After more than a year of delays, the Italian decree regulating online poker casino games and poker cash games has finally come into force. A second Decree, which regulates the award of 200 new remote gaming licences and upgrades the current licences has also been published, thus giving to potential new entrants in the market all the tools necessary to join one of the fastest growing markets in Europe.

The Casino and Cash Poker Decree

For the first time, Italian licensed operators will be able to offer casino games and cash poker games. The Decree regulating such games prescribes the following:

  • the tax duty on casino and cash poker games will be 20% of gross profits. This is an historical change for the Italian gaming market, as all other games currently offered (including poker tournament games) have a taxation regime based on turnover. Hopefully, this new tax regime will not lead to lower tax entries and convince the Italy gaming authority, the AAMS, to adopt the same mechanism with other games.
  • The percentage of bets to be returned to players through winnings will be 90%. 
  • The maximum initial stake during each gaming session will be € 1,000.
  • The maximum buy-in for poker tournaments/skill games will be € 250 (formerly € 100).
  • Multi-level poker tournaments will be finally allowed.
Current operators and new entrants in the market willing to offer such games will have to go through a detailed (and time consuming) certification process performed through an entity accredited with the AAMS. Also, unfortunately:

  • There is no mutual recognition of certifications obtained abroad even if they are received in very stringent jurisdictions like Alderney.
  • The certification is required even if operators use games (for example, casino games) and platforms already certified by a certification entity under Italian law for other operators.
The Decree on New Licences

The Decree on New Licences will also be relevant for current licensed operators who will need to upgrade their current licence to the new regime set forth in the so-called ‘Comunitaria decree’. The Comunitaria Decree aims to set out a new licensing regime fully compliant with EU laws, especially in light of recent EU Court of Justice litigation over the Italian licensing regime.

Indeed, Italian law requires that only operators holding an Italian licence can offer games to people located in Italy – this system does not recognise foreign licences even if they have been issued by other EU countries and has been challenged in several instances, especially in light of the EU principle of freedom to provide services. However, the Comunitaria Decree has successfully passed a review by the EU Commission and, therefore, will not be challengeable.

In a nutshell, this Decree:
  • provides three types of licences: (i) one covering all the games currently regulated (save for those subject to exclusive licences) whose cost is € 350,000 + VAT, (ii) one covering all the games except for bingo games whose cost is € 300,000 + VAT and (iii) a third covering only bingo games whose cost is € 50,000 + VAT;
  • requires that the licence holder has its legal seat and technical infrastructure in the European Economic Area which includes for instance Malta and Gibraltar, but does not include the Isle of Man and Alderney;
  • obliges operators to comply with stringent technical requirements including the implementation of a protocol of communications linking the operator's platform to AAMS' servers for the management of the gaming account system; and
  • prescribes more stringent responsible gaming requirements including the obligation to implement self-limitation tools.
The application process for a new Italian licence can last up to three months and applications can be submitted up to the 31st of December 2011. However, considering the potential workload that AAMS will face during the next months, new entrants in the market are encouraged to submit their applications in the shortest possible term.

What will happen now

There are very high expectations associated with the launch of casino and cash poker games, especially after a tremendous year 2010 which saw the Italian remote gaming market grow by 28% to reach € 4.8 billion in annual turnover. Indeed, considering that such high results have been achieved for the most part through poker tournament games - which usually generate a turnover lower than casino and poker cash games - the expected doubling of the turnover of the Italian gaming market within two years does not appear too optimistic.
Such expectations are also fuelled by the expectation that, with the launch of casino and cash poker games. the offer of Italian websites will be equal to the one of .COM websites – the logic is that a number of users currently playing on such websites might decide to switch to Italian licenced websites offering a higher level of guarantees and actually complying with Italian law. Likewise, more and more foreign operators are planning to apply for an Italian remote gaming licence with the consequential closure of their .COM platforms to Italian residents.

Opportunities for new entrants

New entrants in the market will be able to compete over poker and cash games under almost the same conditions as existing operators, provided they submit the application for a licence in the shortest possible term and make their platform compliant with the technical requirements prescribed by both aforementioned Decrees. These requirements are, of course, notorious for being very stringent and their implementation might be time consuming.

The Italian casino gaming market thus offers the potential to put current operators and new entrants on the same footing, but new entrants in the market will need to react quickly in order to enjoy the full benefits of this regulatory delay.

Do you need more information on the above? Do you need assistance on the application for an Italian remote gaming licence? Feel free to contact me, Giulio Coraggio (giulio.coraggio@dlapiper.com). 

Posted by Giulio Coraggio on Monday 16 May 2011
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