Italian Sportsbook Operators Struggle Due to Heavy Turnover Tax

The struggle of the licensed sport betting operators, due to heavy taxation under the Italian gambling laws, has been discussed at a seminar in Rome. It was organized by DLA Piper, gambling law practitioners, who explained the different aspects of the burdening taxation regimes.

The figures that were presented at the discussion showed that betting through online sportsbooks in Italy dropped drastically from EUR 168 million in 2009 to just EUR 135 million in 2013. Just for comparison the figures in UK showed a completely different story – the spending in the sector increased from EUR 489 million to EUR 776 million over the same period.

The big question at the meeting was – what is the reason for this severe decrease? According to DLA Piper, the stipulated tax on betting turnover is mainly to be blamed. Italian legislators have currently set it between 2% and 5%, depending on the number of possible outcomes of an individual bet.

Marco Pilanzi from University of Milan, used the figures of the Italian regulator AAMS from September 2012, to demonstrate the worst case scenario of the regime. It appears that, at the time, net return to Italy’s licensed sports betting operators was EUR 1 million, but these operators were still required to contribute to the collective EUR 2,7 million in taxes to the state for the month.

What is more, the future in front of providers of internet betting in Italy, seems even darker. The legislators declared that both exchange betting and virtual sports betting operators will face a 20% tax on gross gaming revenue (GGR) when giant operators like Betfair get their approval for starting business next year. For sure the already struggling companies are wondering what will their faith be in the near future.

The seminar participants also discussed Giulio Coraggio’s (DLA Piper) solution proposal for a one-year test period, during which fixed-odds operators would enjoy the same 20% GGR rate as the other companies.