arliament is set this week to approve government changes to scratch-and-win betting, which include moving from a single concession, held by a consortium led by Lottomatica, to a multi-concession regime of up to four operators and an 800 million euro (us$ 1.1 billion) upfront charge.
Italian gaming industry has proven to be recession-proof, with overall bets in the first half of the year up 10.8 % to 26.3 billion euros. Lottomatica's scratch and win business is worth 9 billion euros a year in bets.
CEO Marco Sala told a conference call he believed that scratch-and-win would continue to be "a highly successful and profitable part of our business in Italy ... and (I am) confident that we will lead and dominate this market segment."
CFO Stefano Bortoli said during the conference call that he believed Lottomatica would stay within its loan covenants even if scratch-and-win goes to a multiple concession system with upfront fees to fund.
In further comments during a Reuters interview, Bortoli said he expected the 800 million-euro upfront fee to be shared among the winners of the concession. "In the case that there will be two or three or four (winning) offers we will succeed to keep inside the covenants," he said. "It is difficult to say (if there will be four concession holders) because it depends not only on technical capacity but also financial capacity," he said.
On possible competitors, Bortoli said Italy's private-equity owned Sisal gaming company could bid while international competitors could include Greek Intralot.
One analyst has said that a factor likely to reduce the number of bidders is the lack of specialised ticket printers, given that Scientific Games is already in Lottomatica's consortium and another printer Gtech is a Lottomatica US unit. However, Bortoli said Canadian Pollard was another possible printer for bidders, noting that Pollard is "Number 2 in the world."
Lottomatica holds 63 % in the current concession consortium and Scientific Games has a 20 % stake, though Sala in the call said these stakes could change in the new concession consortium. The government was expected to award the scratch and win concessions by the end of this year in order to replace Lottomatica's single concession expiring May 31, 2010.