News details

The draft Stability Law 2016 was proposed this month in Italy and was accompanied by long-awaited tenders including for 80 new online licences. Stefano Sbordoni, Founding Partner at Studio Legale Sbordoni, discusses the draft, as well as the implications of the Customs and Monopolies Agency’s recent ‘Measures on gaming matters’ document and its recommendations.

The Stability Law 2015 (Law no. 190 dated 23 December 2014) entered into force on 1 January 2015 and is aimed at protecting public order and safety, as well as children and weaker members of society. Commencing from 1 January 2015, this marked the start in Italy of a procedure to legalise the position of those parties active as of 30 October 2014 that, on any basis, collect bets and pay cash winnings in Italy, either on their own accounts or on behalf of third parties, including those domiciled abroad, without being connected to the National Totaliser operated by the Customs and Monopolies Agency. This procedure involved such operators making an application by the end of January, and committing to sign a related agreement by 28 February. However, an operator can only collect bets following payment of the flat tax levied pursuant to Decree no. 504 dated 23 December 1998 and its subsequent amendments, which was due for the tax years prior to 2015 that had not yet been closed for tax inspection purposes. This tax would be paid by the shop manager or the gaming operator.

Upon application, the owner of the business or betting shop was granted the right, until expiry of the current Government licences for the collecting of bets to manage gaming income of this type even on behalf of an existing concession holder.

This procedure resulted in the emergence of new betting shops in Italy. In a market that was already saturated, the legalisation of new betting shops made existing operators even more unhappy. Some licensees strengthened their positions by acquiring new betting shops, but the damage caused to small bookmakers was undoubtedly considerable.

The licences will expire on 30 June 2016 and the Government announced its long-awaited call for tenders alongside the draft of the Stability Law 2016, in October 2015. The call will include the renewal of the call for bingo tenders, cancelled back in October 2014, with operators at present continuing in business on the basis of a de facto extension, which does not fully legitimise such activities. The new draft of the Stability Law, which is still to be approved by the Parliament, provides for:

a) a new tender for 15,000 land based licences, and for 7,000 shops where only a corner of the shop is dedicated to gaming. The tender should be held on 31 July 2016;

b) a new tender for 80 new online licences on 31 July 2016;

c) a new tender for 250 bingo licences.

It seems like, with the New Year approaching, the public gaming sector in Italy can expect a season packed with reforms. Indeed, there are some signs that leave room for hope.

The failure to implement a framework for tax reforms has undoubtedly slowed the public gaming sector’s growth, with the absence of guidelines for the sector and, above all, the inability of concession holders to prepare financial plans of any type for their activities, especially in terms of investment.

The framework for tax reforms envisaged, in fact, a comprehensive overhaul of gaming. A number of important pointers ‘towards the future’ can be found in the document entitled ‘Measures on gaming matters’ sent to the Government by the ADM (the Customs and Monopolies Agency, the central controller of gaming in Italy) at the end of September. Although the contents of this document are not binding, analysis of the text identifies elements that may be used to rewrite the rules for the entire public gaming sector. Firstly, in the introduction to the document the ADM confirms that the system’s failure to implement the framework for tax reforms represents a serious shortcoming, as well as the loss of an important opportunity that would have brought innovations to the entire sector, making it more efficient and productive. In fact, the ADM states that the enabling decrees referred to in Article 14 of the law dated 23 December 2013 (sic) would have allowed the pursuit of three important objectives:

1) the elimination of differences between the central and the territorial (regions and municipalities) governments, which have, according to the ADM document, “confused the overall regulatory framework, making the identification of true market opportunities highly uncertain”; to date, the regulations implemented by the territorial governments (regions and municipalities) conflict, placing restrictions on the opening and operation of betting shops and establishing bans and requirements, for example, to maintain a certain distance from so-called sensitive locations. Notably, even cemeteries are considered to be sensitive locations. Alongside this paradoxical situation, the rulings of various Regional Administrative Courts – appealed to by licence holders in order to uphold their rights granted by the State – have, by contrast, confirmed the legislative power of the regions on matters relating to public health. And, of course, it is considered necessary to protect public health against the risk of gambling addiction;

2) the creation, or rather, the ‘recreation’ of more reliable legal and market conditions in order to enable the holders of public gaming concessions to tolerate any additional demands on their resources that may be required;

3) the reformation of the regulatory framework put in place to tackle illegal gaming. In fact, despite the legalisation implemented by the 2015 Stability Law and the more intensive action against illegal activity taken in recent months by the Italian Authorities, the illegal market continues to thrive and therefore represents an added difficulty for legal operators.

Accepting the failure to implement the framework for tax reforms, the above three objectives and, in any case, summary guidelines for the survival of the entire gaming and betting sector, must still be implemented and achieved. Here, the ADM’s planning document indicates three alternative approaches:

1) re-open the deadline for implementing the framework for tax reform;

2) formalise in a regulation the enabling decree referred to in Art. 14;

3) develop a limited package of regulations for inclusion in the draft Stability Law, with a view to recovering financial resources from the sector.

On the first point, there does not seem to be any room for ‘reopening’ a deadline that has long since passed. The second planning proposal, being the possible formalisation of the enabling decree as a primary regulation, appears to be more feasible. However much time is needed to approve a regulation of this size, involving the convergence of multiple interests, and considering the current difficulties faced in obtaining parliamentary approval for regulations, it is unlikely that this legislature would be able to transform the current draft into a regulation. At this point we must consider the third and final alternative, which does not in any case exclude the second, being inclusion in the 2016 Stability Law - remembering that the nature of this law excludes planning guidelines and only includes those associated with the accounts of the State – of certain indications about future calls for tenders (betting and bingo) that cannot be deferred any longer. For the survival of the system, it is obviously necessary to include instructions designed to resolve and/or attenuate the conflict between the State and the territorial governments, since continuation would utterly compromise both budgeting efforts and the investment made by gaming operators in Italy. The following indications on this, included in the ADM document, are worthy of support; they read “the regional and municipal regulations that effectively exclude legal public gaming should be” reviewed “commencing a political dialogue with ANCI and the Unified Conference, the scope of which may be decided with reference to the [...] points:

- gradual reduction in the number of amusement machines located in bars and similar locations (free access);

- obligation to certify premises (Betting shops, Bingo halls, VLT rooms)[...];

- obligation for legal gaming operators to attend periodic training sessions;

- make additional financial resources available to municipalities [...].”

Undoubtedly, these are all significant aspects. On the subject of periodic training, the writer believes that ‘final mile’ operators must be certified in order to lend certainty and solidity to the legal network, while representing a dignified and usable professional qualification. On the final point, the additional financial resources mentioned might include transfer to the municipalities of the fines imposed on illegal operators. In addition to assisting their finances, this would also help to reduce supply, and control the territory and criminal behaviour. This is a possible solution to an impasse that might otherwise wipe out the entire legal gaming sector.