Fun falls out of Italian bingo
Joe Saumarez Smith, a director of European Domain Management which runs bingo sites in five European markets, suggests online bingo in Italy is not as attractive as it seems.
For some time online bingo operators have regarded Italy as a potentially attractive market. There is a long history of bingo playing (it is said that bingo originated in Italy in the 15th century) and internet and credit card penetration is growing rapidly among the target bingo demographic.
So it was no surprise to hear that most of our rivals had plans for the Italian market once online bingo was legalised. However, the more we look, the less attractive it appears.
The main problem is the proposed tax rate. While the Italian government has not given a definitive decision on what the rate will be, it is certain to be somewhere between 11.5% and 23% on stakes. On top of this, 70% of the stake must by law be returned to the player. Operators must also pay 350,000 annually for a licence.
The overall effect of this will be to make it very hard for a standalone bingo operator to make a decent profit. While existing operators in Italy that have added bingo as a gaming option have reported good profits, we estimate that a standalone operator will need to have a gross gaming revenue of at least 700,000 per month to break even, and that is on the basis of some pretty ambitious CPA levels.
But the people who will really suffer from the tax on stakes are the players. With so much being taken in tax on the sale of each bingo card, the time people can play on the sites rapidly drops. Sign-up and retention bonuses will be much lower. In short, online bingo will be less fun to play. And the overall consequence is likely to be a much lower overall tax take for the Italian government than a tax on gross gaming revenues, which gives operators far more incentive to grow the market.
This article appears in the forthcoming issue of eGaming Review. For a free trial subscription, click here.