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EGBA: Italy’s €7 Million Online Gambling License Fee is Too Steep
By Jeff Osienya Dec 20, 2023 IndustryThe EGBA, the EU’s premier gambling industry trade body, has called out the Italian government’s plan to roll out a hefty online gambling fee of €7 million. According to the trade body, the steep sum could end up pushing operators into the black market.The European Gaming and Betting Association (EGBA) has strongly expressed reservations about Italy’s decision to introduce a €7 million (~$7.67 million) online gambling fee. In the statement calling out the Italian government, EGBA, the EU gambling industry trade body, also pointed out various flaws associated with such a substantial fee. How the Association sees it, the levy will likely have far-reaching negative consequences for the country’s entire online gambling industry.
For a while now, Italy has been working to develop revised gambling regulations (also called the ‘anti-mafia legislation’) that would cover both land-based and online gambling. Thus, finally, a newly proposed gambling decree, spearheaded by the Ministry of the Economy and Finance (MEF), is currently being discussed by the country’s Council of Ministers. After several postponements of the decree’s implementation, the matter is scheduled for presentation to the Council of Ministers.
Feedback from Trade Groups
Also concerned over an unfavorable reorganization of the Italian online gambling market were about ten other trade groups who were the first to bring forth concerns from industry players to the Italian government. Led by the Milton Friedman Italian Political-Economic Institute in Italy, trade group representatives met with lawmakers about two weeks ago in an attempt to get a more favorable outcome.
The group called for careful consideration of the proposed changes before any implementation. They were adamant that such modifications would expand illegal gambling activities, stifle small and medium business enterprises, and raise more consumer protection issues. Further, they argued that the existing legal framework does little to protect consumer rights while promoting the illegal sector.
As such, the groups recommended a holistic approach to the reorganization by looking at the industry’s online and land-based segments. They also pointed out that a significant part of the business’s success was consultative forums and meetings with industry stakeholders and striking a healthy balance between the interests of operators and consumers. Acadi president Geronimo Cardia stated:
Quote“For over a decade, the gaming market has suffered from fragmented and partial interventions.”
Online Gambling Black Market Problem May be Worsened
The main aim of the reorganization is to combat illegal gambling, which EGBA has noted would not be possible with the current government strategy. In the statement issued by the Association, the proposal works against efforts to curb Italy’s online gambling black market. Moreover, seeing as the biggest concern in the gambling sector is player protection, EGBA noted that implementing the unprecedented fees would cause most of the 91 legitimate operators to exit the market.
Such an industry exodus would leave only a handful of operators, about 15 to 20, serving the Italian market. In turn, a smaller legal online gambling industry would push growth in the country’s online black market sector, currently generating over €1 billion (~$1.09 billion) annually for the illegal scene. Mind you, it should be noted that Italy’s gambling black market is already one of the largest in Europe. Thus, the growth would be facilitated by an exodus of existing industry operators and hesitance by new market entrants who would be intimidated by the outrageous license fee.
The EGBA also pointed out that the fee is the highest ever proposed in any EU Member State and would exceed all other states by a wide margin. The proposed €7 million, which is 35-fold of the current fee of €200,000 ($219,198), raises serious questions and surpasses an initially proposed €2.5 million ($2.74 million) tariff. Logico President Moreno Marasco has called the high license fees’ unjustified’, adding that it would stifle competition when a considerable number of operators quit the legal market.
The estimated revenue from a legal online gambling market is €105-140 million ($115-153 million), which EGBA insists would still be possible with a €2.5 million license fee. Since the proposal for the high tariff limits the number of licensees to 40, the €2.5 million fee with all 91 operators will yield about as much. EGBA Secretary General Maarten Haijer noted:
Quote“The proposed increase in licensing fees is unparalleled and unheard of; it would make Italy the most expensive country in Europe to obtain an online gambling license…Together with the other restrictions in its gambling market, such as the local advertising ban, this proposed fee hike will make Italy a closed shop for new market entrants and lead to an exodus of existing licensees. This also raises concerns on compliance with EU law.”
EGBA to Team Up With the Italian Government in License Fee Framework
Following the concerns raised by the trade groups and EGBA, the Association has committed to supporting the Italian legislators and authorities in developing a more sustainable framework. The plan is to establish structures that would be more centered on player protection while creating a fair playing field for both small and big operators.
To ensure that the new regulations meet EU standards, EGBA also addressed Italy’s advertising ban and called for its revocation as illegal operators are currently exploiting it. Instead of a ban, EGBA urged the Italian authorities to consider including regulated advertising in its legal framework. That way, the Italian government would protect minors and vulnerable groups while allowing legitimate operators to market their regulated gambling offerings.
On several occasions, the Betting and Gaming Council (BGC) has reported a disturbing trend in the European gambling sector, that restrictive betting markets have often witnessed expansion of their respective black-market sectors. So, while regulations are constantly introduced to protect industry players, foster a healthy gambling community, and promote a jurisdiction’s economy, there is a threshold that shouldn’t be crossed. Over-regulation will end up having some negative effects that ultimately do more harm than good.
When consumer options are limited when operators exit a legal market, responsible gambling measures are suddenly threatened. Thus, stakeholders await further developments as discussions around Italy’s online gambling licensing fee and the general industry reorganization continue. Here’s to hoping for a constructive dialogue between industry representatives and regulatory authorities, including EGBA, to ensure the long-term sustainability of Italy’s online gambling sector.
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