Italian Government Seeks to Increase Taxes and Shrink the Market

Italy’s ruling coalition between the Democratic Party and Beppe Grillo’s Five Star Movement (M5S) has introduced new measures affecting the gambling industry in Italy.

After voting a blanket ban on gambling advertisement in July, 2018 and enforcing the measure on January 1, 2019, the populist M5S coalition has focused on attacking the segment, fulfilling one of its electoral promises.

Last week, the government introduced another restrictive measure in its first Budget Law Decree, planning to slash the total number of casino licenses (the so called ‘casino con licenza AAMS’) to 50 from 85 presently by 2023 – one of several changes to come.

Italy’s Shrinking Gambling Market

M5S has also changed the license fees to $2.2 million with the licenses issued for a period of nine years. The change will also come into effect in 2023 and it will extend to both new casino operators and businesses applying to renew their licenses.

The government is altering the procedure for the permits. Upon receiving a permit, any applicant must provide at least 50% of the fee within a 30-day window. Similarly, the remainder of the licensing fee must be paid within 30 days after signing the permit.

All companies willing to apply will have an opportunity to do so once the application process opens in 2021 or 2022, the government specified.

M5S will further seek to control the availability gaming terminals and venues, capping their number at:

  • 58,000 video game terminals
  •  35,000 gaming points
  • 2,800 gaming venues

Boosting Italy’s Gambling Taxes

Effective July 14, 2019, Italy also restricted sports betting sponsorships, prohibiting all media companies in Italy from displaying gambling-related advertisement.

However, this hasn’t completely affected the total sports handle. In September, Italy’s sports betting businesses raked in around $142.47 million, as reported by the Agenzia delle Dogane e dei Monopoli (ADM).

The number represented an 8-percent drop in overall handle, but sports betting revenue was still higher than what online casinos generated. Meanwhile, gambling sites brought in an estimated $80 million or a 22-percent increase year-over-year (YOY).

Nevertheless, business isn’t out of the woods and media outlets have reported that the government is now considering to increase tax on lottery jackpots to 20% from 12% presently.

Taxes have gone up across the board. On January 1, 2019, the tax on online casinos and bingo increased to 25% of companies’ Gross Gaming Revenue (GGR). Fixed-odds betting also suffered a tax bump to 24% of GGR.

Video lottery terminals now have been slapped with a fresh tax up for a total of 31%, broken down in 9% of turnover and 23% of amusement with prizes (AWP).

Similarly, the government is reportedly considering a 12% tax on all winnings, rounding up the number players would have to pay to 23%.

Dignity Decree Consequences

With the Dignity Decree enforced – referring to the gambling advertisement ban – and new tax changes, a number of businesses are facing tougher regulatory climate.

Some companies’ licenses are expiring on December 31, 2022. This includes high-profile international brands such as:

  • William Hill
  • The Stars Group
  • GVC
  • Paddy Power Betfair
  • Bet365 & others

There are no guarantees this is the end of the road for the offensive that Italy’s ruling government has launched against gambling. Meanwhile, LeoVegas has teamed up with iSoftBet for the Italian market.