The Italian Gambling Reform: Increase in license fees and new obligations with DLA Piper Experts
As the Italian industry braces for important regulatory changes, DLA Piper experts Giulio Coraggio, Vincenzo Giuffrè, and Enila Elezi offer a comprehensive analysis to navigate the evolving landscape
In a recent analysis exclusive to Gambling.Re, DLA Piper experts Giulio Coraggio, Vincenzo Giuffrè, and Enila Elezi have explored the upcoming changes brought by the Italian Gambling Reform.
At the end of 2024, all the remote gambling licenses in the Italian market are going to expire. Therefore, a tender for new online gambling licenses will be launched during next year. According to the new “Draft Legislative Decree containing provisions for the reorganization of the gaming sector, starting from online gaming” published in January 2024, there will be the award of licenses lasting nine years and they will be covering all the games that are not subject to exclusive licenses (e.g., online scratch cards) against a:
fixed one-off price of € 7 million: 4 million upon winning the bid, and an additional 3 million upon the commencement of gaming services; and
the payment of an annual concession fee of 3% of the net margin: the fee will be calculated by subtracting the amount of game revenue from the sum of payouts and taxes, paid in two installments (16 January and 16 July of every year).
The proposed increase in license fees has sparked significant debate within the Italian gambling industry. While some argue that the higher fees will help regulate the market and deter less reputable operators, others (and mainly the major gambling associations that were heard in these days by the Italian Parliament) express concerns about the potential impact on Italian gambling operators, particularly smaller companies.
One of the primary concerns is the financial burden that these elevated costs will place on operators. The fixed one-off price of €7 million, represents a substantial upfront investment for companies seeking to enter or continue operating in the Italian market. This could affect smaller operators, who may struggle to absorb such significant expenses. Indeed, by reducing the number of licensees to 40/50 from the current 93, we would see a reduction of 50% in the current market, with the concentration in the hands of a limited number of companies and international groups.
Another consideration to bear in mind is that even smaller companies which cannot bear the license fees alone, may opt to join corporate groups. To be considered that the draft decree specifies that a corporate group can obtain a maximum of five concessions. It has still been clarified what includes the definition of “website” and whether the usage of a limited number of skins would be allowed.
Operators may challenge that in other European markets the license fees are proportionate to the operator's net turnover. This means that operators in these markets are typically required to pay a percentage of their revenue as license fees rather than a predetermined fixed amount. The rationale behind this approach is to align the regulatory costs more closely with the financial performance of the operator, ensuring that fees remain manageable while still providing adequate funding for regulatory oversight and enforcement. By contrast, the proposed model in Italy imposes substantial upfront and ongoing fees, regardless of the size or revenue of the operator - the disparity between Italy's approach and that of other European markets may impact competition and market dynamics. Operators may be incentivized to seek licenses in jurisdictions with more favorable fee structures, potentially leading to a loss of revenue and market share for Italy.
Further updates are going to regulate the limit of deposits in cash for the Points of Sale, which will be required to pay license fees for operating.