Italian Online Gambling Licensing Delay Extended Amid Malta’s Concerns

In response to recent objections from Malta, the European Commission (EC) has extended the standstill period for Italy’s new online gambling licensing framework by one month, setting a new deadline of 18 November. The delay comes after the Maltese government, through a submission by the Malta Gaming Authority (MGA), raised concerns over potential compliance challenges posed to B2B operators under Italy's proposed regulations.

The Maltese objections highlight perceived duplicative requirements for B2B firms, including system and platform providers, which may introduce obstacles to operators already licensed elsewhere in the European Union. The MGA expressed that such regulations could create “unnecessary barriers” and stressed the value of mutual recognition agreements to streamline compliance across Member States. The MGA argued that a framework acknowledging existing licenses in other Member States would facilitate a smoother regulatory environment for businesses operating across EU borders.

In its submission, the MGA remarked, “Member States should recognise that B2B operators may already hold licences in other Member States and may be subject to myriad requirements and checks, which could easily be mutually recognised if a cooperation framework is set up for this purpose.” The MGA cautioned that without justification for the additional requirements on B2B businesses, the Italian framework might hinder market access, impacting both the freedom of establishment and service provision within the EU.

Italy’s Licensing Reform and Government Response

As Italy prepares for an updated online gambling system, its Treasury is set to address Malta's concerns through a detailed response, reaffirming Italy’s position on the need for enhanced compliance measures. Upon the end of the extended standstill period, Italy’s Agency of Customs and Monopolies (ADM) will move forward with the revised licensing scheme, which is projected to reshape the regulatory environment for Italy's online gambling industry.

Under the planned framework by the Ministry of Economy and Finance (MEF), the new concessions will be valid for nine years, with an initial licensing cost of €7 million per license, plus an annual fee of 3% on gross gaming revenue (GGR), excluding gambling taxes and winnings. For the interim period, the Italian government has allowed existing licenses to be extended until the end of 2024, aligning with recent budgetary provisions.

The framework introduces strict conditions for licensed operators, limiting each licensee to a single application and website per gambling product. The ADM has announced that it will enforce regulations to prevent the operation of “skin” websites, which are commonly used to promote branded content across multiple platforms. Authorities anticipate that around 50 operators will seek new licenses, generating approximately €350 million in initial revenue from concessions and €100 million in annual fixed fees.

Stricter Regulations and Focus on Responsible Gambling

A key element of the revised licensing system is its emphasis on responsible gambling practices. License holders will be required to integrate tools allowing users to set personal spending and time limits, and notifications must alert players as they approach these thresholds. These measures are part of Italy’s larger objective to encourage safer gambling and enhance protections within the digital betting market.

The updated framework marks the first regulatory overhaul of Italian gambling since the 2011 legalization of online gambling. Italy’s broader Gambling Reorganisation Decree includes future plans for the regulation of land-based gambling across the country's 20 regions and its various municipalities.

The focus on regulatory updates coincides with a heightened examination of gambling behaviors in smaller Italian towns, as seen in the recent investigation in Calliano, a small municipality in the Trentino region. Following the release of a report by CGIL (the Italian General Confederation of Labour), Federconsumatori, and Isscon, Italian authorities are scrutinizing the online gambling practices of Calliano, a town with just over 2,000 residents yet with an average gambling expenditure per capita of €12,749 in 2023.

The study, which analyzed data from the Italian Customs and Monopolies Agency, revealed that small communities often display disproportionately high gambling figures, raising questions about the impact of online gambling in such areas.

Lorenzo Conci, the mayor of Calliano, confirmed that local officials, along with the Italian financial police, are reviewing betting data for potential irregularities. The report, titled “The Spread of Gambling in Small Italian Municipalities,” highlighted anomalies in gambling trends across communities with populations between 2,000 and 10,000, collectively accounting for about a quarter of Italy's population. It stressed the need for more nuanced municipal regulation to address the health and social impacts of gambling on these smaller communities.

The MGA's objections not only delayed Italy’s licensing rollout but also underline the complexities of harmonizing gambling regulations across EU Member States. Italy’s substantial licensing fees, increased from €200,000 to €7 million per license, and other stringent requirements are expected to reshape the market landscape, posing challenges for smaller operators. Industry observers believe these requirements, alongside the restrictions on brand flexibility and the limit of one app and website per product, may signal an increasingly consolidated and regulated online gambling sector in Italy.

The Italian government projects that the new licensing framework will attract 50 operators, yielding around €350 million from concession fees initially and €100 million per year in fixed concession fees over the next decade. Additionally, over 30,000 online gambling agents are anticipated to contribute annual registration fees, generating more than €3 million each year.

As Italy finalizes its response to the MGA's concerns, the extended standstill period offers time for potential adjustments to the framework, aimed at facilitating compliance while maintaining high regulatory standards. The outcome will shape the future of Italy’s online gambling market and provide a case study for EU countries seeking to balance national regulatory autonomy with cross-border business facilitation.

Source:

''Malta opinion sees Italy delay yet guarantee regime change for online gambling'', sbcnews.co.uk. October 29, 2024.

''Small Italian town hits €12,749 average gambling per resident, investigation launched'', sigma.world,October 31, 2024.