Regulator challenges the Italian gambling advertising ban

The AgCom took a firm position against the legality of the gambling advertising ban

AgCom raised concerns as to the legality of the Italian gambling advertising ban in a report sent to the Government, increasing the uncertainty on what is going to happen next.

The Italian gambling advertising ban and its uncertainties

I covered in several articles the scope of the Italian gambling advertising ban and my concerns as to the lack of compliance of such a broad ban with the Italian Constitution that preserves the right to do business and the EU freedom of doing business (Read on the topic the article “Italian gambling advertising ban in place and now?“).

The one-year transitional period provided by the so-called Dignity Decree that introduced the ban expired on 14 July 2019, and operators, suppliers, affiliates and media companies are now panicking on what to do.

But considerable support to the industry now comes from AgCom, the Italian communications authority that is in charge of investigating and issuing fines for breach of the ban.

The AgCom report to the Government on the Italian gambling advertising ban

The scenario has now become more interesting because of a report sent by AgCom to the Government in which the authority raised its concerns on the Italian gambling advertising ban, emphasizing

1. A full ban is neither necessary nor lawful

There is no need of a full ban of gambling advertising since, as outlined in the EU Commission Recommendation of 14 July 2014, “commercial communication of online gambling services can play an important role in directing consumers to an offer which has been allowed and is supervised“.

And, limitations to the ban are also provided by the EU Directive 2010/13/EU which provides that “measures taken by a Member State to enforce its national consumer protection regime, including in relation to gambling advertising, would need to be justified, proportionate to the objective pursued, and necessary as required under the Court’s case-law. In any event, a receiving Member State must not take any measures which would prevent the re-transmission, in its territory, of television broadcasts coming from another Member State.“.

The same Directive emphasizes that “it is important that minors are effectively protected from exposure to audiovisual commercial communications relating to the promotion of gambling. In this context, several self- or co-regulatory systems exist at Union and national level for the promotion of responsible gambling, including in audiovisual commercial communications.“.

This approach has been, for instance, successfully adopted in the UK (Read on the topic “UK live sports gambling advertising ban“).

2. Sanctions are disproportionate and contradictory

The rules on the Italian gambling advertising ban provide fines equal to 20% of the value of the challenged sponsorship or advertisement, with a minimum sanction of € 50,000. Such an amount, according to AgCom, is higher than any penalty that it can issue under its competencies. This regime means that even a minor breach would be punished with at least a € 50,000 fine.

And such a massive fine is not justified against operators that have been expressly authorized by the State to offer their games following the issue of a dedicated gambling license. This regime is therefore in contrast with article 41 of the Italian Constitution that preserves the right to do business and the EU freedom of services.

Also, if the ban applies both against licensed and unlicensed operators, it prevents consumers from distinguishing between them.

3. The ban would not be effective

Advertising has only a limited influence on the decisions to gamble of players according to a recent study. And the ban would mainly impact the online gambling and betting market which has already in place strict self-limitation and self-exclusion measures as well as identification obligations.

On the contrary, the gambling machine market would not be affected since it already does not perform advertising activities. And such a circumstance might be discriminatory if it is considered that more than 50% of the gambling-related spending occurs through AWP and VLT machines.

4. There would be a substantial loss for the media and sports industry

According to data provided by AgCom, the gambling advertising ban risks to lead to a decline in terms of revenues of over € 100 million for TV, press, and media companies. And the same loss is expected to be faced by sports companies.

Such a scenario would make Italian companies less competitive in the European market where no similar ban is imposed in other jurisdictions.

The recommendations from AgCom on gambling advertising

Giulio CoraggioThe report from AgCom ends with the proposal to the Government to reform the Italian gambling advertising regime to

  1. ensure a clear distinction between the lawful and unlawful offering of games, rather than provide a full ban on gambling advertising;
  2. distinguish between the different types of games, consequently adopting different regimes based on the level of risk for affected individuals;
  3. provide limitations on the contents of advertising messages and responsible gambling measures to prevent considerable losses, also encouraging responsible gambling campaigns to increase awareness on gambling addiction issues;
  4. prescribe different regimes according to the level of potential risks for individuals; and
  5. introduce an ad hoc regime for AWP and VLT machines from which most of the gambling spending occurs.

My top 3 recommendations

After such a firm position from AgCom, it is difficult to predict the next steps that the Government will take. There is no doubt that any potential fine issued by AgCom for breach of gambling advertising rules would be challenged. The Government may grant a further extension to the applicability of the regime, but the scenario remains uncertain.

My top 3 recommendations on how to behave in such an unclear situation are to:

  1. Turn gambling advertising campaigns into informative messages, but keep on providing your customers with details on your offering;
  2. Avoid any aggressive marketing campaign and keep a low profile approach until the situation is clarified; and
  3. Be ready to challenge the gambling advertising ban before courts since its strict interpretation would prevent companies actually to operate.

On the topic above, you may find useful the article “Top 3 best practices to be ready for the Italian gambling advertising ban“.

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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. IoT and artificial intelligence influencer and FinTech and blockchain expert, finding solutions to what's next for our clients' success.

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