Brief description of the Italian market and analysis of the tender requirements to grant the Italian online gaming license

1. TrustPartners
Confidential
Online gaming market in Italy:
possible business opportunities
2011, October

2. Confidential
OBJECTIVE
Document purpose is to describe market opportunities, for a foreign Company, to enter in the Italian market, though:
• A quick introduction of the Italian online gaming market in terms of product trends and last years main
figures
• An overview of the main characteristics of the on going Italian tender, in terms of administrative, financial
and corporate qualifications to grant the distribution license and operate in the online gaming market
• A possible support that TrustPartners may offer to our Clients during (and after) the tender license process
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3. Confidential
AGENDA
 The Italian online gaming market
 How to enter in the Italian online market: new licenses
 Possible TrustPartners support
 Next steps
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4. Confidential
THE ITALIAN MARKET: CONTEXT
• Italian gaming market is controlled by the national Authority (AAMS), furthermore in charge of ensuring the market’s
correct functioning: AAMS usually allows Players to operate in the market by means of a public Tender and grants them a
license
• There are two main channels, commissioned by the public governance. through which Players can reach their customers:
physical and online
• Physical channel is represented by physical stores (corners and shops managed by the Operators) and authorized agencies,
through which the Licensee is allowed to distribute:
• Gambling devices (Slot machines) • Numerical guessing games (SuperEnalotto, Win for Life)
• Bingo • Sports betting or other kind of betting
• Lotto • Horse racing games (Horse racing bets, Ippica Nazionale
• Deferred and instant lotteries and Totip)
• Currently, roughly 380.000 Slot Machines (350.000 installed) and 57.000 VLT licenses (29.000 currently installed) have
been delivered by AAMS. New licenses will be delivered during the next months (for 80/100.000 AWP and 12/15.000 VLT,
according to the last estimates)
• Games distribution on interactive channels can be offered through the acquisition of a specific License that gives the
possibility to distribute:
• Sports and Horse Racing Betting • SuperEnalotto
• Instant lotteries • Bingo
• Poker and Skill games • Casino games (Online Slot still not allowed)
Source: TrustPartners analysis on various sources, October 2011
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5. Confidential
THE MARKET GROWTH IN ITALY – GROSS GAMBLING TURNOVER
Values in Billion/€ CAGR
‘04/’10
TOTAL 24,7 28,1 35,2 42,2 47,6 54,4 61,4 +17,8%
0,1 Poker and Skill
3,2 games online
1,9
0,2
3,5
2,3
1,7
• Italian gambling market grew
1,5
3,8 4,5
up during the last years at a
0,2
1,6
2
rate of 17% in terms of
2,5 5,2
0,2 2,3 4 CAGR …
1,7
1,9 3,9 5,7
2,7 9,4 • ... thanks to the struggle
0,3
1,7 2,6 5,9 against the illegal Slot
2
Other * 0,3 2,9 6,2 9,4 Machines market (nowadays
Bingo 1,5 2,3 under the AAMS control)
0,4 1,9 9,3
Totalizator games
1,5 2,7 8
1,8 6,6
Horse racing betting
Sports betting 2,9
1,4 • Growth rate in 2010 vs 2009
1,3 7,3 3,9
32,0
has been around 13%
1,5 25,5
Lotto 11,7 21,7 • Slot Machines represent the
18,8
15,4 main product in terms of
11,5
Lotteries (incl. G&V) 0,6 turnover: in 2010 more than
Slot Machines 4,5
50% of the whole Italian
2004 2005 2006 2007 2008 2009 2010 market were made by them
Growth Year X
- + 13,8% + 24,9% + 19,9% + 13,1% + 14,3% + 13,0%
on Year X-1
(*) Including: Totocalcio, Totogol, Il9, Big Match,
Source: TrustPartners analysis on Agicos data, February 2010
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6. Confidential
AGENDA
 The Italian online gaming market
 How to enter in the Italian online market: new licenses
 Possible TrustPartners support
 Next steps
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7. Confidential
TENDER FOR NEW ONLINE LICENSES IN ITALY
Description
• Italian online gaming market will be increased, in the following months, with
Market scenario 200 more licenses
• Within the 30th of December, in fact, any interested Operator has to present, to
AAMS, its participation to the tender
• Tender key elements can be classified in the three following areas:
New tender
requirements
Characteristics of the • All the components that characterize the
tender tender
• Required qualifications focused on
Corporate and
administrative, corporate and financial item to
financial requirements
comply with
Technical and other • Requested qualifications focused on IT and
requirements procedural items to comply
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TENDER FOR NEW ONLINE LICENSES IN ITALY: CHARACTERISTICS OF THE TENDER
Description
• Deadline for the participation will be the 30th December 2011, length time of the
Basic information concession will be 9 years
