Betting on the rebirth of sportsbook in Italy

Despite appearing to have regained its feet over the past 12 months, Italy’s competitive sports betting market continues to operate with one hand tied behind its back.

In something of an anomaly, the county’s online sportsbooks are levied with a tax on turnover rather than the revenue contribution used by other verticals and by all accounts it’s hurting both operators and the government’s tax take.

Gross gaming revenues (GGR) for Italy’s online sports betting market have struggled to find meaningful growth in recent years with the black market blossoming as a result.

Although the €200m recorded across 2013 was an increase on the disappointing €181m banked the previous year this was mainly due to the regulator’s decision to extend the number of regulated betting markets and far below what many analysts think the upper ceiling should be.

Many believe a change in the betting tax would see GGR climb further still with a number of operators said to be keeping their marketing in Italy to a minimum while the tax continues to be so punitive and there appears to be a change on the horizon.

“This [tax] represents the main restriction to the growth of sports betting here because it is turnover based and is a major risk for operators – even in a month with no profits operators still have to pay some taxes,” Giulio Coraggio, leading gaming lawyer at law firm DLA Piper, says.

The argument for bringing sports betting tax in line with the rest of Italy’s online gaming industry appeared to have gathered pace earlier in the year after the government introduced a ‘delegation law’ in March. The law effectively handed the government a 12-month window in which to review the current framework and make any subsequent amendments.

However, a change in government, as well as a recent personnel change within the finance ministry, has delayed the timetable but, despite these hurdles, Coraggio says he still expects an analysis to take place and believes a draft bill could yet be published before the end of 2014.

A review of the status quo brings no guarantee of change, however, with the finance ministry believed to be concerned that any changes to the current scheme could result in a lower tax take while there is also the possibility of opposition to change from the dominant land-based sector.

Discussions are on-going in order to address the lower tax take concern with potential safeguards being drawn up which could see any resultant shortfall topped-up by the operators themselves.

“A possible option might be to introduce a trail period in which, if the entries are lower than the ones of the previous year, operators shall pay the difference in an amount proportional to the GGR achieved during the year,” Coraggio says.

According to Eurobet sportsbook director Carlo Di Maio, a change in the betting tax is unlikely to happen any time soon with the change of government, he says, pushing the issue of sports betting tax further down the list of government priorities.

Despite this on-going issue, the market remains an attractive one for foreign operators with the likes of bwin, Paddy Power and William Hill all obtaining significant market share while bet365 has also entered the fray after last month launching its own Italy-facing site.

However, with some yet to see a return on their Italy investments, a change in the tax model would be very much welcomed by all those active in the Italian sports betting market.

Francesco Rodano, gaming director at Italian regulator AAMS, says the tax debate continues to be a hot topic although stresses that the final decision will not be one the regulator is ultimately responsible for.

“This is a political choice – the regulator is technical but when it comes to taxation we can provide politicians with advice but the final decision is theirs,” Rodano says.

As ever in regulated Europe the fate of the industry rests in the hands of politicians, and all the operators can do is sit and wait. But the odds, for once, don’t seem to be too heavily stacked against the operators and a draft bill could be a very welcome Christmas present indeed.