SBC Digital Italia: Retail gambling faces its ´adapt-or-die´ moment

Day-One of the SBC Digital Italia Summit saw market experts shed light on the ‘adapt-or-die’ scenario of Italian gambling finally accepting its digital convergence as incumbents recognise that there will be no return to normal trading.

A blunt context posed by ​​panel moderator Christian Tirabassi, Senior Partner, Ficom Leisure, probing the panel on whether Italian retail incumbents had truly accepted being outpaced by their digital counterparts. 

“A number of vendors and operators have lived the nightmare scenario of 0% revenues, for the past two years,” said Domenico Mazzola, Commercial Director of Altenar.

Having reopened their businesses in June, Mazzola noted of a harsh reality dawned on land-based incumbents “that their loyal customers had moved online, irrespective of any convergence strategy”

​​Though warned of changing consumer habits, Mazzola noted that Italy’s land-based franchisees had always been ‘suspicious of digital convergence’, regarded as a means to lose their businesses to online competitors.

Italy’s retail betting sector now contends against a substantially enhanced online vertical, which poses the potential to draw many customers away from traditional brick-and-mortar venues due to its convenience and ease-of-use. 

Commenting on this transition, Paolo Personeni, Managing Director MTS at Sportradar, remarked that it would be ‘very difficult to find a solution that is valid for everyone’ as the Italian sector makes its recovery from both the pandemic-induced lockdowns and regulatory hurdles.

“There has been a gradual recovery online, and the first thing we have noticed in all regions is there was concentration on larger operators,” he began. “Going from retail to online made it possible for the operators to be more visible, and this trend was confirmed in 2021, when we started seeing the first reopening of retail shops. 

“With regards to volume, we had an increase, which was quite surprising. We were 20% in all markets, but we had a strong recovery in traditional countries such as Latin America and Africa. This is an interesting sign that gives us hope for the future with regard to the online model.

Meanwhile, Novomatic Italia’s Legal & Regulatory Affairs Manager, Elisabetta Gregni, shared her optimism for the recovery of the country’s retail betting market, but added that extensive collaboration with other institutions is necessary to offset black market threats.

“For the future, we are extremely convinced of the sustainability of retail being both linked directly to cooperation with institutions and the regional authorities, to try and find together ways to ensure on the one hand, fighting illegality, as well as protection of the licensees and employment and also the protection of all those investments done over the past few years. We hope this will be done in the future by operators.”

This sentiment was not shared by Federica Faggiano, CCO at iSoftBet, however, who believed that the reopening of Italy’s retail sector did not pose a serious challenge to the burgeoning online market, which established itself well during the strict national lockdowns.

“Operator strategies have been beneficial for growth by converting players from retail to online as quickly as possible,” she detailed. “The fact there were different games, interesting products and new products – it is much wider online than in retail, from what we have observed. 

“This trend will keep going and holds well despite the retail reopening. We expected a more immediate decrease, however the decrease is lower than expected despite the summer season which normally represents a seasonal decrease for online gaming.”

In order for Italian retail to survive alongside its online counterpart, Personeni added, the sector must take lessons from the retail approaches of other countries’ betting industries, many of which have integrated betting and gaming services into other forms of hospitality and entertainment.

“It is fundamental that the online sector is here and still growing. There should be a seamless model, if we look at various foreign business models, the retail is integrated into bars and restaurants where people gather to watch sports events. The retail point can also be a meeting point. There are many things to discuss.”

​​​​Marco Castaldo, CEO of Microgame – a technology supplier to over 50 Italian-licensed gambling businesses – stated that the market’s biggest challenge remained on ‘regulatory outcomes’, in that ‘licensees still having no clarity on what regulations the ADM will apply’.

Microgame’s CEO warned of friction between retail and online incumbents, as the ADM further probes Italian online gambling licences – warning that the industry has to avoid “another scenario in which yet again the ADM has the power to unplug the growth in the market”. 

Regulation, he argued, could be a ‘very negative factor’ as demand continues to grow, adding: “It is not a given that the structure of the industry, just like the regulator wanted to define it, will actually accompany these other trends in a legal way. It is my fear that the contrary will happen and of course the market will go back to illegality.”