Poll: Will changes to legislation damage the Italian market?

Last week rumours emerged that the Italian Ministry of Finance was debating proposals to change its egaming taxation model from 20% of gross profit to 1% of turnover as part of a series of austerity measures designed to ease the financial crisis engulfing the country.

The Italian market is the largest in Europe with revenues growing to €4.8bn in 2010, and its costly licensing system has helped Italian companies maintain their market-leading positions. The global financial crisis, however, has begun to harm companies’ revenues, with Snai revealing that its horse betting numbers were down approximately 50% following a strike which closed all Italian horse racing activity for more than a month.

The company only earned around €8m in net revenues from its horse betting activities, with taxes and commissions paid to betting shops eating up most of its €110m gross revenues, suggesting that the current tax system is putting a huge strain on its profit margins, despite being seen as an attractive framework for the majority of operators.

Changing the tax rate to 1% of turnover, therefore, could impact revenues, potentially leading to operators withdrawing from the market, with a number of large Italian companies already struggling to manage existing debt levels ““ Snai was €250m in the red last year ““ further harmed by taxes.

Italy, however remains a hugely lucrative market, with egaming turnover expected to double this year, and high smartphone penetration suggesting that ““ if regulated ““ mobile could become another profitable channel.

To vote click on the eGR poll on the bottom right hand side of the home page or visit the eGR Linkedin group.