Italian Online Gaming Data Report September 2010

Italian Online Gaming

Data Report

September 2010

Contact:

Scott Longley, Head of GamblingData

Suite 704, 91 Waterloo Road

SE1 8RT London

Tel: +44(0)207 921 9980

Email: [email protected]

http://www.gamblingdata.com

mailto:[email protected]

2

ITALIAN ONLINE GAMING DATA REPORT –

SEPTEMBER 2010

Background:

With the passing of the Bersani Law in 2006 the Italian government began issuing more than 16,000

sports-betting shops and corners licences and also opened up the online sports-betting market to

more liberalisation. In September 2008, tournament-only poker was launched. Latterly, the Abruzzo

legislation opened up the way for cash poker, online casino and online bingo operations, though to

date only the last of these has gone live.

As the first major market in continental Europe to liberalise its online gaming market, Italy has

unsurprisingly been the subject of intense interest and conjecture. The monthly publication of

turnover figures by the Italian regulator Amministrazione Autonoma Dei Monopoli Di Stato (AAMS)

offers for the first time the opportunity to online operators to truly benchmark performances in a

given territory and gain an insight as to how newly-regulated markets perform and mature.

The 2009 market performance:

The Italian gaming market was worth a total of over

€54.4bn in 2009 by turnover. Slot machines were by

far the largest segment at €25.6bn with scratchcards

and other lotteries next largest at €9.4bn. Sports-

betting was worth a total of €4.03bn for the year,

both online and offline, while online poker was worth

€2.35bn.

(See Figure 1: ‘The Italian Gaming Market 2009’)

Slot machines

Scratch cards and other lotteriesSports-betting

Online poker

Other

The Italian Gaming Market 2009

Source: GamblingData, AAMS Fig. 1

3


SEPTEMBER 2010

The latest picture:

The July 2010 statistics released by the regulator for

the whole of the gambling market show that the

Italian gaming market continues to be dominated by

machine play with over 54 percent of the €4.54bn

wagered by Italians over the month coming from this

sector.

(See Figure 2: The Italian Gaming Market, July 2010)

The total amount was down from the €4.7bn in June, itself the lowest monthly total since

September 2009, but was still 7 percent higher than in July 2009. The figure brought total gaming

spend for the first seven months of the year to €34.5bn, up 13.1 percent on the €30.5bn registered

in January to July 2009.

The machine total of €2.45bn in July was helped by the introduction within the past two months of

the first swathe of VLTs, also introduced under the Abruzzo legislation. Scratchcards and minor

lotteries contributed €670m of the total, or 14.8 percent, while the numbers games Superenalotto

and Win For Life grabbed a 5.5 percent share of the market or a spend of €251m. The Lotto games –

the equivalent of the National Lottery - rose to €445m in July, or a 9.8 percent share of the market.

Bingo stood at €135m, or 3 percent, skill games (tournament poker) – got a 5.5 percent share or a

turnover of €236m. Sports betting suffered from Italy’s early exit from the World Cup (see World

Cup analysis below) and fell to €216m from €346m in June, or a 4.8 percent share of the market.

Slot machines

Scratch cards and other lotteriesSports-betting

Online poker

Other

The Italian Gaming Market July 2010


4


SEPTEMBER 2010

The online sports-betting market:

Analysis of the online sports-betting market shows

that the established Italian betting and gaming names

dominate the space, but not quite to the degree that

they have a lock on the retail betting space.

According to figures obtained by iGaming

Consultancy, in the first six months of the year, while

in the land-based sphere Snai, Lottomatica and Sisal

dominated the landscape with a combined market

share of over 72 percent in the first half of 2010, their

combined total in online only comes to just over 46

percent.

