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The Communications Authority (Agcom) fined a well-known social media for approximately 1.3 million euros for breach of the Italian gambling advertising ban.
This decision comes on the heels of three previous measures the authority had imposed against major social media and further strengthens AgCom’s operational line in combating gambling advertising, regulated by Article 9 of the Dignity Decree.
The Accounts Challenged to the Social Media
The matter originates from several reports that, between August 2, 2022 and May 2, 2023, had been received by AgCom in relation to alleged violations of Article 9 of the Dignity Decree setting out the Italian gambling advertising ban due to the publication of certain posts by about twenty profiles of a well-known social media. After a careful pre-investigation phase, the authority ascertained that, indeed, the content of these posts promoted gambling and therefore charged the company that owns the social media with the dissemination of advertisements of gambling sites with cash winnings.
Specifically, in the 20 identified accounts/channels, gambling promotion was carried out through the posting of (i) gaming sessions (slot machines or video lottery terminals), (ii) promotional images of gaming sites, and (iii) direct hyperlinks to gaming sites with cash winnings as well as (iv) details on how to access the gaming sites, available bonuses, and payment methods for depositing and withdrawing winnings.
Out of the 20 contested accounts, 9 were marked with a so-called “blue check mark” indicating that an optional paid subscription had been signed between the account in question and the social media. In other words, some of the contested accounts benefited from additional features to enhance users’ experience on the social media upon payment of a sum of money to the company. However, in order to obtain this certification, the 9 contested accounts had been subjected to audits by the social media, both automated and human, aimed at analyzing channel content.
In contrast, for the remaining 11 contested accounts, the social media had not carried out any specific checks since there was no subscription and thus no business relationship with them.
The defensive arguments of the social media against the breach of the Italian gambling advertising ban
Despite the fact that the defense pleadings submitted by the company were received late by AgCom (i.e., beyond the 30-day deadline stipulated in the notice of objection), the authority nevertheless decided to accept them and evaluate them for the proceedings in order not to compromise the exercise of the company’s right of defense.
The company’s line of defense mainly relied on the concept of passive hosting provider, of jurisprudential elaboration, both at the EU and national level, and the liability exemption regime provided by Legislative Decree 70/2003, which implements Directive 2000/31/EC setting out the eCommerce regime.
Specifically, the company:
- asserted that it qualified as a passive hosting provider and, as such, held itself responsible for the removal of third-party content only if (i) specifically reported and (ii) not promptly removed pursuant to the eCommerce Decree;
- pointed out that the eCommerce Decree excluded the imposition of active monitoring obligations on hosting providers, thus a duty to actively seek out facts or circumstances indicating the presence of illegal activity on the social media operated by the company;
- noted how European regulations, including Regulation (EU) 2022/2065 setting out the Digital Services Act (DSA), and some decisions of the Lazio Regional Administrative Court in similar cases, supported the company’s contention, namely that passive hosting providers should go free from liability unless they are aware of and act immediately to remove illegal content;
- in the specific case, it asserted that it had not received any report from the Authority regarding the content posted by the Contested Accounts and, consequently, only after receiving the notice of dispute, had promptly disabled access from Italy to all the Contested Accounts.
AgCom’s Investigative Findings
In its order against the company, before addressing the liability regime under the eCommerce Decree and the DSA, AgCom provided a brief reconnaissance of the applicable legislation on the prohibition of gambling advertising, emphasizing the broad scope of application of Article 9 of the Dignity Decree.
In fact, the authority focused on the inapplicability of the eCommerce Directive to the ban established by Article 9 of the Dignity Decree because the eCommerce Directive explicitly excludes from its scope certain information society services, including “games of chance involving a pecuniary stake in games of chance, including lotteries and betting.” Thus, in this regard, with specific reference to the nature of hosting providers, the Dignity Decree intended to adopt a general rule that does not allow in any way to directly or indirectly promote games with cash winnings. It follows, therefore, that, contrary to the Company’s assertion, the latter cannot invoke in any case the liability exemption regime set forth in the eCommerce Decree but rather that of the DSA, which essentially incorporates, in its Article 6, the same requirements as those set forth in the eCommerce Directive (and thus in the eCommerce Decree).
Thus, the Authority focused on the company’s liability regime because of its nature as a hosting provider under the DSA and held how it could not invoke the liability exemption regime automatically for all Contested Accounts. On the contrary, according to AgCom, it was necessary to verify concretely (case by case) the possible liability of the platform with respect to the content it carried and therefore with respect to the nature of each of the contested accounts.
Accordingly, according to the Authority:
- with respect to 11 out of 20 contested accounts for which there was no commercial relationship and lacked any form of control, the company should not be held liable for the actions committed by the aforementioned creators at its content sharing service. In these cases, the company effectively had had no knowledge of the wrongdoing (prior to the authority’s allegations) and could therefore benefit from the liability exemption schemes; contrarily,
- for the remaining 9 contested accounts (those marked by the “blue tick”), since the company actually had knowledge of the illegality of these accounts, it could not avail itself of the condition of exemption from liability under the DSA. According to AgCom, the company could not consider itself unaware of the nature of the content conveyed by the 9 contested accounts because the company has ad hoc control and verification procedures for the various commercial services offered to its users (for a fee) that aim to analyze the content of the channel in question. And these contested accounts had been the subject of the aforementioned controls.
Therefore, the AgCom determined the sanction in the amount of 1,350,000 euros for the 9 contested accounts but “verified” by the company, due to which a violation of Article 9 of the Dignity Decree was found through the promotion, through a multitude of disseminated content, of sites with cash winnings. The penalty was calculated on the minimum fine of 50,000 euros for each account and multiplied up to three times.
In the commensuration of the sanction, several criteria were taken into account, among others, the work done for the elimination or mitigation of the consequences of the violation: the Authority noted the closure of 18 of the 20 contested accounts after receiving the notice. However, AgCom was not aware of any steps being taken to prevent future violations of the regulations in question. In addition, the authority considered the company’s economic conditions and the fact that it had been designated by the European Commission as a (VLOP) Very Large Online Platform, given its 112 million monthly active users such as to justify the overall measure of the sanction.
Some considerations for companies
This decision, as well as the other three mentioned in the introduction, shows the increasing attention and severity of the authority in assessing conduct potentially constituting a violation of the ban on gambling advertising. Therefore, platforms must pay increasing attention with respect to the content published by users and must commit to implementing measures for the prevention of unlawful conduct in order to be able to benefit from the exemption of liability provided by the DSA and possible mitigation by the authority for the purpose of calculating the financial penalty, in the case of actual violation of the Dignity Decree.
Many clients are asking whether the terms of the Italian gambling advertising regime will change as a consequence of the new licensing regime that will be soon established. There is no clarity on the matter. You can read more on the topic in this article “New Italian Rules on the Online Gambling Regime and Licenses Approved“
