Italy: 120 igaming licences up for tender

The opportunity to enter the Italian market appeals to many external operators, according to Ficom Leisure senior partner Christian Tirabassi. Here he balances the opportunity, against the terms of the tender

The Italian gaming regulator, Agenzia delle Dogane e dei Monopoli (ADM), has published its tender for up to 120 online and mobile betting and gaming licences.

To put this into context, the Italian gaming market is the second largest in Europe after the UK, which is considered the global benchmark for the gaming industry.

The online Italian betting and gaming market reached a total GGR of about €1.2bn over the last 12 months. The average GGR per month was €104m including all licensed products (betting, casino games, slots, poker, bingo and other games).

The largest contributor to the total GGR was casino (45%), followed by sports betting (41%), poker tournaments (7%), poker cash (6%) and bingo (2%).

Retail sports betting in Italy generated €670m over the last 12 months (December 2016–November 2017). During the same period, online sports betting generated €509m GGR. On average, land-based sports betting operators maintain a GGR margin between 10% and 25%.

Italy’s current licences officially expired in June 2016 but were extended. The new licences will last five years, expiring on 31 December, 2022.

As strategic and M&A advisors specialising in the gaming industry, we see a lot of interest from operators not yet in the market. However, it is important to remember that the licence is only one of the elements to obtain before operating.

The player management system, together with the betting and gaming platform and every single game, need to follow specific technical and administrative requirements, and be connected to the central IT system of ADM’s IT partner, Sogei.

They then need to be tested and certified to be allowed to go live. This is a complex and lengthy process that involves constant dialogue with the regulator and Sogei.

Also, it is important to note that once this process is completed, the operator starts with no customer base, because the migration of customers from a non-licensed operation is very strict and needs to be approved.

For these reasons newcomers to the Italian market need to evaluate and perform acquisitions of existing operators in order to grow from that base.

In this case, they have the advantage of being already live and can skip all the certification process (which would probably create a bottleneck) and focus on marketing and business development.

Terms of the tender
Rodolfo La Rosa, partner at Baker McKenzie Rome, has summarised the terms of the tender below:

The public tender will award up to 120 licences for the setting-up and operation of online betting and gaming platforms, for the provision of these games:
i. fixed odds and pool betting on sports, including horse racing, and non-sports events, as well as simulated (virtual);
ii. skill games with cash prizes (excluding lottery and other related games), including poker and other card games and casino games;
iii. fixed odds betting with interaction between players (betting exchange); and
iv. bingo.

The deadline for the submission of applications is 19 March, 2018, 3pm CET.

The applicant must be a gaming operator performing its activity in the European Economic Area (EEA) with an overall turnover in the last two years of at least €1.5m, or an entity operating in a different field from gaming or performing its activity outside the EEA, provided that such entity submits to ADM:

• an independent appraisal attesting that it holds, through its subsidiaries or parent company, all the required technical and infrastructure capacity; and
• a two-year first demand bank guarantee for €1.5m.

The applicant must have a dedicated technical infrastructure compliant with all the technical requirements set forth by the ADM. The technical infrastructure must be located in the EEA.

Furthermore, the shareholders and the members of the applicant’s corporate bodies (e.g. sole director, board members) and its technical director (if any) shall comply with the personal and professional requirements set forth under the Italian public procurement code.

Each applicant must provide ADM with a one-year first-demand guarantee, either in cash, national bond or through a bank or insurance surety, for €100,000.

All the applications will be examined in order of receipt and the licences will be awarded after successful verification of the fulfilment by the applicant of all the administrative, financial and technical requirements. 

A one-time licence fee of €200,000 must be paid by each applicant when the licence is awarded.

Additional information, such as the full set of documents pertaining to the tender, including complete rules for tender and relevant administrative, technical, financial and procedural information, is available from ADM.

Christian Tirabassi is a senior partner at gambling consultancy Ficom Leisure. He has 16 years experience in international corporate advisory and business development and M&A in the international betting and gambling industry, both online and offline. Tirabassi advises private equity funds, investment banks, gaming operators and new entrants in international betting and gaming.