The Italian gambling authority, AAMS, published the data on the Italian online gaming market for the first quarter of 2013 which show a minor reduction of spending of 0.2% compared to the same period of 2012, but what looks very interesting is that almost 50% of the spending in the market is generated by casino games and cash poker games. And casino games and cash poker games are the sole games currently subject to a gross profit tax regime.

 

In particular, casino games saw a huge boost because of the launch of online slots in December 2012 with an increase of the spending of 84.7% which according to the AAMS report was due to the reduction of the Italian casino black market whose spending in 2012 was assessed to be around € 280 million as opposed to € 147 million of the online licensed casino market. However, if a contraction of the black market has really occurred this is also due to the tax regime implemented for online slots which allowed operators to offer the same payout as the one available on .COM platforms.

 

On the contrary, in relation to the sportsbetting sector a spending increase of 29.1% has occurred compared to Q1 2013 but this was due to a payout of 94.9% occurred in January 2012. And this confirms the inefficiency of a turnover based tax regime. Indeed, it is likely that operators in January 2012 did not gain any profit since they had to pay turnover taxes between 2% and 5% regardless on whether or not they had achieved any margin. As a consequence, odds offered by unlicensed operators are often more attractive since the urcentainty of a turnover based tax regime to which licensed operators are subject leads them to offer lower odds to preserve their margins.

 

The recent approval of betting exchange regulations whose offering will be subject to a 20% gross profit tax might foster AAMS to expand the same regime to fixed odd sportsbetting games also given the number of complaints that such different tax regime between the two products is generating, but in the meantime operators shall ensure that an additional 0.5% gross profit tax is not requested for bets and events not included in the official AAMS schedule as prescribed by the relevant draft regulations.

 

Only a gross profit tax regime might considerably limit the black market and the hope is that the good example provided by Spaniards with a gross profit tax regime across all the products which - together with other measures - efficiently reduced the black market will be shortly followed by the Italian gambling regulator.

 

As usual if you want to discuss the above, feel free to contact me, Giulio Coraggio (giulio.coraggio@dlapiper.com).

Posted by Giulio Coraggio on Monday 20 May 2013