The criteria for calculating the potential fine for breach of the Italian gambling advertising ban are pivotal for a risk assessment.
In several instances, I covered the uncertain scope of the Italian gambling advertising ban (Read the article “Italian gambling advertising ban in place and now?“), This makes the marketing strategy of operators quite puzzling to identify what kind of activities the ban falls short.
In dealing with TV and media companies, there is always an initial position to request a full liability waiver to start a tiring negotiation on the actual perimeter of the waiver. As part of these negotiations, there is always some confusion on calculating the potential fine for breach of the Italian gambling advertising ban. But the positions that were taken by AgCom, the Italian communications authority that has jurisdiction over the gambling advertising ban, can help in the interpretation.
According to the so-called Dignity Decree, the breach of the Italian gambling advertising ban “entails on the instructing entity, the owner of the broadcasting means, site or destination and the organizer of the event or activity [–], the application of an administrative fine of an amount equal to 20 percent of the value of sponsorship or advertising and in any case to not less than € 50,000 per each breach“.
The consequence of the above is the following:
1. There is a joint and several liability between the instructing entity (the advertiser), the broadcaster (e.g., the TV company or the website where the ad is displayed), and the organizer of the event, while duplication of the fine per each entity would be in breach of Italian statutory principles
📌 the cost of the potential fine could be shared among the instructing party and the advertiser as part of a partnership arrangement, given the lack of clarity on the scope of the ban;
2. The potential fine is calculated on the value of the sponsorship/advertising campaign, and therefore, if a TV ad campaign covering a period of time is challenged, AgCom is likely to consider the value of the relevant agreement
📌 long-term agreements should be avoided as otherwise there is a higher risk that the potential fine is calculated on the value of the whole contract;
3. The reference minimum fine of € 50,000 per breach is ambiguous and will give rise to disputes. If an advertising campaign is challenged, that should be considered as a single violation, while each time an ad is aired cannot be deemed a separate breach, AgCom’s positions on the matter are controversial
📌 elements on discretion as to how a campaign is run could impair its qualification as a single violation and therefore should be avoided;
4. As occurred in a recent dispute, if the challenged entity decides to spontaneously settle the case relating to the breach of the gambling advertising ban, it can have the potential fine reduced to 1/3
📌 in most cases, the payment of the reduced fine is the wisest and most convenient option, and the parties shall regulate the matter in the agreement. Besides, this provision helps to calculate the actual risk exposure.
I hope this is helpful, and on the same topic you can read “Top 3 best practices to handle the Italian gambling advertising ban“.