Casino and cash poker decree
Decree on new licences
A long-awaited decree to regulate online casino poker games and poker cash games has finally come into force. A further decree that regulates the award of 200 new remote gaming licences and the upgrade of existing licences has also been published. These decrees give potential new entrants all the tools necessary to join one of the fastest-growing markets in Europe.
Casino and cash poker decree
For the first time, Italian licensed operators can offer casino games and cash poker games. The key provisions of the decree are as follows:
- The tax duty on casino and cash poker games is 20% of gross profits. This is a fundamental change for the Italian gaming market, as all other games (including poker tournament games) are taxed on the basis of turnover. If, as many stakeholders hope, the new tax regime does not result in lower tax revenue, this may persuade the Italian Gaming Authority to adopt the same profit-based tax mechanism for other games.
- The percentage of total stakes that must be returned to players in winnings is 90%.
- The maximum initial stake for each gaming session is €1,000.
- The maximum buy-in for poker tournaments or skill games is €250 (previously €100).
- Multi-level poker tournaments are allowed.
Existing operators and new entrants that wish to offer such games will be required to complete a detailed and time-consuming certification process through an entity accredited by the authority. Unfortunately, the decree does not provide for mutual recognition of foreign certification, even if this is obtained in jurisdictions with stringent rules, such as Alderney. Moreover, certification is required even if operators offer such services by means of games (eg, casino games) and platforms for which other operators have already obtained certification under Italian law.
Decree on new licences
The decree on new licences is also relevant for existing licensed operators that must upgrade their licence in order to comply with the new regime set out in the Comunitaria Decree (Law 88/2009). The new licensing framework aims to be fully compliant with EU law, especially in light of recent EU rulings on Italy's licensing regime.
Italian law provides that only operators which hold an Italian licence may offer games to users in Italy. It does not recognise foreign licences, even if these have been issued by other EU member states. This position has been challenged on several occasions, especially in light of the EU principle of freedom to provide services. However, the Comunitaria Decree has been reviewed by the European Commission and is not subject to challenge. Among other things, the decree:
- provides for three forms of licence which cover:
- all regulated games except those which are subject to exclusive licences (at a cost of €350,000 plus value-added tax (VAT));
- all games except bingo games (at a cost of €300,000 plus VAT); and
- bingo games (at a cost of €50,000 plus VAT);
- requires that the licence holder have its legal seat and technical infrastructure within the European Economic Area - this includes certain popular locations (eg, Malta and Gibraltar), but excludes others (eg, the Isle of Man and Alderney);
- requires operators to comply with strict technical requirements, including the implementation of a communications protocol that links the operator's platform to the authority's servers for the purposes of managing the gaming account system; and
- imposes more stringent requirements on responsible gaming, including an obligation to provide self-limitation tools.
The application process for new licences takes up to three months; applications may be submitted until December 31 2011. However, in view of the authority's likely workload over the next few months, new entrants should submit their applications as soon as possible.
The industry optimism surrounding the launch of casino and cash poker games seems justified, especially as the turnover of the Italian remote gaming market grew by 28% to €4.8 billion in 2010. Given that this growth was achieved mainly through poker tournament games, which typically generate less turnover than casino and poker cash games, total turnover could double within two years.
Such projections are based on the expectation that once casino and cash poker games are launched, Italian websites will offer a range of games which compares to those of '.com' websites. The Italian industry hopes that a share of the '.com' websites' existing users will decide to switch to Italian-licenced websites that offer greater guarantees and are required to comply with Italian law. Increasing numbers of foreign operators are expected to apply for an Italian remote gaming licence and close their '.com' platforms to customers in Italy.
Market entrants will be able to compete to provide poker and cash games on almost exactly the same conditions as existing operators, provided that they submit their licence applications as soon as possible and make the relevant platform compliant with the technical requirements in the two decrees. However, the requirements are notoriously strict and are likely to take a long time to implement.
New entrants have an opportunity to put themselves on substantially the same footing as existing operators, but must act quickly in order to reap the benefits.
For further information on this topic please contact Giulio Coraggio at DLA Piper Italy by telephone (+39 02 80 61 81), fax (+39 02 80 61 82 01) or email ([email protected]).