We previously reported that as part of a dispute relating to the disconnection of AWP machines from the servers of the Italian gambling authority, the Italian Accounting Court had issued fines against all the Italian AWP and VLT licensees whose aggregate value is of € 2.5 bn. Such fines if enforced would have forced most of the licensees to shut down their business and declare bankruptcy which would have led to a potential higher loss for the State since such companies would have ceased to fuel the Italian Treasury with their substantial tax payments.
The court decision was issued in 2012 and the Appeal is likely to be heard early next year, but the need of the Italian Government to quickly increase the tax entries as a consequence of the cancellation of an estate tax might allow the licensees to settle such dispute through the payment of a percentage of the fines issued by the Accounting Court which according to the information available should be 25% of the fines issued i.e. around € 600 M. Also the provision prescribing such settlement fee might state that if the licensees are not willing to pay it, the gaming duty for VLTs might be increased.
This potential settlement might be positively seen by those willing to invest in gaming operators. Indeed, M&A and private equity transactions involving Italian VLT licensees have been frozen during the last years because of the extraordinary fines to be potentially enforced with a negative impact especially for private equity funds that after many years in a company were willing to sell out their participation. Depending on the amount to be paid by licensees in order to have the fines waived, this measure from the Government might finally foster this type of transactions again. Also, it is likely that VLT licensees will need to pay a substantial lump sum in a short timeframe and therefore might be looking for new investors in a period where they also need to invest in their VLT business to further expand it.
We will follow the developments of the matter, but in the meantime feel free to contact me, Giulio Coraggio (email@example.com), to discuss , also join our IPTitaly group on LinkedIn.