OREANDA-NEWS. Fitch Ratings says its outlook for 2016 EMEA gaming is negative. Fitch expects intense competition, changing consumer habits, a structural shift to online gaming and ever increasing regulation and taxes to lead to continued erosion of operating margins. Weakened financial flexibility and already high leverage means downside pressures will remain to cope with any shocks. However, we expect demand for online gaming to continue growing with opportunities for consolidation and geographic diversification to remain

Fitch believes that the very competitive EMEA gaming markets - primarily the UK, Italy and Benelux - will keep operating margins under pressure over the next three years, with regulation and regulatory costs increasing, particularly in the machines gaming sector.

As online gaming evolves internationally, Fitch expects geographic diversification and consolidation to continue. This will leave the remaining players better placed to offer the most innovative products, including real-time betting, reliable multi-channel delivery, and intelligent marketing, leveraging off big data and thus protecting customer loyalty.

Aside from the above headwinds in adapting business models, we believe credit profiles will remain relatively stable, as we do not expect mergers and acquisitions to be debt-driven. The EMEA gaming sector is already relatively highly leveraged and operates under fairly aggressive dividend policies which constrain financial flexibility for many operators.