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Italian gambling tax increase and its potential consequences

An Italian gambling tax increase is going to hit both the online and land-based sectors with effect from the beginning of 2019.

The Italian gambling tax increase

As the followers of the Italian gaming market know quite well, the last days of the year are very stressful for the sector. The Government needed to approve its budget law and the gambling market is often used an “ATM” to gain new tax entries. Below are the main changes that are going to occur:

How the Italian online gaming tax changes

There will be an increase of the Italian gambling tax for

  • online skill games with cash winnings (that include poker tournament) and online bingo from 20% of the GGR to 25%;
  • online sports betting from 22% of the GGR to 24% of the GGR; and
  • online and land-based bets on virtual events from 20% to 22% of the GGR.

In relation to the above, a major topic of discussion is whether online casino and cash poker games are included in the tax increase. Indeed, unlike online poker tournament, these categories of games do not fall under “skill games”. The provision has been interpreted on the press as if the increase would extend also to casino and cash poker games, but in my view the matter can be challenged.

All is happening a few days before the effective date of the change that will be 1 January 2019, with the consequence that operators will not have even the time to re-certify their games, lowering for instance the pay-out. Also, it is unlikely that the Sogei central system used to calculate the gambling taxes can be updated in time for the change.

How the VLT, AWP and land-based sportsbetting tax changes

The Italian gambling tax increase will impact also the land-based sector since the land-based sportsbetting tax will increase to 20% of the GGR, while – as mentioned above – land-based bets on virtual events will face a tax increase to 22% of the GGR.

Also, in relation to land-based slots,

  • AWP machines, also known as comma 6 a), will be hit by a tax increase of 1.35% but the minimum pay-out will be lowered is 68%; while
  • VLT slots will be hit by a tax increase of 1.25% but the minimum pay-out will be also lowered to 84%.

Also in this case, the change is effective from 1 January 2019, but strangely enough 18 months have been granted to perform the technical changes necessary to adjust the machines. And it is not clear how the tax increase can be immediately applicable without the possibility for machines to immediately lower the payout. This is another aspect of uncertainty that might lead to disputes.

The Government wants to protect players, but hopes they will gamble more

As I commented in an article on the Italian press, the recent behaviour of the Italian Government towards does not make any sense.

The ban on gambling advertising that I had covered in this article “Will you challenge the Italian gambling advertising ban?” was meant to reduce gambling addiction, but now that the Government needs gaming tax entries, it will not be able to afford a reduction in gambling tax entries.

There is another law that is usually passed at the end of the year and postpones the coming into force of a number of provisions. The hope is that it will be the opportunity to find a better balance between opposite needs. Also the outcome of recent questionnaire on the scope of the Italian gambling advertising ban (read on the topic “Questionnaire on the Italian gambling advertising ban enquires the industry“) will be another opportunity to reach a sustainable compromise.

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Giulio Coraggio

I am the head of the Italian Technology sector and the global head of the IoT and Gaming and Gambling groups at the world leading law firm DLA Piper. Top global IoT influencer and FinTech lover, finding solutions to what's next for our clients' success.

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