The potential reduction of the number of Italian online gambling licenses might lead to distortions in the market, with no benefit to anyone.
The last months of the year are always stressful for the gambling sector for Italian licensed operators and suppliers, as the Government approves the so-called budget law, which often contains some changes impacting the gaming market.
The proposal of reduction of the number of Italian online gambling licenses
I already discussed some of the likely changes to be introduced through the budget law. But a potential further change is leading to considerable discussions. Indeed, the Government announced in a draft of the current budget law the intention to set a limit of 50 online gambling licenses with an initial bidding price of € 2 million per license.
According to the current draft, the tender should be launched by the end of 2020. But in my view, it cannot award licenses that are effective earlier than in 2023.
The reason for the postponement to such date is because the current Italian online gambling licenses will expire at the end of 2022. Since such licenses have already been awarded, they cannot be terminated. However, the current licenses cannot be automatically renewed, and operators will have to participate in a tender for new licenses in 2022.
The renewal process has been so far just a bureaucratic process in the sense that licenses were awarded to whoever applied for them, was meeting the requirements, and paid the fixed one-off price for the license, which in the last tender was of € 200,000. On the contrary, the new rules will set a minimum price that might not be affordable for many operators.
What consequences on the Italian online gambling market of the 50 licenses limit?
I don’t know the exact number of Italian online gambling licenses awarded so far. But we are far from the 200+ licenses of 7/8 years ago. My view is that because the market is becoming more mature.
When the Italian online gambling market was launched, we had, for instance, several small companies, but even betting shops that had a local clientele and started operating an online gambling website, with no financial resources at all to run the business.
At the same time, we had medium-sized foreign operators that entered the Italian gambling market with no knowledge at all of the applicable requirements and of the need to localize their offering and marketing strategy. They were just translating the website in Italian, hoping that local players would go to their website, relying on what had worked for years on .COM platforms.
As it happens in all the large markets, Italy requires a quite tailored approach. In this sense, the announced exit from the market of some operators during the last months, it might mean that they do not have the resources to run a local strategy.
The main downside of a limit to the number of Italian gambling licenses
My view is that if and when a reduction of the number of Italian gambling licenses will occur, and their price will increase, we will have some operators that would have, in any case, exited the market in a few years, not applying for a license.
But, at the same time, also because of the Italian gambling advertising ban, there might be operators that will not “bet” anymore on the Italian market since the price for the license will set a considerable barrier to the entrance in the market.
This scenario means that if the proposal of the Government is passed, the State will collect € 2 million from a quite limited number of operators, which I believe to be less than 50 operators.
At the same time, the black market will start flourishing again. As happened when casino games were not regulated in Italy, operators that were not able to enter the market, will not give up their Italian players, but continue offering them their games on .COM platforms. And measures like payment blocking will not be effective during the period when Fintech is enabling payments through an increasing number of channels.
All in all, I believe that a limit to the number of online gambling licenses and increase their price will lead to a distortion of the market with adverse effects for small/medium operators and especially for Italian customers.
On the topic above, you may also find interesting this article on other measures that might be introduced through the Italian budget law “Italian register of gambling operators and suppliers and payment blocking against unlicensed operators“.