Company Profile: Merkur International

Merkur Rising

Gauselmann Group turns up the heat on the ‘electronic casino’ sector with the launch of Merkur International, a new division that encompasses operations, distribution and manufacturing across the whole of Europe.

December saw the unveiling of one of the industry’s worst kept secrets, the launch of Merkur International by Germany’s Gauselmann Group. News of the company’s plans had been filtering into the European market for months, but the official unveiling took place at the EELEX show in Moscow. Merkur International is the umbrella company for Gauselmann’s operations, distributions and manufacturing divisions in the international gaming and amusement markets. Existing brands, such as Stella International and MEXIM  (Gauselmann Group’s AWP and amusement arms respectively), are now domestic-only names within Germany, while Merkur International’s ‘Merkur Casino’ and ‘Merkur Gaming,’ launch December encompass the company’s reinvigorated approach to international markets. At the centre of this wave of expansion and change is one man, Gauselmann Board Member, Rolf Klug.

Mr. Klug has a vision and a mission and has built a formidable team around him to take Merkur International to the markets. Key to this new streategy is the brand, the Merkur Sun, which is such a familiar symbol of gaming professionalism within Germany, but has, to date, been relatively underplayed at an international level. It’s something Mr. Klug intends to radically change. “Out plans focus around the Merkur Sun,” explained Mr. Klug of the vision behind the radical reshaping of the company. “We are to tap into the Merkur Sun brand, which has traditionally been an internal quality focus for the group, and which is not to be taken externally to the customer in every market. The Merkur gaming Sun represents ‘games and quality,’ both for the end customer, the operator and from within our own company.

It is Merkur International’s corporate identity; the motivation of our employees and the quality based assurance of our products for both gaming and casino segments. ” One of the key figures within the new Merkur International team is Rolf Falke, General Manager of Merkur Casino. “The Merkur Sun and the ‘made by Gauselmann ’ motto, is the brand we are promoting to the international industry,”  described Mr. Falke. “Merkur Spielothek is an established and respected brand for Gauselmann Group’s arcade locations in Germany, but my target is the international market. Having established a large network of locations in Germany, we are currently operating ‘electronic casinos ’ without live table games, in countries that include: Belgium, Holland, Germany, Czech  Republic Romania and Hungary. We are to opening in Russia, Croatia, Spain, and in Latvia and the Baltic States. ” Currently Merkur Casino operates in over 40 electronic casino locations, opening new sites each month. The operation in the Czech Republic have been expanding rapidly towards a figure of 20 in the near future. In Spain, locations are expected to open soon, so too in Croatia, Russia and the rest of Eastern Europe. “We have not set an expansion target,” said Mr. Falke. “But we are looking to each country in which the operation of electronic casinos is legal (in countries such as Greece and Portugal it is difficult to establish such locations, for example). While we have also no plans for development in the UK, Eastern Europe, however, will be a focal point. in the domestic market we have 186 locations, with around 3,000 employees. Despite a change to Germany’s gaming law, it remains very strict and our strategy, therefore, is to grow outside the country. ” The interior and exterior design of the new locations follows the same principle laid down by the Merkur Sub Philosophy. In fact, the sun is the key component in everything that both appears upon and lies beneath the running of each location. “From street-level, the location immediately draws your attention. You see the sun and automatically know that this symbol represents quality. It also signifies the standard of equipment, the level of service and the type of games you can enjoy,” explained Mr. Klug. “Each location carries this same concept, whether it’s in Hungary, Romania, Russia or Latvia. Our locations are targeted at bringing the clientele the best possible poker experience. In Hungary, our location within a shopping mall in Budapest represents 800sq.m. of space.

