A recent move by the Italian Gaming Authority seems to indicate that it will no longer tolerate the provision of online gaming services to Italian residents without the appropriate licence. The authority has accused Betfair Italia of breaching the provisions of its Italian gaming licence agreement, which prohibits the online operator from offering games to Italian residents in breach of Italian law, whether directly or through an affiliate.

Betfair Italia is part of the Betfair group and holds an Italian remote gaming licence, under which it runs the website www.betfair.it. However, it appears that Betfair has been offering its games to Italian residents through its www.betfair.com website, which is not operated under an Italian licence.

In the event of such unlawful conduct, Betfair Italia's gaming licence agreement allows the authority first to suspend and then to terminate the licence. The authority has suspended Betfair Italia's licence for three months and has started proceedings to terminate it. Betfair has sought to object to the suspension order, but it has been upheld by a court of first instance and on appeal. This double defeat could lead to the termination of Betfair's licence and the shutdown of the Italian Betfair website.

These are believed to be the first proceedings of their kind against a primary operator in Italy; as such, they represent a new regulatory approach. A tougher stance towards online gaming providers is also reflected in new laws which were introduced in late 2010 - they provide that website operators which offer games to Italian residents without the necessary licence are nonetheless liable for Italian taxes on their unauthorised revenue. These two factors may finally push operators to comply with Italy's licensing regime.

The authority's timing was perfect, as a decree has since been published which regulates the award of 200 additional remote gaming licences (for further details please see "Online gaming decree to boost national market"). The Betfair dispute may encourage website operators that are targeting the Italian market to apply for an Italian remote gaming licence.

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]).