• Licenses will allow concessionaires to distribute the whole legalized online games
portfolio, such as sports betting, horse betting, poker, skill games, bingo, lotteries,
casino and any further games to be launched
• 200 licenses are available
• Costs are variable and related to the games in portfolio:
Economics
• 50k€ for the bingo concession
• 300k€ for sports/horse betting, poker, skill games and casino
• 350k€ for all the games showed in the previous points
• Participants must provide AAMS with a provisional 1 year guarantee equal to the
Deposit 50% of the total costs for concession (as above), but this cannot be less than 40.000€
• Requests will be analyzed and approved with a ‘first presented, first examined’
Other principle
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TENDER FOR NEW ONLINE LICENSES IN ITALY : CORPORATE AND FINANCIAL
REQUIREMENTS (1/2)
Description
• Participant offices must:
Corporate
qualifications • Be located in the EU
• Be organized as Public Company or Corporation
• Own a previous license, focused on one of the games listed in the tender,
granted from the EU Country where the registered/operative office is located
• In addition, any:
• Non-EU gaming Operator
• EU Operator with revenues lower than 1,5mln€ (during the last 2 years)
• Other Operator not involved in the gaming industry
has to:
• establish its registered office/headquarter in the EU before the license
giving
• demonstrate its own/its subsidiary technical, financial and
organizational abilities in line with the tender requests, through a third
party independent authority
• offer a two years warranty of 1,5mln€ at least
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10. Confidential
TENDER FOR NEW ONLINE LICENSES IN ITALY : CORPORATE AND FINANCIAL
REQUIREMENTS (2/2)
Description
• Participants must have reached at least 1,5million€ of turnover in the past 2 years
Financial qualifications otherwise
They must demonstrate their:
• Own/their subsidiaries technical, IT and organizational know-how, through a
third party independent authority/Operator, in line with the previous licenses
for online/offline channel
• Financial and operational stability, through a two years warranty of at lest
1,5mln€
• Lack of debt versus AAMS, in case of ownership of a license for online-offline
market
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TENDER FOR NEW ONLINE LICENSES IN ITALY : TECHNICAL AND OTHER
REQUIREMENTS
Description
• Participants must own a dedicated IT system for one of the games product listed on
Main qualifications the tender, and being:
• Compliant with the technical requirements (in case already in possession of a
gaming license)
• In possession of a related technical and infrastructural know-how if:
• operate in gaming market not in the EU area
• operate in gaming market in the EU area, with revenues lower than
1,5mln€ during the last two years
• do not operate in the gaming market
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12. Confidential
AGENDA
 The Italian online gaming market
 How to enter in the Italian online market: new licenses
 Possible TrustPartners support
 Next steps
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13. Confidential
ITALIAN TENDER: TRUSTPARTNERS POSSIBLE SUPPORT
Area Activities
1
• Analysis of the tender requirements (in terms of
Tender/Concession administrative, economical and technical qualifications),
requirements analysis for the Italian market; evaluation of any possible entry
strategy for our Client
2 • Market analysis, for the Italian tender, in order to get a
Market and product wide know-how about products value and technical
analysis features and identify the most interesting product niches
where to focus the license request (such as Bingo, other
TrustPartners possible
TrustPartners possible games or an overall license)
support
support
3
• Support our Client, during all the certification
Tender/Concession processes needed for the online license and set up of the
documentation set up technical and formal documentation for the Italian
tender
4
• Introduction our Client to the main Italian stakeholders,
Communication with for online gaming activities (Public institution, Media,
relevant Stakeholders eventual other Partners, etc), and operative support to
manage communication/ relationships with them
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14. Confidential
AGENDA
 The Italian online gaming market
 How to enter in the Italian online market: new licenses
 Possible TrustPartners support
 Next steps
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15. Confidential
NEXT STEPS
• Evaluation of the entry opportunities in the Italian online gaming market
• Identification of the most effective entry opportunities and strategies in the Italian online gaming market
• Definition of the potential entry road map and related high priority activities to be launched
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