While the Italian government has yet to give licensed operators the green light to offer online bingo services, Scott F. White, the chief executive of Parlay Entertainment Inc., said his company hopes to leverage first-mover advantage in a new licensing deal with Italy's Microgame S.p.A.
"If the good partners are gone by the time others try to come into the market, they're left really trying to do it themselves," Mr. White told IGamingNews by telephone today. "I think it's definitely advantageous to be there first."
Italy, which has recently begun regulating Internet-based games of skill -- including tournament-style poker -- is expected to add bingo to its list of approved games sometime during the first quarter of next year, Mr. White said.
The deal, which he said was several months in the making, sees Parlay provide Microgame with two online bingo networks, the first of which will target the Italian market exclusively. The second network, targeting an international audience, is scheduled to launch in the second quarter on licensure from Malta.
Ahead of the launch, Mr. White sees significant upside in Microgame's network of partners in-country. Microgame -- which, in 2007, generated a net profit of 3 million euros from revenue of 15 million euros -- counts approximately 70 land-based bingo halls as partners. Should online bingo receive government approval, Mr. White said, Microgame plans to market the new offering directly to them.
Mr. White, 46, an Ontario lawyer specializing in business, administrative and corporate law before taking his post with Parlay in 1999, described Italy's market as "complicated" for software providers.
"The sites that are legal and regulated have to flow through the Ministry of Financial Services, which adjudicate and review the transactions," he explained. "Then they take their taxes, which are fairly high, and then the operators split with the providers. So, it's a little more complicated than the I-gaming model we're all used to."
As certain of Europe's jurisdictions continue to liberalize in 2009, operators and the providers that supply them -- should they seek licenses in these jurisdictions -- are certain to face more prohibitive tax regimes. Mr. White, however, takes a philosophical approach concerning the prospect of tighter margins on less favorable duty rates.
"The reality is that the sorts of wagering businesses that work -- that get public support and political support -- are regulated," he said. "Tax is part of that regulation -- everybody has to pay. Tax also prohibits -- restricts -- the wrong guys from coming into the market. The margins may be a little bit smaller, but on the upside, you've got far better penetration from the standpoint of revenue."
Chris Krafcik is the editor of IGamingNews. He lives in St. Louis, Mo.