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| Betting exchange vs. sportbetting, who will win? |
As anticipated Italian betting exchange regulations have finally come into force, but the main question on which operators in the sector are questioning each other is the effect of betting exchange games on the sportsbetting market.
The coming into force of the Italian betting exchange decree is an interesting change because betting exchange is the first betting product in Italy together with bets on virtual events subject to a tax regime based on gross profits rather than turnover. Indeed, the offering of betting exchange games will be subject to a tax regime of 20% of gross profits just like casino and cash poker games compared to sportsbetting games that face a tax regime between 2% and 5% of the turnover. Indeed, for bookmakers that usually have a margin around 8% of the amount collected from players, the current tax regime obliges them to pay into taxes over 50% of their profits!
The approval of betting exchange regulations whose offering might be deemed in competition with the sportsbetting offering has therefore led to a major reaction and complaints from Italian licensed sportsbetting operators which are concerned to be considerably damaged by a type of game similar to theirs but with a more favorable tax regime. This is even more true if the additional 0.5% turnover tax for the so called customized bets or bets not included in the official AAMS schedule whose regulations are expected to be approved soon will be confirmed.
The hope is that the director general of AAMS will take the position that the current tax regime for sportsbetting is considerably damaging the sector which saw a reduction in the spending of over 20% in 2012 compared to 2011 and is fueling the black market where better odds and a broader offering are available. And as a consequence of such situation, hopefully AAMS will decide to apply the 20% gross profit regime also to the offering of sportsbetting games at least for a trial period to check the effect of such regime on the tax entries as occurred in the past with the bingo offering whose tax regime has been considerably reduced for a trial period and then such lower tax regime has become stable.
However, if such approach is not followed by AAMS the risk is that the betting exchange of offering will considerably damage the sportsbetting sector to the benefit of very few operators.
The last developments in the Italian market should support an optimistic approach. The recent launch of online slots and its success with an 80% increase in the spending in the online casino sector compared to the first quarter of 2012 should be the evidence that AAMS wants to support the growth of the Italian online market.
It will be interesting to follow the developments in the next months, but in the meantime if you want to discuss the above, feel free to contact me, Giulio Coraggio, also follow me on Twitter and become one of my friends on LinkedIn.
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