I suppose it could be said that five years from now Germany’s 8,000 arcades could be 4,000 and its 240,000 AWP machines could be 120,000 and that Armageddon had visited what has for the past five years been regarded as Europe’s healthiest street market.

That would presume to put the gloomiest prognosis forward and to discount entirely the ability of the German coin machine industry to defend its corner.

Based upon what we know for sure at this moment, however, it could happen. I expect to see, however, an industry coming out fighting when the Ima show opens its doors this month in Düsseldorf.

The threat to the industry is happening piecemeal. Each of the 16 German ‘Lander’ or provinces, which is free to adopt its own variation on the law which permits AWPs in the street market, will progressively take a stance on the emerging situation. But there is already a pattern. The pattern is to remove the anomaly which has grown up over the years in the licensing of the country’s arcades.

Arcades were supposed to be small, with just a handful of machines. So the industry exploited a loophole which enabled it to ‘multi-licence’. If you visit a German arcade you will find a very up-market, carpeted, well-lit, sophisticatedly decorated series of rooms. In fact, each of those rooms represents a separate arcade. A license currently permits an operator to have up to 12 machines in their arcade. So if the premises are big enough, they split it into a series of rooms connected to a common lobby area and license each of them as separate.

That is one of the reasons why Germany has such a high number of arcades, and they do very well. In fact the 8,000 arcades probably hides the fact that there are 12,000 licences in force. The Gauselmann Group has its Spielothek chain of 200-plus arcades – probably the largest locations and although there are groups with larger number of arcades, the Gauselmann outlets have the greatest number of machines. The Löwen Play group – no relation to Löwen the machine manufacturer and in fact owned by Axa the insurance group – also has 200-plus locations. Then there is Novolino, the chain owned by the Novomatic Group in Austria, again 200-plus locations. The largest is Ritzio, the Russian-owned collection of arcades which has grown up only in the past few years as the Russian group emerged from a domestic market closing down its casinos and sought a non-Russian outlet. It effectively bought up smaller German operators to form a large operating holding. It is reported to be 250 locations strong, having bought no fewer than 40 arcades in Hamburg this year alone.

The bulk of the industry, however, remains in private hands. And so does the bulk of the ‘single site’ industry, the machines in pubs, bars, restaurants and other outlets holding perhaps one or two machines in each. But that is the secondary market. The arcades are the cream of German AWP operating.

That then, is the background. What is happening is that the Lander are trying to get rid of the multi-licensing situation, for reasons which are not really apparent, except perhaps politics and the ‘soft target’ approach to appeasing a negativity apparent from the German press as Germany gears up for federal elections in 2013.

When politics rears its ugly face, level playing fields and justice fly out of the doors. There is no real reason to alter the curious state of affairs in Germany’s arcade licensing laws. There is no real reason for targeting the arcades at a time when the German casinos enjoy a wealth of freedoms over such areas as machine numbers and payout levels. German AWP manufacturers have to conform to a complex range of conditions limiting the rate of payouts and wins during any one period of play.

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