Lottomatica lags behind the FTSE MIB; rumours about reforms to land-based gambling are weighing on the share price

  (Il Sole 24 Ore Radiocor) - Vellings in Lottomatica shares on the Milan Stock Exchange following rumours of a possible reform of land-based gambling by the Italian government. According to reports in the daily newspaper La Repubblica, Rome is once again considering re-accelerating the reform of the sector to avoid infringement proceedings in Europe. Among the options under consideration is an extension of the current regime, which is due to expire in December.

“Given that, for technical and legislative reasons, the reform should have been approved by August,” says the Banca Akros team, “the solution could be a temporary extension” expiring in December. In the meantime, the option could be to “launch auctions for the allocation of 90-year licences”, along the lines of the model already adopted for online gambling. It also appears that gaming machines will have to be fitted “with better software and chips to prevent hacking”. However, the issue of minimum distances between retail outlets and sensitive locations—which are currently regulated inconsistently on a regional basis—remains to be clarified.

Analysts believe, however, that this reform could have positive implications for Lottomatica in terms of its future stability. ‘The lack of reform has so far prevented leading operators from consolidating and rationalising the market by absorbing smaller operators,’ the experts note, adding that ‘if the reform is approved, the likely higher costs of gaming licences will be more than offset by synergies’. Analysts also point out that “Lottomatica currently pays around 75 million euros a year for gaming concessions”, and confirm their ‘Buy’ rating on the share, with a target price set at 32 euros.