Gambling

The Italian remote gambling licenses and the threats of terminaton

The lack of extension is leading to endless disputes

Some Italian remote gambling licenses just expired and others will do it soon, with the regulator threatening a termination which is leading to disputes.

Updated on 07.10.2020

During the current Covid-19 emergency, the Italian Government is overwhelmed by the actions to be undertaken for the relaunch of the economy.  Therefore, some of the upcoming deadlines might have been overlooked. However, the termination date of some Italian remote gambling licenses just passed, and others will expire soon.

The current chaos around the extension of Italian remote gambling licenses

The nine-year Italian remote gambling licenses held by some operators are expected to expire between the last months of 2020 and the first months of 2021.  The Italian budget law 2016 regulated the recently-ended tender for Italian remote gambling licenses prescribing just a 4-year duration for the “alignment in time, as on 31 December 2022, of all licenses relating to the offering of the games at a distance” with the explicit goal to ensure that all the Italian remote gambling licenses, including those expiring before the end of 2022, will expire at the same time on 31 December 2022.

This circumstance was confirmed by the Italian budget law 2020 which established that the Italian gambling authority “shall award the following concessions through an open, competitive and non-discriminatory procedure to be launched by 31 December 2020: [—] e) 40 rights to be able to offer games at a distance with an auction basis of not less than EUR 2,500,000 for each right”, urging the regulator to launch a tender for new remote gambling licenses by end of the year.

The terms of Italian gambling licenses and the potential options

The license agreement regulating Italian remote gambling licenses does not provide for its automatic renewal, which is excluded.  Therefore the regulator shall issue an order providing for the extension of licenses up to the award of the new license.

This course of action would not be new since the early comers into the market were recently awarded a new license, but operated for almost two years under an expired license. At that time, the regulator just compelled them to commit to joining the tender for new licenses as a condition for the extension.

Likewise, holders of betting shop licenses had their licenses repetitively extended during the last years against the performance of a one-off payment.

There is no doubt that the provisions mentioned above created, on the one hand, a reasonable expectation on operators as to the extension of their license and, on the other hand, an obligation on the regulator to launch the new tender by the end of 2020.

The disputes arose to appeal against ADM’s termination orders

Unlike what was expected, during the past week, ADM served upon some license holders the notice of termination of their Italian gambling licenses, with the consequential disconnection from the Sogei system that would have led to the immediate interruption of the offering of games, triggering irreparable damages to the operators’ business and considerable disruptions to their players.

Fortunately, courts took a better stance than ADM, and following the appeal from operators granted the suspension of the termination order up to the hearing that is due in November 2020.

The backlash from operators to ADM’s orders is leading to significant disputes, which might also translate into the flourishing of the unlicensed market. Operators might be considered discriminated against those running recently awarded licenses and claim that they can operate under, for instance, their Maltese license relying on the EU principle of freedom of services.

Such a scenario would yield unparalleled tax losses for the State during a period when we are facing a financial crisis and the Government cannot afford a further reduction in tax entries.

The last proposal of extension of licenses

According to the press, a proposal that is currently under the review of the Italian Parliament provides for the extension of Italian online gambling licenses up to the end of 2022, against the payment of a monthly fee of € 2,800.

This solution would be ideal for operators that could continue operating without interruptions and join the new tender for Italian gambling licenses that is expected to be launched by December 2022.

Hopefully, the extension will be granted soon, but operators are ready for the worst with never-ending legal disputes that might arise damaging the whole country.

Image Credit Laurence Edmondson

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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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