Within this space we have looked at the gaming offer; the casino-style machines; the effects of the light décor; we have employed specialists in charge of each design process. Plus, the location strategy is crucial in that it remains easy for each customer to find us. It’s important that we come to them, to where they live and not the other way around. And as part of this, we are offering quality of service and equipment assured by the Gauselmann Group. The staff are highly trained; uniforms smartly presented; bards offer food and drink; the environments is inviting and clean; machines deliver high percentage payouts and a high number of which are obviously Gauselmann machines. ” Mr. Klug acknowledges that the offer is not a new concept, as for several years the ‘electronic casino’ has grown across Europe into an expanding sector between slot halls and live casinos. “Two years ago we saw a sea-change,” explained Mr. Klug. “Live casino players wanted a different atmosphere, while slot hall players desired a different quality environment from the dirty locations they had been presented with in the past. The right level has been found for this player, a high-end location that meets their expectations and strives to exceed them. This has been our expansion focus, though the core strategy also includes products aimed at each games segment to supply every part of the market. ” It’s a cohesive strategy, providing your own locations with in-house products. Again it’s not a new idea, and while the focus of Merkur International is aimed at Eastern European markets, it has been in countries such as Ukraine, where the major operators all fulfill that very role. Companies like Odrex, alliance and Igroservice, operate, distribute and manufacture.

  And it’s certainly a model that has proved very successful, though each has roughly stayed within its border countries : Ukraine, Russia and Moldova. To expand across Europe and beyond is an altogether more ambitious goal. “We are to invest our know-how and capital into individual locations and at the same time push our gaming and casino products,” stated Mr. Klug of the Merkur strategy. “We do not see this as cannibalizing these markets, as we see them as two very separate sectors : casino and street. Casinos will always require a casino licence, and this will be the sole market for Atronic International (Gauselmann Group’s casino slot manufacturer); for the electronic casino on the other hand, Merkur will participate with Atronic, and of course other manufacturers. In Russia, for example, there are IGT and Atronic machines within our own locations, and where in many countries the law makes further requirements of us, we will also make the appropriate concessions to abide by the rules of each market. ” Despite the focus on the ‘electronic casino’ concept for Merkur International’s operations business, the company has not steered itself from the amusements business. Merkur Gaming, the products arm of the company, encompasses the latest range of street machine gaming products, previously manufactured under the Stella Banner, and the range of amusement equipment as supplied by MEXIM  in export markets. “We are to supply the existing needs of all operators in one-stop-shopping environment,” explained Merkur Gaming’s Andreas Weiss. “From a products point-of-view, we cater for the smallest of children to OAPs. We serve any and all kinds of customers and supply their individual needs; supporting casinos with their business needs for gaming machines, from Russian-style video slots to mechanical reel AWPs. We maintain very deep contact with each customer, following the development of the machines to tread the same path as the operators. It’s our job to continue to improve quality and ensure that the machines fit the market exactly.

The new multi-roulette and Lucky Wheel (a wheel of fortune style game) has the advantage that you don’t need a lot of space to operate these games. Within a casino this may not be a problem, but a street-based ‘electronic casino’ has very limited available floor space. We are therefore offering this game to small arcades, with merchandising packages and display jackpot systems. We are promoting machines with attractive combinations, and for the smaller slot halls of up to 30 locations that don’t have a jacpot. ” Merkur Gaming’s Axel Pawlas has also been a familiar face at recent industry shows, having attended something of a ‘show marathon ’ last year. His task within Merkur International is to expand the reach of its amusement product, such as Trendy, Gauselmann Group’s versatile touchscreen gaming unit. Air Hockey Typhoon and Star Kick, are also part of his portfolio, offering operators award- winning machines from within the one-stop-shop concept. “It is exciting working with machines, such as kiddie rides, that can benefit from the creativity and talent of the Gauselmann Group. The latest rides we have created use video game technology to make the experience uniquely interactive,” described Mr. Pawlas of the company’s new Space Car. “For this kiddie ride, net profit per day has been in the range of an average AWP machine in the UK, which is amazing for this type of product. We are also licensed to sell Disney characters, touchscreen games for children (with and without coin-in), Internet terminals, etc. etc. Every Type of game for every type of person, offering the benefits to all types of customer,”  enthused Mr. Pawlas, returning to the central philosophy   of Merkur International. Mr. Klug also reiterates that the policy of supplying its own locations as a one-stop-shop is equally valid to independent customers, who desire to place orders with one common company and not to have to deal with multiple vendors. “We ship more than 80,000 units per year, have a robust management systems and existing in-house strength and human resources. Combine this with proven technology, and we have a very attractive proposition to all market sectors across the whole of Europe and beyond. ” It’s an ambitious goal, no doubt, but it’s driven by passion for the industry and experience from every sector. In an interview with Paul Gauselmann at the EELEX exhibition, he explained that the catalyst for the creation of the Merkur International brand was the market strength of the company in Germany, where Gauselmann has 70 per cent share of the domestic market.

