A fourth group of machines that allows players to use their skills to influence the outcome of the game is subsumed under the term “other games” subject to part 33d of the Trade, Commerce and Industry Regulation Act (Gewerbeordnung, GewO). The Federal Criminal Investigation Agency (Bundeskriminalamt) uses the licensing process for these machines in such a restrictive and inapprehensible manner that in general the legal regulations have little relevance. There are only very few devices of this kind of machine on the market.

In 2008, a total of 108,240 jukeboxes, sport-games and amusement machines with and without prizes were marketed, a reduction of 7.1% as compared with the previous year. Since 2007, the market analysis also comprises Internet terminals that are installed in amusement arcades and in pubs, bars and restaurants. Excluding this strongly growing market segment, industry turnover fell by 8.1% in 2008.

The market share for all machine groups of the members of the German Industry Association for Coin- operated Amusement Machines (Verband der Deutschen Automatenindustrie e.V. (VDAI)), the German industry’s association, is, on average, about 90%

For the most important product group, AWPs, the number of new licences is recorded by the National Metrology Institute (PTB). Up until now, these statistics were a good indicator for market development, even though not all of the approved licences led to sales. A certain number of licences were used for AWPs that were only put on the market for testing purposes. This means that the actual market volume was less – around 5% of total new licences.

As a result of the new law an increasing number of screen-based AWPs have been introduced to the market. As a result, more foreign companies have become involved in supplying games to the German market – either directly or with domestic partners.

It must be noted that in spite of the reduction of the number of amusement machines sold, rented or leased, the total turnover of machine manufacturers and wholesale distributors grew in 2008. Since the  new law was introduced the distribution channels for AWPs have changed.

Until the end of 2005, it was necessary to invest in new machines if an operator wanted to offer a new game. Now games can be updated without changing the hardware. Therefire, in spite of the reduced number of amusement machines, the total turnover of manufacturers and wholesale distributors grew by 18.4% in  2008.

At the end of 2005, around 87,000 fun games were in operation in Germany. Fun games are amusement machines with the issue of tokens. They were developed from AWPs based on British or Dutch legislation and were well-received by clients. The speed of the games made them particularly attractive. Cycles of only a few seconds and absorbing sequences are the reasons players give for choosing fun games instead of AWPs, games that took longer.

But fun games were not only used within the regulations. To a certain extent they were abused by the “black sheep” in the industry to provide illegal gambling opportunities. Fun games were then banned as of 1 January 2006 by the new Gaming law.

The German Industry Association for Coin-operated Amusement Machines, VDAI, maintains records of the amusement machines installed at the end of each year. The machines recorded are not only those supplied by member businesses but also those from other manufacturers, distributors and direct imports. They comprise the number of installed jukeboxes, pinball, sport-games and amusement machines with and without prizes. Since 2007 the number of Internet terminals delivered to amusement arcades, pubs, bars and restaurants has also been included. The total number of installed machines amounted to 295,500 in 2008.

In 2005 the decline of the number of installed AWPs bottomed out at 183,000. This was around 50,000 AWPs less than the 235,000 units in 1996. Since the new Gaming Ordinance took effect on 1 January 2006, the number of AWPs has grown strongly and reached 210,000 in 2007.

Preliminary figures indicate that the number increased further in 2008 up to 225,000 AWPs. This development indicates that the structural change envisaged by the new gaming law has reached one of its objectives: the strengthening of commercial gaming in competition with the public and publicly-licenced gambling and Internet-gambling and gaming.

The improvement of the framework conditions for commercial gaming was linked with the obligation that all fun games and jack-pots have to be dismantled completely and without delay. This process has been nearly concluded and is reflected in the stock of fun games: 87,000 machines were installed at the end of 2005 in 2008 there were only 10,000 fun games left.

Likewise, the stock of amusement machines without prizes and sport-games machines has shrunk. For most of the product groups, the decline has not yet come to an end. Two factors are worth mentioning: The operators’ investment budgets have been very much focused on the procurement of AWPs, leaving few funds for the procurement of other amusement machines.

In addition, the new more exciting AWPs has attracted new players, who in the past used to play other amusement machines. It is assumed that the additional investment expenditures that have been caused by the new Gaming Ordinance will be concluded in 2009. This provides a better outlook for those market segments that have not yet benefited from the good investment climate with the operators. It is expected that the share of amusement machines without prizes and of sport-games machines in the stock of installed machines will at least not be reduced further.

At the beginning of the early 1980s numerous novelties based on touch-screen machines, which were quite primitive by today’s standards, were put on the market.

During the late 1980s innovations in sport-games machines were driving factors. During all of the 1990s the more advanced information and communication technologies  spurred the pace in innovation. Video-game machines, touch-screen machines, driving simulators, etc. added to the supply of the amusement machine industry and became more and more sophisticated. However, commercial gaming has always remained the bread-and butter business.

Until the middle of the current decade, commercial gaming contributed around 70% to the total gross revenues of the operators. With regard to the legal framework conditions, the market penetration was high and the development of new growth potentials by a more attractive supply and the broadening of the customer basis was not possible. The Gaming Ordinance in force until the end of 2005 was extremely restrictive and only allowed minor product innovations, which were not sufficient to attract new clients or only let along retain the old.

Under these difficult conditions, commercial gaming was not able to compete with publicly-licensed and public companies that offered gambling in a quasi monopolistic environment. As a result it lost market shares. The operators in the commercial gaming market did not have sufficient leeway to counter the expansive business strategies of the suppliers in the gambling market with comparably attractive products. This fact induced the Federal Ministry of Economics (BMWi) in 2000 to start a structural reform of the Gaming Ordinance, which was not concluded until the end of 2005.

Since 1 January 2006 the amusement machine industry has been operating under the more favourable framework conditions of the new Gaming Ordinance, which has provided scope for the exploitation of the possibilities of advanced information and communication technologies.

Study Commissioned by the German Working Committee of Coin-operated Machines – Arbeitsausschuss Münzautomaten (AMA) – Hans-Günther Vieweg

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