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The Italian Parliament has granted an extension until the end of 2024 to gaming licenses on remote gaming, AWP and VLT network management, sports and horse racing betting, and bingo hall management.
With one of the government’s most recent amendments to the Italian budget law, an extension until December 31, 2024 is reintroduced for gaming licenses on remote games, on bingo halls, on the management of AWPs and VLTs, and on land-based sports and horse betting, including bets on virtual events.
This is a peculiar scenario, to say the least, because in particular the Italian licenses on remote games for all operators in the market were set to expire on December 31, 2022. So operators were holding their breath until December 29, two days before the expiration date, as to whether they would actually have to cease operations.
Among the reasons for the extension of gaming licenses was mentioned the need to have time to carry out an effective and adequate reorganization of the sector, as requested by their member organizations. In addition, the extension is aimed at ensuring the investments borne by license holders to ensure public health and technological innovation in the offering of games.
The current situation is a consequence of one of the deformations of the game management system in Italy where the state “grants” private companies the management of games, but in fact the entire investment and business risk is borne by operators. A shift from the current system to a legal regime in which operators are given licenses, as is the case in most jurisdictions worldwide, has long been called for, but this has not yet happened.
The extension was certainly inevitable in the current regulatory environment, but it is also true that a new regulation of the gaming sector is most urgently needed. For example, for sports and horse racing betting, we are witnessing emergency extensions that has now lasted for several years, not allowing operators to plan their business accurately. The same reasoning, however, applies to all games because emergency legislation cannot be reconciled with a prudent business plan.
Licenses are extended against payment of a one-time fee, calculated in proportion to the duration of the extension and increased by 15 percent over the amount paid at the time of award of the licenses. Thus, the amount paid by license holders at the time of awarding the license for its entire term must be taken into account and related to the two years of extension with the 15% increase.
It follows that although an increase has been provided for, its value does not significantly affect the operating cost of licenses. The fee must be paid in two equal installments due on July 15 and October 1 of the year 2023, respectively, and for what is due in the year 2024 in two equal installments by January 15 and June 1 of that year. Exceptions apply to land-based sports betting and horse racing for which a single payment is due by July 15, 2024.
From the extension of the Italian gaming licenses, the government estimates that € 176 million in additional revenue may result. Certainly, this is a large amount that pays duty, however, to a licensing system that in the current regulatory uncertainty feared litigation and a deregulatory regime should there be tenders for the award of new concessions.
From the point of view of license holders, the extension of gaming licenses is good news because, in return for a payment in line with what has already been paid previously, they see their licenses extended for another two years while they wait for the rules of the licensing system to be clarified and distorting rules such as those on the ban on advertising to find a regulatory framework that better balances the needs of freedom of enterprise with the protection of individuals.
A determination by the director of the Italian gambling authority (ADM) will then have to establish the obligations for concessionaires, of presenting adequate economic guarantees, proportionate to the new definition of the time terms of the aforementioned extensions. Currently, it has been required to adjust the bank guarantees to cover the concession obligations until December 31, 2023, but it is likely that a further resolution may be issued following this further extension. In addition, it is likely that ADM will issue a circular with more detailed instructions on payment methods and that a tax code will be issued to make payments due as a result of the extensions.
On a similar note, you might be interested in the new Italian rules on fixed-odds sports betting that introduce significant changes to the previous regime.