His vision was to expand upon this growth in external markets in Europe, and to specifically develop products for these sectors. “Domestically, we have 70 per cent market share in operations, three times bigger than the next competitor,” said Mr. Gauselmann. “To grow we must look externally, primarily examining the legal infrastructure of each market to enable us to expand without jeopardizing existing licences. In this framework, the new markets in Eastern Europe are the most attractive and our prime focus. That’s not to say that we are ignoring established markets. As shown in the UK with Bell Fruit Games, it is possible to enter successful partnerships, but having separated financially from the Bell Fruit venture, we are looking to build internationally and domestically. We have different development brands, including Stella, which will continue in Germany, but it is the Merkur Gaming brand that now represents our product manufacturing and gaming design internationally. Ostensibly, nothing will change within the company – the Gauselmann Group continues to focus on design and development of products, while casino development is taken care of by Atronic. ” However, there have been changes within the company, since Atronic announced in 2004 the 50 per cent sale of its shares to US-based Gtech. Mr. Gauselmann explained:  “Our aim was to cooperate with Gtech at an international level. We are a family business and will continue to be so, but to expand into foreign markets one must have the backing of influential partners. We remain the only German company with a Nevada licence, and at the moment, on paper, a close partner with Gtech and their management. We must undergo investigation in 2007 to take this partnership through due diligence and to completion. We are currently entering into projects in light of this cooperation for Gtech’s approval in the Nevada gaming market. However, nothing has changed internally within the Gauselmann board structure. I will continue to be responsible for technical product and the German market, with Michael (Gauselmann) responsible for the international activities of the Gauselmann Group. To carry some of this burden, Rolf Klug joined us from the Us office to steer the international focus of the business in Europe. ” Merkur Gaming, tasked to provide one-stop-gaming-solutions showed 13 different games at the EELEX exhibition in December, including its new, high performing platform with LED illumination specific for Russia. Details of the new subsidiary, Marker Rus, were also revealed. January 16 was the official start date for the production line in the Russian city of Novogorod, in which the Gauselmann Group has achieved ISO certification to create a Russian product of the highest quality.

“Our working relationship with Unicum Group is very strong,” acknowledged Mr. Klug, who would not disclose any further partnership at this time. “There will be future partnerships in Russia, but not on an exclusive poker basics,” he said. “We must make sure that our products have as wide a distribution network as possible. Not only active as one source, but multiple sources : ROSGamem, Villart, Unicum etc. We gegin manufacturing in Russia in January and will assess over the course of the year the success of this project. Our strategy is to create designs for the market from within the market. ” The final hint for the future came from the presence of Austrian sports-betting specialist Udo Nickel on the stand representing CashPoint. Mr. Gauselmann, who stated his interest in sports betting platforms, said: “We are specialists in hardware and as a developer, and have begun working with Cashpoint to create terminals. In Germany, only the Federal government is able to place sports-betting terminals in the market. However, I expect that in 2006 private companies will be able to offer this product to the market. ” And undoubtedly when sport-betting is allowed, Merkur Gaming will be there to cover that market too.