Changes in the Italian gambling sector are not good news for the market

The changes introduced by the new Italian budget law will considerably change the market

The budget law will provide significant changes in the Italian gambling market in 2020 for both the online and land-based gaming sectors.

The Italian budget law obtained its final approval by the Parliament, and its provisions need to be reviewed together with those recently introduced through the Tax Decree. Below are the main changes:

Land-based gambling licensing regime extended to any location

Up until now, no gambling license was required for gaming halls and bars where Comma 6A machines (the so-called NewSlots) and VLTs could be installed. The new rules provide for the launch of a tendering process by the end of 2020 for the award of the rights lasting for 9 years

  • 200,000 rights for remotely operated Comma 6A machines with a minimum bidding price of € 1,800 per right and a minimum offer for 10,000 rights, and 50,000 rights for VLTs with a minimum bidding price of € 18,000 per right and a minimum offer for 2,500 rights;
  • 35,000 rights for bars and tobacco shops to install Comma 6A machines with a minimum bidding price of € 11,000 and a minimum offer for 100 rights, while no license was required in the past;
  • 2,500 rights on gaming halls where Comma 6A machines and VLTs can be installed with a minimum bidding price of € 35,000 and a minimum offer for 100 rights;
  • 40 remote gaming licenses with a minimum bidding price of € 2,500,000, while the price paid recently by operators was of € 200,000 for a 4-year license.

Increase in gambling taxes for land-based machines

Gambling taxes are increased

  • to 23.85% of turnover up to 31 December 2020 and 24% from 1 January 2021 for Comma 6A machines with a minimum payout reduced to 65% and
  • to 8.5% of turnover up to 31 December 2020 and 8.6% from 1 January 2021 for VLTs with a minimum payout reduced to 83%.

Additionally, the tax on winnings to be paid by players is increased to 20% in the case of winnings exceeding 20%.

Extension of tenders for betting shops and bingo halls

As happened during the previous years, tenders for betting shops and bingo halls are postponed and need to be launched by the end of September 2020. In the meantime, current license holders can continue operating against the payment of

  • € 7,500 per betting shop; and
  • € 4,500 per betting corner.

Establishment of the unique registry of gambling operators

Regarding the land-based gaming sector, there was already a registry of gambling operators, suppliers, and providers. The registry is now extended to the remote gambling market with the obligation to enroll in the registry for, among others,

  • remote gambling license operators against the payment of a yearly amount of € 10,000;
  • remote gambling platform suppliers and suppliers of platforms for bets on virtual against the payment of a yearly amount of € 2,500;
  • points of sale of vouchers against the payment of a yearly amount of € 200; and
  • any entity that has ongoing agreements connected or functional to the offering of games against the payment of an amount to be determined by the gambling authority.

Operators will be entitled to enter into agreements only with entities enrolled in the registry, and the gambling authority is expected to issue the rules regulating the registry, including the indication of the applicable transitional period.

Blocking of payments towards unlicensed gambling operators

Credit cards, financial, and banking operators are not allowed to transfer gambling and betting related amounts towards unlicensed operators that offering their games/bets in Italy. The breach of such prohibition is sanctioned with a fine between € 300,000 and € 1,300,000 per violation.

My view on the introduced changes

Giulio Coraggio

The changes introduced by the Italian Government have the sole purpose of increasing the “potential” tax entries from the gambling sector, without any long term view, and with any actual increase in tax entries.

Both for the online and the land-based sectors, the provisions will allow only large operators to continue offering their games legally.

This scenario means, in my view, that the illegal gambling market will flourish, vanishing all the efforts of the last decade with potential risks for Italian players and negative effects on tax entries. The difficulty in enforcing the measures against unlicensed operators and the limited effects of payment blockings that were already introduced in the past with no actual implementation show the limited knowledge of the market by the Government.

Additionally, new disputes will arise concerning, for instance, operators that just got a distance selling license expiring in 2022 when they will be obliged to bid for a license whose initial price is 10+ times more than the price currently paid.

Hopefully, courts will oblige the Government to repair such negative changes and introduce a more suitable regime for the Italian gambling market.

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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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