Italy gambling reform brings rapid consolidation

Increased licensing fees and higher barriers to entry in Italy could significantly reduce the online gambling market, an outcome stakeholders believe is purposeful.

On May 30, the Italian Customs and Monopolies Agency (ADM) concluded its tender process for remote gambling concessions. While successful bidders are anticipated to be announced after summer, industry stakeholders foretell a profound transformation in Europe’s largest gambling market.

Moreno Marasco, president of the LOGiCO online gambling association in Italy, informed Sigma magazine that a considerable decline in the number of active operators is imminent.

In stark contrast to the previous tender that attracted 93 applications, only about 50 operators are believed to have submitted bids this time. Current forecasts suggest that the number of active concessionaires in the Italian market could drop from 81 to approximately 33, representing a staggering 60% reduction.

“This decline is noteworthy, considering the robust growth in both revenues and legal operators within the Italian market,” Marasco stated.

With the advent of the new system, he remarked, “the competitive landscape will be thoroughly redefined.”

The primary catalyst for this seismic shift is the ADM’s imposition of significantly elevated requirements for prospective concession-holders. Notably, the initial licensing fee of €7 million has effectively excluded many smaller players from the market.

Rapid Consolidation in the Market

As Christian Tirabassi, founder and senior partner at M&A advisory firm Ficom Leisure, outlined, this consolidation aligns perfectly with governmental aspirations. For years, the barriers to entry into one of Europe’s wealthiest gambling markets were surprisingly minimal. Now, in a strategic effort to modernize legislation and align regulations with market dynamics, authorities are purging less financially capable entities from an expanding market.

“Previously, very small companies could operate in a market valued at €4 billion—and now €5 billion—with initial investments as low as €250,000,” Tirabassi noted, reflecting on the former cost of an Italian remote gaming concession.

“The regulator deemed this unacceptable; entrusting such a delicate operation to financially unstable companies is not prudent.”

The current emphasis is on securing companies that can demonstrate superior financial, technical, and compliance standards—those that won’t skimp on crucial Anti-Money Laundering (AML) requirements.

A Process of ‘Natural Selection’

In addition to the €7 million fee per vertical and brand, online sports betting and casino operators face taxes of 24.5% and 25.5% on Gross Gaming Revenue (GGR), respectively. They are also responsible for an annual fee of 3% of GGR and must allocate a minimum of 0.2% of their GGR towards responsible gambling initiatives, capped at €1 million.

Ficom has engaged in several M&A transactions to facilitate the absorption of smaller operators by larger entities, with this trend accelerating due to the reforms. “Post-tender, we anticipate that large, integrated, multi-product companies will dominate the market,” explained Tirabassi.

He predicts that a mere handful of operators will generate about 80% of Italy’s €5.2 billion in remote GGR, with no more than 30 to 35 operators remaining in the overall legal market.

“The reform has established a more normalized licensing fee,” he clarified. “The previous rates—particularly the low entry costs—were the anomaly. Coupled with stricter requirements, the necessity for omnichannel operations has reinforced natural selection favoring larger corporations.”

Comprehensive Gambling Reforms in Italy

Beyond the consolidation, Italy is undergoing extensive reforms aimed at enhancing standards across various domains, including cybersecurity, AML, and player protection. Since regulating online gambling in 2006, Italy will terminate a two-decade-old framework as it introduces new technical reforms after awarding concessions.

New regulations will leverage digitalization trends, implementing numerous player protection tools that allow customers to set limits on deposits, spending, and playing time while enabling self-exclusion from platforms. Automated alerts will also be instituted to mitigate compulsive behavior, particularly targeting the 18-24 age demographic—this being a pioneering move in European regulation.

The stability of Italy’s gambling market over the prior decade has yielded significant benefits, with total GGR projected to reach €21.6 billion in 2024—a 4.4% increase year-on-year. Approximately one-quarter of this revenue, or €5 billion, is expected from online operations, demonstrating remarkable growth opportunities.

Flutter Positioned for Leadership via Snaitech Acquisition

Early signs of consolidation are evident in transactions like Flutter’s €2.3 billion acquisition of Playtech’s Snaitech. As per analysts at Jefferies, Flutter could capture a 30% share of the Italian gaming market, bolstered by its diverse brand portfolio, ensuring its position at the forefront of online gaming.

In 2023, Flutter commanded a 15% share of the Italian online betting and iGaming market, leveraging its Sisal and PokerStars brands, while Snaitech followed closely with a 10% share.

Delays in Land-Based Gambling Reforms

In concert with the new remote concessions, Italy aims to revamp its land-based gambling landscape, with plans to unify its licensing framework, enforce location restrictions, limit cash deposits to €100 weekly, and implement mandatory identification and self-exclusion systems.

Nonetheless, regional pressures have prompted the government to delay these reforms until mid-2026, instead of the earlier target of late 2025. During this period, both federal and local authorities will address crucial funding questions.

Tirabassi asserts that success in the Italian market hinges on maintaining a scalable omnichannel operation, integrating both online and land-based gambling under a singular brand. As the new concessions scheme bans skins, operators must secure licenses for every vertical and channel they wish to operate, likely amplifying market consolidation further.

While the elevated barriers to entry may deter many, those who successfully navigate this rapidly evolving landscape stand to gain significantly from a burgeoning market. Yet, amidst these swift changes, one constant remains: IGT will continue its exclusive operation of the Italian lottery until 2034.

After a competitive bidding process, the IGT-led consortium LottoItalia secured a nine-year renewal of its exclusive lottery concession, surpassing Flutter with a bid of €2.23 billion—more than double the €1 billion base price—demonstrating that in Italy’s modern market landscape, financial strength dictates success.