News: AGI UPDATE 1-Gambling group Novomatic puts flotation plans on hold

(Adds confirmation from company, outlook, quotes)

Gambling technology group Novomatic said it has put plans for an initial public offering on hold due to uncertainty over new regulation in one of its most important markets, Germany.

The Austrian company had been expected to publish its intention to float on the Frankfurt stock exchange this week, but it said it is no longer targeting a 2017 listing, declining to elaborate.

The IPO was seen valuing the company, which makes slot machines and is also the largest operator of gambling halls and casinos in Germany, Italy and the UK, at more than 5 billion euros, which would make it one of the largest listings of an Austrian company in years.

New rules in Germany mean gambling halls need to be 100-500 meters apart from each other, and each can only hold one licence to host up to 12 gambling machines. Novomatic has a market share of 53 percent in the country.

"The implementation of the new German regulation is filtering through more slowly than expected and it is difficult for investors to fully assess the effect on Novomatic's business," said a person close to the matter.

Added to this, the acquisition of Australian peer Ainsworth (AGI) , which is expected to contribute 50 million euros ($59 million) in annual core earnings, has not yet been completed, the person added.

Novomatic, owned by the family of its billionaire founder Johann Graf, has been on a shopping spree in recent years. The Ainsworth buy gave it access to the important U.S. market last year, where it is targeting a market share in slot machines of more than 10 percent.

Novomatic generates around 40 percent of its sales from gambling equipment, the rest stemming from operating gambling halls.

Novomatic reported a 29 percent drop in first-half net profit on Aug. 30, citing tax hikes in Italy and Austria and preparations for regulatory changes in Germany.

It said that while it expects the number of gambling machines drop by 25-30 percent in Germany in coming years due to the new rules, it expects usage rates to rise. ($1 = 0.8484 euros)