5 August 2019

Cirsa must close two Barcelona bingo halls to buy Giga

(Spain).- The National Commission for Markets and Competence (CNMC) has authorised the acquisition of Giga Game System Operations, a slot hall operator and games distributor in Spain, in the first phase dependent on a number of commitments on behalf of Cirsa.

The new deal affects the autonomous communities of Catalonia, Valencia and Aragon. The Spanish company must close two bingo halls located in the city of Barcelona, the licenses of which may be acquired by new competitors.

The risks posed to fair competition due to the high market share that Cirsa will have in Catalonia once the deal goes into effect will be offset by a number of agreements specifically, in relation to the management of slot machines in hospitality establishments, as well as when it comes to the running of games and bingo halls.

As a result the authorisation of the operation remains subject to the fulfilment of a series of commitments to competition rules according to the CNMC chaired by José María Marín Quemada.

For the hospitality establishments side of its operations Cirsa has pledged to eliminate the exclusivity clauses in all contracts signed in Catalonia, in order to foster fair competition between recreational machine operators within the local community.

In addition, the company will reduce the duration of five-year contracts in both its hospitality establishments and slot parlours favouring greater market competition amongst licence holders. This commitment will also extend to the signed contracts outside Catalonia which will enhance the competitive landscape for the market throughout Spain.

Cirsa pledged to revise all contracts of five years within the next between 12 to 24 months. It will give priority to longer term contracts of 10 years, as it is, according to the CNMC, the most damaging when it comes to competitive dynamics in the sector.

In May it was reported that Cirsa had closed an acquisition that would allow it to substantially increase its size in Catalonia and operate a casino for the first time in its home community. The gambling group told its bondholders that it had reached an agreement to acquire Giga Games System Operation from the family of Juan Lao, brother of the former owner of Cirsa.

The CNMC will monitor compliance by the company and will require periodic reports allowing the licensee’s programme to be contrasted against the results. The CNMC is a public entity that promotes and defends the proper functioning of all markets, in the interest of consumers and businesses.
Giga Games is a game and leisure group that runs an extensive park of recreational machines located in bars and restaurants, mainly in Catalonia and the Valencia Community. The company also has dozens of gambling halls and several bingo halls. In total, the businesses acquired by Cirsa reached a turnover of €124m in 2018.

This figure is equivalent to more than half of the turnover (€216m) recorded in 2017 by the Conei Corporation of which Giga Games is a subsidiary.
Juan Lao Hernández founded Conei in 1998 after separating from his brother, Manuel Lao, to whom he sold his 44 per cent share in Cirsa and kept a part of the business. According to local press this acquisition, therefore, involves reuniting the former Lao group and could mean that the two brothers have chosen to divest and sell their gaming operations to North American fund Blackstone.