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The remote gambling market in Italy is undergoing significant changes that could reshape its landscape, potentially transforming it into exclusive opportunities for a few operators, with daunting barriers to entry and unprecedented tax hikes.
Potential rising cost of Italian remote gambling licenses and its consequences
At the end of 2024, all the Italian online gambling licenses will expire. Therefore, a tender for new licenses is expected to be launched in the coming months. The terms of this tender are uncertain. As mentioned in a previous article, the current law provides for a bidding process with a minimum price of € 2.5 million instead of € 350,000 of previous tenders. However, the Italian Ministry of Finance wants to make the tender even more costly by increasing the minimum bidding price to € 6 million.
These licenses will cover all the remote games from sports betting and poker to casinos and bingo, save for scratch cards and numbering games for which license holders can become resellers. But the price remains extremely high if compared to the past tenders. Besides, there is no indication that the Italian gambling advertising ban will change its terms.
According to the Ministry of Finance”s initial estimates, this measure is expected to attract a maximum of 40 operators, generating revenues of about € 240 million.
The potential tax increase on remote sports betting
In addition to the measures referred to above, there’s contemplation over a potential tax hike for online betting, potentially rising from 22% to 26% GGR, to secure additional revenues of € 70 million.
This move will strain the struggling Italian bookmakers, forcing them to adjust their betting odds, hence offering less competitive rates despite the fierce competition from .COM bookmakers who benefit from considerably lower tax burdens, such as Malta’s mere 5% on GGR.
Regulating Top-Up Sales Points (PVR)
There’s also an anticipated “regularization” of the Top-Up Sales Points (PVR) for betting. These shops, including internet cafes, just sell top-up cards for online gambling platforms, but in some cases, they are operated as actual betting shops. They are estimated to be about 70,000 across the country.
The Ministry of Finance plans to levy a fee ranging from € 200 to 700 on operators to continue their operations, anticipating a revenue collection of around € 35 million.
The impact on the gambling market in Italy
The increase in prices for remote gambling licenses and the sports betting tax rate coupled with the gambling advertising ban might lead to a significant barrier to the entrance into the market and might force several operators to either run their business illegally with a foreign license or cease their operations. Indeed, the estimate from the Ministry of Finance shows an expectation that more than half of the current operators will not participate in the new tender.
While these measures will undoubtedly fortify major operators due to reduced local competition, they might inadvertently promote the growth of the unlicensed market. Some operators might resort to mergers, acquisitions, or even transforming into “skins” linked to other license holders. Indeed, the current Italian licensing regime allows an operator to run an unlimited number of skins under its license, provided that players have no more than an account per license. However, since skins do not hold a license and their operators do not go through KYC checks, it will be harder to track unless a stricter regime for them is introduced as well.
The remote gambling market in Italy is at a crossroads with major opportunities and threats. Hopefully, politicians will understand that they cannot ruin all the efforts achieved during the last 20 years in establishing a flourishing market.
On a similar topic, you can read the following article: “Italy Approves its Largest Gambling Law Reform“.