(See Figure 3: ‘Total sports-betting market share,

2010H1’)

But none of the big three are the biggest online, at least in the first half of 2010. This title goes to the

Microgame network, which comprises over 130 sports-betting and online poker providers and which

in the first half had over a 26 percent market share and a turnover of €198.8m. Next up comes the

Lottomatica and Totosí pairing which had a combined turnover of €182.5m. Behind that comes SNAI

Sports-betting

Other Online

The Online Market by Turnover Jul-10

Jan

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

Oct

No

v

Dec

2010

2009

Source: GamblingData, AAMS

Online Sports-betting Turnover Jan-09 to Jul-10

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00%

SNAI

LOTTOMATICA

SISAL

MICROGAME

COGETECH

EUROBET

PIANETA SCOMMESSE

INTRALOT

TOTO 2000

BWIN ITALIA

GIOCODIGITALE

OTHER

Operator

Online Sports-betting Market Share 2010H1

Source: GamblingData, iGaming Consultancy Fig. 3

5


SEPTEMBER 2010

with a market share of 13 percent and a turnover of €98.6m and Sisal/Match Point which grabbed a

first-half market share of just over 9 percent and a turnover of €68.7m.

A greater challenge to the established operators looks to be coming from Bwin Italia/Gioco Digitale

which between them had an online market share of 11.8 percent in the first half or a combined

turnover of €89m. But the combo has been growing its share of the market from around 10.9

percent in January to 16.5 percent in June. Still, it should be noted that this figure would represent

less than 5 percent of the total offline and online market in June.

The figures from July, moreover, show Bwin/Gioco Digitale falling back again slightly in market share

to 14.6 percent and a turnover of €9m, though the recently announced deal which will see Italian

football’s second division, Serie B renamed Serie Bwin for the next two seasons might boost these

figures once more once the new football season gets underway.

Lottomatica and Totosí took top spot in July at 22 percent share of the market and a turnover of

€13.5m. Microgame’s network fell back to second with €12.8m while Sisal’s Matchpoint was fourth

with 11.1 percent or €6.8m and SNAI was fifth with 8.9 percent and a turnover of €5.5m. The total

market was worth €61.5m in the month.

With the figures obtained by iGaming Consultancy, we also can see statistics for the payout ratio for

the sports-betting operators and hence get a clearer idea of the gross gaming revenues. So, given an

average payout ratio of 84.3 percent in online sports-betting, it means that the turnover figure of

€754.4m in the first-half of 2010 translated to a total gross gaming revenue of approximately

€118.5m across the sector. In comparison, the gross gaming revenue for the retail sector hit around

€334.9m or a payout ratio of 79.5 percent. (Figure 4, ‘Turnover/Gross Gaming Revenue for Online

and Offline Betting, Jan-Jun 2010’)

Turnover

Gross Gaming Revenue

Turnover and Gross Gaming Revenue for All Channels Jan-10 to Jun-10

January February March April May June


6


SEPTEMBER 2010

Margins across operators differed significantly. The total market leader SNAI achieved online

margins of a shade under 18 percent in the first half, leading to gross gaming revenues of €17.6m,

compared with just under 13 percent for Lottomatica and gross gaming revenues of €11.9m.

(See Figure 5, ‘Online Margins by

Operator, 2010H1’)

However, its Totosí brand – aimed

at more hardened gamblers – saw

it margins come in just over 7

percent for the first six months of

the year leading to gross gaming

revenues of €5.58m. The next

most punter-friendly operator was

Gioco Digitale which returned over

92 percent of revenues to its

players leaving it with a gross

gaming revenue of €1.8m for the

half-year.

Parent company Bwin, meanwhile, achieved margins of just over 12.5 percent and gross gaming

revenues of €8.28m.

It should be noted that the rise of sports-betting online has spelled bad news for pool or tote betting

which has seen turnover fall significantly year-on-year for every months of 2010. In the year-to-date

pool betting revenues stood at €1.59m in the year to July, down over 24 percent on the first seven

months of 2009.

Also worse off in 2010 to date is online horserace betting where total yearly revenues to date are

also down on 2009 at €16.7m, albeit only a 4.6 percent decline on the first seven months of 2009. A

recent report from GamblingCompliance suggested the horseracing sector generally was suffering

the most from the rise of other forms of sports-betting and online gaming. The story pointed out

that as recently as the middle of the past decade, the Italian national tote processed nearly €3bn of

bets per year. But by 2009 it had fallen to below €2bn and in the first five months of 2010 the total

was just €800m.

