David Snook reports from the Forbes show in Prague on the current situation in the Czech Republic and the need for new legislation
Given that it was formulated 20 years ago, the Czech gaming machine law has worked very well. It has resulted in a 60,000 street market for limited payout machines and a separate business for the casinos.
Loosely based upon the Dutch laws - companies from the Netherlands were first into the emerging Czech market - the regulations coming from Prague are now accepted as outdated.
A quarter of the AWPs in the market place have now been replaced by video lottery terminals, not that the Czech players would know; after all, they look exactly the same and have similar games. The difference is that they operate under separate sections of the Czech law and are therefore far more liberal in terms of stakes and prizes.
As Karel Hamr, a partner in one of the country’s leading distributors, Jamp, put it: “The AWP market has been pretty well filled for some time, but the VLT business is still expanding. So operators’ main consideration is which VLT to put on which site. Replacing AWPs is taking second place in their thoughts, unless they are thinking about replacing them with VLTs.
“Obviously, operators are making their choice based on performance of each type of machine. We saw the same effect when video-based AWPs began to overtake the reel games a few years ago.”
It is only a question of time before the situation is regularised, for the country’s Ministry of Finance, which has responsibility for gaming machines, has Ernst and Young looking at ways to update the regulations. The VLT, after all, is the result of a technology about which no-one knew anything when the gaming regulations were originally framed.
“To be a VLT a game has to be online, so that the authorities can check every aspect of its performance,” said David Mixa, foreign relations manager at Synot, one of the leading suppliers to the market. “Every one of our machines is fully online; the server is at our headquarters and the same thing applies to most of the other suppliers.”
Dates to bring in new legislation were originally set for January 2009, but it has long since been clear that this deadline is considerably adrift. The entire parliamentary process will have to be undertaken once the bill is framed and now insiders in the Czech industry do not expect to see a new law until at least 2010.
What is expected is that the number of machines in the market place will remain pretty much the same, but all would have to be online to the Ministry of Finance. The fallout from this will probably see some of the smaller, less technology-oriented manufacturers drop out of the market place.
A general tightening up of the licensing procedure is likely, but the big question is whether the current AWP laws with their limited stakes and prizes, or the more liberal VLT regulations will be used as a basis.
The two trade associations in the Czech Republic - one for the gaming machine industry and another to look after the interests of sports betting companies - are working with the authorities, but also lobbying strongly. The basis of their campaign is to hold on to what the industry currently has.
Currently the AWP market is running with a top stake of around CZK750 (€35) and a top prize of one million crowns, although the market currently has VLTs offering as much as CZK15m (just under €950,000) as a top prize. The top VLT stake tends to be CZK1,000 (just under €40) and the normal top prize CZK1m (just under €40,000).
There is no surprise, therefore, that the player - and therefore the operator and the supplier - prefers VLTs. But the constant talks about updating the laws has caused some uncertainty in the market. If the average life of an AWP is three years, then the constant possibility of a law-change has a negative influence over buying.
The trade associations for the street market, the casinos and sports betting business are all working with the government on the plans for a new law. They may favour the VLTs in the final outcome, although not just for their higher prizes. As VLTs have to be online to the fiscal authorities, the industry is more transparent. For the operator it has benefits too.
Said Karel Hamr: “The government has greater control over the operator, but it also means that the operator can maintain their sites better, keep the machines functional, foresee possible problems and generally make their operating more effective.”
The fact that town halls can influence the siting of AWPs in their territories, but VLT permits are approved by the Ministry of Finance is not a real factor in the choice of which machine goes into which location, as the Ministry will generally ask for the observations of the town halls with each application.
Generally, the Czech Republic remains one of Europe’s better machine markets. The belief in the industry is that the regulations should be updated to reflect today’s conditions. Said Hamr: “The update should take care of technological advances but also try to prepare for further possible changes.
"The world has moved on since the present law was introduced and innovations such as server-based gaming, internet gambling and sports betting should be brought into those regulations - either legalising them, or making them illegal - according to their potential impact on our market.”
