Italy Set For Steep Decline Of Gambling Operators Amid Reforms
Italy has recently concluded its application period for new gambling licenses, marking a pivotal shift in its regulatory landscape. With stringent new regulations, the landscape for gambling operators is expected to experience a significant contraction.
Rising Costs for Gambling Licenses
Under the new framework, operators must now pay an upfront cost of €7 million (approximately $8 million) to secure a gambling license, known as a remote gambling concession in Italy. This fee applies to each license, meaning that those aiming to operate both an online casino and a sports betting platform will incur costs totaling €14 million.
Italy’s gambling regulatory authority, the Customs and Monopolies Agency (Agenzia delle Dogane e dei Monopoli or ADM), will announce its licensing decisions later this summer, following the application cut-off on May 30.
Anticipated Decline in Licenses
Analysts predict the issuance of licenses may drastically drop to around 33, a marked decrease from 81 currently active licenses. Back in 2018, the landscape witnessed 93 applications leading to 81 licenses being granted. This time, only approximately 50 applications are expected to have been submitted.
Moreno Marasco, President of Italy’s LOGiCO online gambling association, emphasized, “This is a significant reduction, especially given the Italian market’s exponential growth in revenue and the number of legal operators.”
Previously, the entry barrier for licenses was relatively low at €250,000 ($287,000), which enabled many smaller operators to access Europe’s largest gambling market, valued at over €5 billion ($6.91 billion). The current steep licensing fees, however, have effectively excluded many from participating in this lucrative space.
Taxation Impacts on the Industry
In tandem with these changes, operators will now face a 0.5% tax increase. The sports betting revenue tax rate has risen to 24.5%, while the casino revenue tax is set at 25.5%. This adjustment could potentially yield an additional €481 million annually for the Italian government.
Conversely, the taxation rate on fixed odds horse racing betting has plummeted from 43% to 20.5%. This reduction aims to rejuvenate a sector that has been facing numerous challenges.
Market Consolidation Among Large Operators
Christian Tirabassi, founder and senior partner at M&A advisory firm Ficom Leisure, commented on the implications of these reforms, indicating a trend toward market consolidation with larger operators taking a dominant position. He noted the government’s preference for substantial companies that adhere to anti-money laundering (AML) regulations.
Tirabassi stated, “The previous low licensing cost was unsustainable for a market valued at €4 billion then and now €5 billion. The decision to raise it reflects a desire to maintain financial integrity within the sector.”
Recent acquisitions underscore this consolidation trend. For instance, Flutter Entertainment’s acquisition of Snai, coupled with its existing presence via Sisal, is expected to grant the company approximately 30% market control. Other significant players like Lottomatica, Entain, and bet365 are anticipated to further consolidate their market positions.
“Following the tender process, we foresee an era dominated by large, integrated, multi-product, and multi-channel companies,” Tirabassi elaborated. “The reform has aligned license expenses with market standards. The previous pricing was an anomaly, and the increased regulatory rigor necessitates an omnichannel approach for success in the Italian market.”
The recent changes herald a transformative phase for the Italian gambling industry, emphasizing the importance of robust financial foundations and compliance with evolving regulations. As the sector adapts, stakeholders must navigate these complexities to harness opportunities within this lucrative market.