0.00% 5.00% 10.00% 15.00% 20.00% 25.00%

SNAI

LOTTOMATICA

MATCH POINT

MICROGAME

TOTOSI

COGETECH

EUROBET

PIANETA SCOMMESSE

INTRALOT

TOTO 2000

BWIN ITALIA

GIOCODIGITALE

OTHER

Operator

Online Margins by Operator 2010H1


7


SEPTEMBER 2010

The World Cup:

The bare figures for sports-betting in Italy during the recent World Cup held in South Africa point to

the growing popularity of a big soccer tournament with punters and its value to the operators.

Compared with four years’ previous -

when Italy won the World Cup in

Germany - total betting turnover on the

tournament as a whole rose 70 percent

to €344.9m. Meanwhile a margin of

just a shade under 29 percent meant

they got to share a gross gaming

revenue pot of around €97.8m.

(See Figure 6, ‘Turnover and Gross

Gaming Revenues for World Cup 2010’)

Of the total gambled, just under 74 percent was gambled in land-based establishments while just

over 26 percent was gambled online. If Italy had gone further in this year’s version, that rise might

have been even higher. In the group stages turnover was up 82 percent over the same period in

Germany 2006 to €191.5m while the most popular betting matches of the 48 group stage games in

betting turnover terms were Italy’s three ties against Paraguay (€8.92m), Slovakia (€7.64m) and New

Zealand (€7.61m).

But the biggest turnover on individual matches came in the knock-out and stages with the final

between the Netherlands and Spain being the largest betting match of the tournament at €18m

staked with Germany v Spain the next biggest betting heat with a total turnover of €13.7m.

Of particular interest to the operators will be the amount of in-play betting or live betting that took

place during the World Cup. In total about 20 percent of the total came from in-play betting. During

the final, of the €18m total, €2.22m was bet in-running and AAMS noted that there were 69 markets

open on the final, with the most popular being the name of the winner (€5.98m) and the least

popular being Fabregas to score with only €5 wagered.

Turnover

Gross Gaming Revenues

Turnover and Gross Gaming Revenues for World Cup 2010


8


SEPTEMBER 2010

One operator who spoke to GamblingData suggested that when it came to in-play betting there was

“something of a regional split” evident from the degree of take up. “In the north they are more

sophisticated bettors and are very much into in-running betting. But in the south it’s a different

culture. There they go to the cafe to chat with friends while they have a drink and a bet.”

9


SEPTEMBER 2010

The bellwether – Lottomatica

As the biggest Italian gaming operator Lottomatica is due more attention. In the first half, the

company’s Italian operations achieved revenues of €591.9m, a 3.4 percent decrease on the first half

2009. The company said its lottery operations garnered revenues of €327.2m, down from €360.9m

in the first six months of last year. Instant-ticket/scratchcard wagers also fell back to €4.83bn from

€4.96bn in the same period 2009 while Lotto wagers for the first half came in at €2.4bn, down from

€2.9bn. The sports-betting operations combined saw a 12.2 percent increase for the half-year to

€560m, up from €499.2m in the first half of 2009. Gaming machine wagers rose to €2.2bn from

€2.1bn. The company pointed out in its accompanying statement that it remains the largest gaming

machine/AWP operator in Italy, and that it became the first company to install a tranche of VLTs in

mid-July, after period close. The company hopes to have 1,000 machines installed by the end of

2010.

Marco Sala, chief executive and managing director, said in the earnings call accompanying the

results that the VLT installation was a “great demonstration of the value of the group”. “When we

created the Lottomatica group of companies, we envisioned a time when we would be able to

integrate and leverage the core competencies of the combined organisations to address an

opportunity. That is what is occurring in Italy with our machine gaming and interactive businesses as

Spielo and G2 help our Italian operations to differentiate themselves from their competitors.”

