Gaming is a fast-growing segment of the online community—remarkable since people have actually been saying that since 1994! Well online gaming and gambling may become more difficult (and more expensive) in places like Italy, if the Italian Chamber of Deputies has its way. New legislation ratifying and amending existing Italian law authorizes the State Monopolies Authority (Amministrazione Autonoma Monopoli di Stato (AAMS)) to promulgate implementing regulations—which are likely to be issued in early 2010 (although late 2009 is a possibility). Currently, Italy licenses online poker tournament games and fixed-odds sports betting, but online gambling in Italy is limited to Italian gamblers on internal, not international networks.
So what does the new law provide? Although absent the actual regulations it is impossible to predict with certainty, there does appear to be both good news and bad news.
First the good news. The law authorizes the introduction of online cash games—both fixed draws and card games—and permits the implementation of new online lotteries of various types and modes of play. Consequently, online games involving cash are likely to become legal and be introduced in Italy.
Now the bad news. The tax that will be imposed on these new games is 20 percent of the total (essentially a gross profits tax). This represents an increase above the current 4.5 percent tax on “gross gaming revenues” that applies to sports betting in Italy. In cash online games, unlike tournament poker (in which a tax is imposed as a percentage of gross gaming revenue), the network operator generally takes a “rake” from each game. Thus, using a gross profits tax will allow the operator to set the rake more rationally in the marketplace, but will also result in more tax revenue.
So bottom line, while these new provisions are likely to stimulate new online gaming, the AAMS retains very broad authority to define the basis upon which operators can customize the wagering products and services being offered. Because the AAMS still retains the right to approve each betting product, one wonders if that will not limit both innovation and competition in the online gaming marketplace. That said, gaming and gaming revenues continue to increase and tax revenue will likely follow. We’ll see if the new regulations provide additional opportunities, but as they said in ancient Rome: Cum catapultae proscriptae erunt tum soli proscript catapultas habebunt.
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