The fight between Italian online gambling operators and regulator on license extension continues

An uncertainty remains on the status of licenses, which does not help the market

Italian courts recognized – in several instances – online gambling operators’ right to continue operating under their expired license issuing an interim injunction allowing the temporary extension, the regulator continues sending termination notices.

The uncertainty on the future of Italian gambling licenses

In a previous post, I had discussed the situation of some operators whose license was due to expire in October 2020.

The Italian budget law 2016 regulating the recently-ended tender for Italian remote gambling licenses had prescribed 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. And 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 the end of the year.

Despite the above, during the past months (and even very recently), the Italian gambling authority, ADM, sent termination notices to Italian licensed gambling operators, usually a few days before the termination date. Such notices referred to the operator’s disconnection from the ADM’s servers, which would lead to the immediate closure of the platform’s operation due to the technical features of Italian licensed websites that need to communicate in real-time with the regulator’s system to notify transactions.

It is no surprise that Italian licensed operators were stunned to receive a termination notice and quickly got extremely agitated because there is no open tender. Therefore a termination of their licenses put them on the verge of losing all their players and investments. 

The appeal against the decision of the Italian gambling authority

The Italian gambling authority’s termination notice translated into a rough reaction from operators that filed plenty of appeals seeking an interim injunction from administrative courts suspending the termination of licenses. And the groundedness of the position of Italian operators was confirmed by the Administrative Court of Rome, which upheld their position, granting the required suspension.

It does not mean that the licenses are automatically extended, though. But operators’ websites cannot be disconnected from the regulator’s servers, and they can continue offering their games up to October 2021, when the hearing on the case’s merits will be held.

Most of the disputes arose during the last months of 2020 as the nine-year term of several operators expired during those days. However, the outcome mentioned above of court disputes was not a deterrent for the Italian gambling authority from sending other termination notices. As soon as the expiry date of further licenses was approaching, new termination notices (and new disputes) came up…

What happens to the other operators?

There is no problem for operators that recently gained a new license since their license will expire at the end of 2022. On the contrary, there are some operators whose license term will expire in the coming days.

As occurred with previous tenders, it would be beneficial that ADM takes a clear stance, allowing operators to continue to operate against their commitment to join the upcoming tender. Such an approach would avoid useless disputes with operators and the State’s costs and help the market gain more credibility in the current financial crisis.

The current political uncertainty does not ease the identification of a solution. ADM should adopt a responsible behavior and lodge a proposal for an automatic extension of licenses against a fixed fee payment. Despite the several bills on the topic flying around the Parliament, no approval has occurred yet.

Courts need to replace the Parliament during these days, and hopefully, judges will continue to be more responsible than MPs. 

Image courtesy Hans Splinter

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Giulio Coraggio

I am the location head of the Italian Intellectual Property & Technology department and the global co-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 client's success.

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