10


SEPTEMBER 2010

The poker market:

The statistics produced by AAMS for the Italian poker

market, opened up in September 2008 and until very

recently producing hugely impressive month-on-

month growth figures, have caught the headlines as

far as the liberalisation of the Italian online market is

concerned. Despite the seasonal slowdown witnessed

this past summer, the figures are still impressive. The

total market in terms of turnover was worth €1.89bn

in the first seven months of the year compared with

€2.35bn in the whole of 2009. July represented

something of a slowdown from the peak monthly

turnover of €290.8m seen in March this year, but at

€236m it was still 28.1 percent up on the monthly

figure from the previous year and if the rebound from

the tail end of 2009 is replicated this year, then the

poker market can be expected to far exceed the total

turnover figure for last year.

The leading operator remains Microgame which despite its problems with regard to possible action

against ‘totems’ on the part of the regulator continues to hold its position at the top of the table

with its network of white-label operators based largely in the centre and south of Italy. (See Figure 8:

‘Italian Poker Market by Operator, Sept 08 – Jun 2010)

Poker

Other Online

The Online Market by Turnover Jul-10

Jan

Feb

Mar

Ap

r

May Jun

Jul

Au

g

Sep

Oct

No

v

Dec

2010

2009

Source: GamblingData, AAMS

Poker Turnover Jan-09 to Jul-10

11


SEPTEMBER 2010

Microgame achieved a turnover in July of €63.7m, down 9.4 percent on June and though it is still

comfortably Italy’s number one with a 27.5 percent market share it has fallen back slightly from the

29 percent share from the previous month.

But coming up on the rails is PokerStars which has been grabbing share in the Italian poker market

since its late entry in early 2009. According to Italian gambling market information provider

Agipronews, PokerStars continued to cement its second place in Italy with a turnover of €49.1m in

July or over 21 percent of the market, albeit the turnover total was down slightly on its peaks in

March and May of €53.8m.

Lower down, it will be interesting to see what happens to the combined Gioco Digitale/Bwin and

PartyPoker market share once the PartyGaming/Bwin merger goes through early next year. As it

stands, in July the Bwin/Gioco Digitale combo managed a share of 15.3 percent of the market or a

turnover of €35.5m in July. PartyPoker meanwhile, an avowed late starter in Italy, had a market

share of 2.2 percent in July but it is thought that the combination of the merger with Bwin and the

launch of cash games could dramatically alter the picture in the next six months or more.

0

10

20

30

40

50

60

70

80

90

Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10

Turnover (€m)

Microgame Pokerstars Lottomatica PartyPoker

Gioco Digitale Bwin Gioco Digitale/Bwin

Italian Poker Market by Operator Oct-09 to Jul-10

Source: GamblingData, Agipronews, Agicosnews Fig. 8

12


SEPTEMBER 2010

An avalanche of tournaments:

Interesting statistics are

produced by AAMS on the

sheer volume of

tournaments that take place

online in Italy per day. In

July, over 12.6 million

separate tournaments were

held online, attracting 36.6

million participants at an

average entry size point of

€6.45. As the regulator

points out, the participation

rates can vary from between

two people and several

thousand, but a basic

calculation suggests that the

average number of players per tournament is less than three. (See Figure 9, ‘Number of Poker

Tournaments/Number of Tournament Entries, Jan-Jul 2010’)

The figures suggest that the tournament poker scene is much more akin to cash poker in the rest of

Europe with players getting involved in a proliferation of micro-tournaments with small entry fees.

This was confirmed by Mor Weizer, chief executive at Playtech, who admitted that in the Italian

marketplace, his network’s offering was “trying to replicate cash games”. He added: “It’s the way

Italians play poker. Cash games are still more popular than tournaments.”

Noting that “a lot of players still play with sites like Full Tilt”, Weizer suggested that Italian poker

players were still attracted to the local brands and hence the tournament offering had been

designed to resemble some of the feel of cash games in terms of game turnover and speed of play.

