In recent years, the Italian Legislature has repeatedly intervened in the regulation of the gambling and betting industry, both to prevent the spread of illegal and unlawful activities, and to protect consumers and maintain public order. The industry is of particular interest since, as highlighted by a recent governmental report,1 the estimated value of the gambling and betting industry amounts to approximately EUR 2 billion per year. The Italian press recently reported that in January 2009 alone, more than EUR 140 million was spent on online games platforms from Italy.2
General Criminal Prohibition of Gambling
Under Italian criminal law, gambling (gioco d’azzardo), whether in a public place, an open-to-public place or a private club, is prohibited and punishable by imprisonment and monetary sanction.3 Gambling is defined as a game with the purpose of profit where winning or losing depends wholly or almost wholly on pure luck.4
Italian law draws a distinction between gambling, which is generally prohibited, and other lawful activities, such as games where the outcome is determined by the player’s skills as opposed to pure luck (skilled games); sport-betting; traditional and non-traditional lotteries; and other miscellaneous activities, including bingo and SupErenalotto. These activities are specifically regulated by law and supervised by the relevant authority, the Ministry of Treasury, through the National Monopoly (Azienda Autonoma Monopoli di Stato).5
In 2006 a provision was passed that, under certain conditions, allows online skilled games and sport betting.6 In particular, online skilled games are now permitted for consideration, provided that the administrative authorisation and police licence were duly issued; the game platform complies with the National Monopoly’s regulations; the fee necessary to play the game does not exceed a certain amount, currently EUR 100; and certain information on the game’s mechanics is publicly available.
As for the highly debated issue of whether or not poker and video poker are deemed gambling under Italian law, a recent Supreme Court case held that “poker is notoriously a game governed by luck, as a result, devices [i.e., video-poker] that replicate its fundamental mechanics, procure an outcome that does not derive from the player’s skill but through mere luck”.7 In light of the above, the bottom line on poker seems to be as follows:
- Live poker is gambling under Italian law and as such prohibited unless conducted in a private residence, but not a private club.
- Video-poker devices are prohibited, and their installation or commercialisation is punishable.
Italian law provides an exception for online games organised as tournaments, where the jackpot is composed only of the players’ single entrance fees. 8 Online poker played under the rules of “Texas hold’em” is therefore permitted. However, live poker played under the rules of Texas hold’em is still considered gambling because the exception applies only to the online game as opposed to the live game, as clarified recently by the Supreme Administrative Court (Consiglio di Stato).9
Regulatory and Administrative Profiles
The organisation of skilled games and betting activities is subject to regulatory and administrative clearance. In particular, it is necessary to obtain an administrative licence from the National Monopoly and a public police authorisation.10
All administrative functions are implemented by the National Monopoly that issues the regulations for the conferral of administrative licences in fields such as skilled games, traditional and instantaneous lotteries, betting, bingo and forecast competitions.
In recent years, licences have been assigned by the National Monopoly through a public tender offer upon fulfilment of the requirements and conditions specified in the bid, such as corporate structure, minimum yearly turnover, good standing and payment for the consideration for the issuance of the authorisation.
No Enforceability of Game Debts
Under Italian law, receivables arising from games or betting cannot be judicially enforced. Once a payment has been executed, however, it cannot be retrieved by the payor through clawback.11 Even duly authorised and licensed business undertakings cannot take their debtor to court to enforce game receivables, so it is advisable to structure the business undertakings in a way such that players are required to make advance payments.
In January 2009, the Italian Government proposed a long amendment providing some relevant changes to the applicable laws and regulations.
The proposed amendment, inter alia, provides the following: 12
- Access to online games shall occur only through the National Monopoly platform.
- Approximately 200 administrative licences shall be issued provided that the information technology devices are located within the European Union; the undertaking applying for the authorisation is an incorporated joint-stock company whose bi-yearly turnover is EUR 1.5 million or more, or it is capable of providing a bank guarantee for the same amount; the undertaking is in good standing and meets certain professional requirements; and the consideration, up to EUR 350,000, for the authorisation is duly paid.
- Stricter sanctions, including imprisonment, shall be applied to service providers as well as to players that infringe the law.
- Players shall open a game account as provided by the National Monopoly.
Finally, the proposed amendment introduces the “Betting Exchange,” which allows the betting of a fixed amount of money directly against other physical players. This would allow physical players to play against one another, fixing a fee which may then be covered by other players at their will.13 The service provider would bear no risk, and is entitled to receive a percentage of the fee against the sole provision of the game platform.
The proposed amendment is currently under discussion at the Senate.