NOVOMATIC'S CONTRACT WITH ROMANIA FAILS TO DELIVER €75 MILLION

Published on October 19, 2015 in Industry News

Novomatic and Romania's National LotteryOnline gambling is a growing industry that comprises of many deals and agreements between various companies from around the world. One of the biggest segments of the online gambling industry is lotteries.

A probe into a multi-million Euro deal between Novomatic and Romania’s National Lottery, Loteria Romana, has been launched after guaranteed revenues have failed to be produced.

Novomatic is one the largest online gambling companies in the world. Situated in Austria with more than 30 years of experience, Novomatic has become the leader in high-tech gaming equipment and online gambling. Due to these and many other factors, it’s no surprise that the deal between Novomatic and Loteria Romana was expected to flourish, but instead has failed.

In 2013, a long-term partnership deal was signed between the two companies. The contract stated that Novomatic’s subsidiary Novo LVTech Solutions would be providing Romania’s National Lottery with 10,000 high tech and state of the art lottery terminals (or VLTs). The contract also stated that Novo LVTech Solutions would provide a relevant video lottery system, including a jackpot system, maintenance services, spare parts and logistics over a 15-year period for all of the machines provided.

The agreement, which was signed in Bucharest, showed that the two companies would split the joint revenues (after expenses) equally and that Loteria Romana would receive a proportionate minimum revenue of €75 million at the least.

While the revenues have fallen short, Novomatic states that Loteria Romana has only accommodated 5,000 or half of the lottery terminals agreed upon and therefore the state has failed to meet the contract’s criteria.

The Romanian authorities have stepped in and launched a probe into what has been dubbed an “unlucky contract” by the Romanian Ministry of Finance and anti-corruption prosecutors.

Loteria Romana’s bad karma

Unfortunately, this has not been the first failed lottery deal for Romania. In 2003, Loteria Romana signed a deal with Greek gambling company, Intralot. The agreement was set to run for 10 years, but soon after the agreement ended in 2013, an investigation was launched.

The investigation was focused on more than 6,000 slot machines created by Intralot that are expected to have been operating with licenses between 2006 and 2014.

The contract between Novomatic and Loteria Romana is said to have been one that would hopefully clear Romania’s history of bad karma. The Romanian Ministry of Finance has stated the contract with Intralot is “one of the most damaging contracts” ever made by the state.