Bearing this in mind, Weizer admits to the obvious thought that when cash games are introduced at

some point either later this year or early next some cannibalisation is likely to take place. But at the

same time, it is likely that cash games – and the new online casino market which is also waiting for

0

5

10

15

20

25

30

35

40

45

50

Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10

Million

Tournament entries Tournaments

Number of Poker Tournaments and Entries Jan-10 to Jul-10

Source: GamblingData, Agipronews, Agicosnews Fig. 9

13


SEPTEMBER 2010

regulatory clearance before opening later this year or early next – will grab more of the grey or

offshore market and so should see the legal Italian market grow once again in absolute terms.

This was confirmed by analysts who pointed out that the lift being hoped for by many operators by

the introduction of cash games might be less than hoped. One analyst suggested that the rise in

turnover when tournament poker becomes cash poker will be “muted”. “It won’t be a huge uplift,”

he suggested. Nick Batram from KBC Peel Hunt, meanwhile, added that while there would be

something of a positive movement, “it’s not going to be like suddenly switching the lights on”. “It

will be more like turning the dimmer switch up a few notches.”

14


SEPTEMBER 2010

Other Games

Bingo:

Bingo is the new kid on the block in online terms having only been first licensed in December of last

year. Growth has been steady with total revenues since launch standing at €67.6m. In July, total

market revenue hit €11.1m up from €10.1m in June.

Gratta e vinci and superenalotto (Win for Life):

The online scratch and win numbers for the first seven months of 2010 show the product to be

declining severely in popularity with monthly double-digit declines in 2010 culminating in a 38

percent fall in July to €2.91m. The year-to-date total is off by 19 percent in the first seven months at

€36.3m. Superenalotto/Win for Life, however, has taken a small share of the online market with

monthly sales in July of €1.68m. Total sales in the first seven months of the year hit €10m.

15


SEPTEMBER 2010

The grey/illegal market:

Though it is hard to divine who exactly is operating in the ‘grey’ market in Italy, there are some

names which have become public in recent months. London-listed Gaming VC has recently entered

into a spat with provider G2, part of the Lottomatica empire, with regard to its Italian-facing

operations. While once having a licence under the brand name Betpro, Gaming VC recently sold the

licence, but it continues to take Italian bets under its CasinoClub and Betaland brands.

Meanwhile, though an Italian language site is by no means an absolute proof that the site in

question is taking bets in Italy, it can be noted that many of the leading European-facing offshore

operators also have Italian language offerings. Notably, many of these operators make a feature of

online casino offerings. Mor Weizer, chief executive at Playtech, refused to put a percentage against

the size of the grey market in Italy, but suggested it was “quite significant”, adding that he believed

that many of these operators might well consider taking licences once casino gaming was allowable.

Presumably these new entrants might include leading Playtech licensee Titan which currently offers

Italian-language sports-betting and poker – as well as casino – but does not appear to be a part of

the Playtech Italian network.

However, anecdotal evidence would suggest that many offshore operators will still be unwilling to

pay the taxes that go hand-in-hand with being licensed and hence will remain on the grey side at

least for the foreseeable future.

16


SEPTEMBER 2010

New entrants:

More perhaps than cash poker, it will be the introduction of online casino games in Italy which is

likely to be the cause of a rush of new entrants into the market. Companies such as William Hill and

888 have stated recently that they are either in the process of or already have gained a licence for

Italian operations. 888 said in late August that it felt it was “well-placed to capitalise” on its position

in Italy via a joint venture with Endemol which will see it offer Big Brother and Deal or No Deal

branded games to the Italian market. 888 has also signed up both Bwin/Gioco Digitale and

Microgame to its online casino offering ahead of regulation. Playtech also said in late August that it

had a number of current licensees eyeing up entry into Italy with a casino offering. “We are seeing a

lot of interest,” said Weizer. “They are already in the licensing process. These are casino specialists

looking to replicate what they have elsewhere. These are significant operators.” Speaking earlier in

August, Jim Ryan, chief executive at PartyGaming, said the company would be looking to do a deal

with an offline operator to get a jump on the competition. “We hope to marry our online capabilities

with a land-based operator and we will hopefully get into that market before the vast majority,” he

said at the time of Party’s interims results in August. In contrast, Ladbrokes announce back in May

that it had ceased online operations as a result of the sale of its offline estate of shops to Cogetech.

