It is a serious matter for the UK industry when a major distributor goes into liquidation. It has not happened too much in recent times, so that when it does, attention is focused on the circumstances and effect.
We are of course not privy to the detailed background of the company’s failure, but anyone with knowledge of the market can make educated guesses simply by observing the pattern of gaming machine sales and the way in which they are influenced by circumstances within the industry.
Why, you might ponder, should a distributor heavily reliant on Category C games founder at a time when that sector has enjoyed a major boost – the £100 jackpot? Surely the fillip that the increased payout introduced would turn a salesman into an order-taker – at least for a time?
It could be that direct sales from manufacturer to operator, effectively bypassing traditional distributors, could have something to do with it. Couple with that the benefit to the manufacturer of supplying machines on revenue-sharing terms and we begin to see some influences that are not healthy for distributors. Many of the machines get to the market by direct revenue-sharing deals rather than sales.
The problems may go back further than that, however, and have roots in events going back to the “new” Gambling Act in 2005. That protected what are known as “legacy” machines and sales of new product suffered in face of the competition from the older models.
At the same time, resources from the big adult gaming centre (AGC) operators would have shifted away from Cat C. The removal of VAT recovery for the operator didn’t help either.
One way or another, the operator slowed down the purchase of Cat C machines which contributed to the spectacular decline in the number of new Cat Cs entering the market annually, a factor upon which we have often commented.
Then in came the aforementioned direct sales and revenue sharing and it all starts to make some sense. It must have been very difficult for AMG as an independent.
Other companies, such as Crown and RAL are perhaps more widely based in terms of product and in any case have stouter foundations in terms of backing.
We can therefore expect that the AMG failure will not be replicated.
