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How Brexit might impact the gambling sector in Italy

Brexit might cause major issues to Italian licensed gambling operators

Brexit could lead to substantial troubles for gambling companies operating in Italy and the regulator shall act in the best interest of the market.

I had discussed the impact of Brexit on the gambling sector in this article, but here is an update after the achievement of the final Brexit EU-UK Trade and Cooperation Agreement.

The Italian gambling law obligation on the location of servers and license holders

Italian gambling law requires for both online operators and AWP/VLT licensees that:

  • the license holder is a company with a registered office in the European Economic Area and
  • the technical infrastructure, hardware, and software, dedicated to the activities subject of the license are in a country of the European Economic Area.

There are considerable discussions as to what can be considered as “dedicated to the activities subject of the license” and, for instance, as to whether a disaster recovery system can be located outside the EEA since it is not meant to be operational but to activate in case of disaster. However, provisions on the matter are ambiguous, and there are no precedents where courts or the regulator gave a clear interpretation.

What position was taken by the Italian gambling authority?

The Italian gambling authority, Agenzia delle Dogane e dei Monopoli (ADM), held on January 8, 2021, a “hearing” to clarify their position on the impact of Brexit on gambling operators.

No clarification was provided during the hearing, but participants were only invited to lodge their questions, and I submitted the following questions:

  1. Law No. 88 of July 7, 2009, requires remote gaming licensees to have “residence of the technological infrastructure, hardware, and software, dedicated to the activities covered by the concession in one of the States of the European Economic Area” with the clear objective of limiting the scope of the requirement to the availability in the European Economic Area only of what is essential for the activity covered by the concession.  Please confirm this interpretation of the requirement.
  2. Given that the Brexit agreement was reached in the final days of 2020, will license holders have at least 6 months to comply with the requirements resulting from Britain’s exit from the European Economic Area, as has already been recognized in other sectors?  A different approach would be unjustified, given the uncertainties surrounding the Brexit agreement’s scope until the very last days of December 2020.
  3. Gibraltar is part of Great Britain and, therefore, has left the European Union as a consequence of Brexit.  However, Gibraltar remains part of the Schengen area because there will be no restrictions on access and controls by ADM in Gibraltar.  Please confirm that remote gaming licensees will continue to have the residence of their infrastructures dedicated to their licensed activities in Gibraltar.
  4. Does ADM plan to enter into bilateral agreements with gaming authorities located outside the European Economic Area to allow licensees to locate their licensed infrastructure in these jurisdictions?  ADM has already stipulated this type of agreement in the past.

ADM is meant to address the submitted questions in FAQs published on their website.  In the meantime, they interestingly sent a letter to all the license holders requesting them to disclose the location of their technological infrastructure, including their disaster recovery system.

Hopefully, ADM will take a reasonable stance on the matter since a strict interpretation would lead to major disputes and jeopardize the whole 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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