Austria’s change of heart towards betting-cafes has forced slot-machine maker Novomatic to move towards less regulated markets.
The impending change to gambling laws in Austria is forcing the world’s second largest slot machine maker to rethink its marketing strategy and begin seeking new opportunities further afield. Novomatic, the company owned by charismatic ex-butcher Johann Graf has been advised by the Austrian government that its betting café permits will not be renewed when the license expires in September 2015. Despite collecting over 50 million euro a year in taxes from the slot machines placed in Austria’s betting cafes, the government has taken heed of warnings that a new breed of “pathological gamblers” are being created.
With such a reversal in policy, Novomatic has begin investigating the potential of less restricted markets, and has begun exploring opportunities in counties such as Peru, Paraguay and South Africa. Figures recently released from companies that have opened a South African operation have shown success above and beyond initial expectations.
Online companies have proved that by tailoring their offering specifically for the local market, a South African operation can be profitable. This will be welcome news to Novomatic, who will be looking to continue their run of nearly 30 years of revenue growth. A spokesperson for the company indicated recently that Novomatic will seek funding through a bond sale or an initial public offering.
Funding certainly shouldn’t be a problem with for a company with such a healthy bank balance. In 2010 Novomatic’s net income more than doubled to 130 million Euros in 2010, whilst revenue rose 12 percent to 1.2 billion Euros. Sales more than doubled during the past five years.
Novomatic was created in 1980 and is still wholly owned by the Graf family. Johann Graf, 64, has a personal net worth of 4 billion Euros.
