The decision of the Italian Administrative Court to escalate to the Constitutional Court the decision on the € 500 million gaming contribution opens uncertain scenarios.
After the attempt by licensees to object to the € 500 million contribution, their requests seems to have been accomplished now.
What did the Administrative Court decide?
The Administrative Court did not take any decision, it only referred to the Constitutional Court the issue on the compliance of the € 500 million contribution with constitutional principles as it was “not clearly ungrounded” that the contribution is in contrast with the principles of disparity of treatment and plausibility because the criteria of allocation of the contribution based on the mere number of installed machines regardless of the revenues generated through them does not take into account that the ability to generate revenues of each machines depends on a number of factors rather than just their number.
Such provision could have led to a disparity of treatment between licensees since it would have given an advantage to those that are able to generate more revenues per machine. At the same time, the contribution was required only to the entities of the supply chain operating in the VLT/AWP segment without requiring a contribution from other games.
Also, according to the Administrative Court, the law provided for a fixed € 500 million gaming contribution rather than a proportional reduction of the amounts allocated to the entities of the supply chain linked to their revenues which created an unbearable burden for them that is in contracts with the principle of proportionality.
Finally, the fact that the contribution had to be fueled also by the entities of the supply chain with whom the licensees had to renegotiate the contractual terms is in contrast with the principle of freedom of private negotiations.
What will happen now?
It is quite unclear what will happen now as the remarks raised by the Administrative Court are quite straight forward and the Government cannot afford to have amounts in the budget of the State that are not cashed in. The Constitutional Court might take some months or even more than a year to decide, but it is more likely that the Budget Law to be approved by the end of the year will remove the € 500 million contribution and replace it with the increase in the gaming taxes as already currently planned.
What will happen to the gaming contribution?
The Administrative Court did not suspend the efficacy of the gaming contribution that up until it is removed it is still into force. But if the Constitutional Court cancels the € 500 million contribution, the Government will have the issue relating to the refund of the € 300+ million already cashed in that might be the result of an agreement between the licensees and the Government.