The increase of tax on Italian VLTs and Comma 6A might lead to a further change in the market that has been the victim of a considerable tax pressure during the last years.
I had discussed in a previous blog post of the main upcoming changes that the Italian budget law is expected to introduce by the end of the year. However, such changes are not comparable with the impact of the upcoming change to be introduced by the budget law.
The Italian tax increase on VLTs and Comma 6A
VLTs and Comma 6A (AWPs) had already faced two tax increases during the last year. But the party named “5 Stars” which is part of a coalition forming the Italian Government is considerably against the gambling sector and now requested a new tax increase to find funds for the Italian budget of the new year.
According to the current draft of the so-called tax decree, with effect from the 10th of February 2020, the taxation on VLTs will increase to 7.9% to 9% of the turnover and the one on Comma 6A will increase from 21.6% to 23% with an increase in tax entries of € 499 million for 2020 and € 574 million for 2021.
What is the impact on the Italian gambling market?
The Italian VLT and Comma 6A market is made of 11 license holders which are the entities to which the gambling authority, ADM awarded the license for the management of the network connecting the machines to the servers of the regulator.
But in addition to such entities, there is a very large number of small/medium companies that provide maintenance, support and installation services to them, as well as game contents. Since license holders will have to reduce costs to remain profitable, as a consequence of the tax increase, the result is expected to be a reduction of commissions to such entities.
Indeed, according to the estimates, 150,000 workplaces are at risk with the tax increase, which might lead to a substantial negative social impact due to the increase in the level of unemployment.
Unfortunately, the Italian Government is looking for money to make the budget of the country in line with the parameters required by the European Commission, and it’s unlikely that they will consider the long term negative effects of such a tax increase.
On the same topic, you can find interesting the article Italian register of gambling operators and suppliers and payment blocking against unlicensed operators.