SBC News caught up with Marco Castaldo, CEO at Microgame, for his take on the much-discussed advertising ban in Italy, how it might influence Microgame’s business model, and why adapting an online platform for the country – given the current uncertainty and speed to market – “makes less sense now than before”.
SBC: With Microgame’s Italian offering very diverse, including casino/slots and a network of online poker rooms, do you anticipate that some of these verticals will be more significantly affected by the advertising ban than others?
MC: It’s too early to tell as the advertising ban will really take effect this summer for incumbents, but I believe there are countervailing factors that will sustain growth.
For one thing, online penetration is still low in Italy and land-based gaming has been hit hard by regulatory action, such as the reduction of AWPs. There is a strong incentive for land-based operators to develop their online presence, and the ad ban favours them.
SBC: Might this ban influence Microgame’s business model going forward?
MC: Our core business has been multi-channel for years so we, and our customers, are well-positioned to thrive in a no-advertising environment.
Several land-gaming operators are addressing online, many for the first time, and that is a natural source of growth for Microgame. So, our fundamental model won’t change, but we have increased investment in our proprietary, multi-channel platform stack.
SBC: With a significant shortfall on the expected number of licensees, what potential impact(s) does this have? Are tax hikes a possibility moving forward?
MC: 66 successful online licence applications are actually above industry expectations, at least for those who believe the Italian market is too fragmented.
The fact that the number of available licences budgeted by the government was much higher doesn’t automatically translate into higher taxes. We have just been hit pretty hard as it is.
SBC: Despite talk of an unfavourable market a number of new entrants have debuted, what opportunity have they seen? Or had they simply been through too much of the process before the ban was announced?
MC: From the number of deals we are working on for fully-outsourced services, I see that the interest in the market is still high. After all, this is one of the largest regulated markets in the world and the potential for growth is very strong, despite the ad ban.
Land-based operators have seized the opportunity and are moving ahead decisively. As for foreign licence applicants, it seems many don’t want to miss the opportunity and take the long-term view.
With Microgame, they can start-up an operation very fast and with virtually no investment. If the business shows promise, they can integrate their own technology and ultimately even switch to their platform over time. Adapting one’s platform for Italy, given the uncertainty and long time-to-market, makes less sense now than before.
At this week’s Betting on Football conference, Castaldo is a panelist for ‘Italy – Fighting the backlash’, held as part of the ‘Global Market Profiles’ track on Thursday.
He will be joined by Bepi Pezzulli (General Counsel, SKS365), Quirino Mancini (Partner, Tonucci & Partners) and Carmelo Mazza (CEO, OIA Services/Betaland) for a session moderated by Domenico Mazzola (Commercial Director, Altenar).
For tickets and more information about the event, please visit the website.