machines market as “network operators.” Of course, a relevant part of the tender participants’ business plans will have to be assessed on VLTs, notwithstanding the fact that the VLTs market is still to come.
On the subject of tender, the renewal of the 10 existing operators’ licenses is granted by law. But the only ones that seem to be willing licensees are groups of traditional machines operators that have adopted the cooperative model, like B-Plus (formerly Atlantis) and Gamenet-Criga did in the recent past. Rumors of interest by few VLT manufacturers have not been confirmed yet; there is nothing substantial on the horizon.
Getting into technical details, the AAMS Decree dated Jan. 22, 2010, (Official Gazzette n. 32, 9/2/2010) specifies that VLTs shall have a minimum bet of 50c, with a limit of 10 euros per game. The maximum win per game—jackpot excluded—is 5,000 euros, but total payouts cannot be less than 85 percent of coin-in. The jackpot is set on each gaming system at a maximum of 500,000 euros, but it is limited to 100,000 euros per single gaming hall. Also, the sites where VLTs can be located are defined by law: bingo halls, betting shops and dedicated gaming halls (six different categories are described in the Decree). It is compulsory, though, for VLTs to be located in premises where the owner has obtained a license under Article 88 of TULPS. A condition that has fevered the market is the fact that the text of Article 88 states that the license is related to betting and is granted to licensed (by the competent Ministry) betting operators. If the provision is strictly interpreted, only three of the six categories of premises indicated by the VLT decree could match this condition (bingo halls and betting shops). However, this is not the intention of the authority. The two ministers, in fact, are already working on coordination.
Let’s see the final outcome. Not so long ago (the year 2000), they assisted Italy in a (frustrating) gold-rush toward gaming halls and premises that could match the requirements of the upcoming bingo halls. On the basis of that experience, caution is a must. But today’s market and legal landscape are much different—and possibly mature enough to successfully absorb the new VLT-oriented gaming halls. The VLT era is a new challenge for the Italian market, an opportunity for regulators to redraft the map of distribution and access to gaming in the territory, and a chance for a starring role for new operators.
Stefano Sbordoni is an international lawyer and a professor of IT Law at Università della Tuscia and adjunct teacher at Italy’s Superior School of Economy and Finance. He has been teaching at the University of Malta to Italian gambling licensees. Sbordoni is a consultant to AAMS and many Italian and foreign leading gambling operators. He is the author Licenced Games and Online Gaming.
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