Nick Batram, analyst at KBC Peel Hunt, said the introduction of casino games would mark a step

change in the Italian market. “Casino will be a transformation,” he told GamblingData. “That will be

like flicking on a switch.”

But there was more caution from one Italian market operator who wished to remain anonymous. “I

think Italy is somewhat misrepresented,” he said. “Now I agree, casino is significant. But from the

recent past, when we opened up tournament poker, it took from our sportsbook. So I think that

there is a certain level of spend. I don’t know if the market is growing. I’m not at all sure the market

is expanding.”

He added that he feared that the era of market expansion was likely drawing to a close and that a

consolidation would be taking place in the coming months and years. “I think the smaller operators

will fall by the wayside,” he said. “I think you need 2,000 shops and corners. I think that is the

sustainable level. The fear is the market might be wrapped up.”

17


SEPTEMBER 2010

Market participants – leading players:

Main Online Sports-Betting Operators:

Lottomatica Runs the Better and Totosi brands

Sisal Runs the MatchPoint brand. Also operates the Superenalotto and sports-betting

games such as Totocalcio and Totogol. Also operates AWP machines

SNAI Sports-betting and horserace-betting provider, and ancillary gaming services

provider

Microgame Network currently running 130 sports-betting and poker brands

Eurobet Italia Owned by Gala Coral

Intralot Secured a large number of sports-betting and horserace betting licences with

Bersani and has a white-label deal with PartyGaming for online poker

Cogetech Bought the 142 Pianetta Scommese shops from Ladbrokes in April 2010

Toto 2000 Owner of the Strike Scommese brand

Leisure & Gaming Owns the Betshop brand and is a major licensee on the Microgame network

Bwin Also owns the Gioco Digitale brand. Soon to merge with PartyGaming

Merkur Win Owned by the Gauselmann Group

GBet Gmatica’s sports-betting and poker online operation

18


SEPTEMBER 2010

Main Poker Operators:

Microgame Network of over 130 sports-betting and poker independent licensees including

Betshop

PokerStars Global online poker powerhouse

Bwin/Gioco Digitale Gioco Digitale grabbed an early lead in the online poker market before falling back

and being bought by Bwin

Lottomatica In the poker market with the Better and Totosi brands, owns the Boss Media poker

network via its G2 online gaming software supply operation

SNAI Runs its poker operation on the Playtech network

Sisal Runs its poker operation on the Playtech network

PartyGaming Admitted it was slow to recognise the opportunity in Italy

Betclic of the Mangas group which also runs the Expekt, Bet-at-home and Everest brands

GBet Owned by Gmatica

Gamenet Machine operator which runs a poker offering on the Playtech operation

Leonardo Service

Provider

A network with a number of poker and sports-betting licensees

19


SEPTEMBER 2010

About GamblingData

The global gaming industry is changing fast. With many jurisdictions in transition between pre-and

post-regulation, never has it been so important to have access to reliable data information about the

market.

GamblingData provides clients with essential country, sector and company analytics to help achieve

the best possible understanding of the underlying facts, figures and trends in support of their

business, competitor, product and market research activities.

GamblingData provides the facts, intelligence and analysis gaming businesses need to make the

most of the opportunities in a volatile business environment.

We now have a team of 4 dedicated business analysts researching, compiling and analyzing relevant

gambling data points from over 150 jurisdictions.

We are able to provide tailored data research services specific to your company requirements

and/or access to an online database with historical data going back over 30 years.

Our database is updated in real time so you can be sure you are accessing the latest available

research and has some market leading functionality allowing very focused intelligence gathering.

Contact:

Scott Longley, Head of GamblingData

Suite 704, 91 Waterloo Road

SE1 8RT London

Tel: +44(0)207 921 9980

Email: [email protected]

http://www.gamblingdata.com

mailto:[email protected]

Italian Online Gaming Data Report September 2010

Documents

Transcript of Italian Online Gaming Data Report September 2010