Towards the reorganization of online gaming in Italy

The Italian Council of Ministers has given its final approval to the draft Legislative Decree “Provisions on the reorganization of the gaming sector, starting with online gaming” (the Decree). With the final approval of the Legislative Decree, the Government is aiming to rationalize and update the online gaming regulatory framework, increase the value of the online concessions to be awarded, and bring them to the highest market standards. The whole online gaming ecosystem will be regulated with more modern and exacting principles.

The Legislative Decree focuses essentially on new and more rigorous standards of legality, responsibility and transparency. It then regulates the new online gaming concession framework, directly managed by the Italian gaming regulator, ADM, the Italian Customs and Monopolies Agency. The Decree includes provisions regarding the maximum duration of an online gaming concession, set at nine years. The cost of a license is set at €7 million, and the specific requirements and conditions interested parties participating in the public tender must comply with are also defined.

As well as online gaming, the Decree contains new provisions over public tenders for the Lotto (expiring in November 2025) which will see it go from an auction base of €700 million to €1 billion, and Scratch and Win (expiring in September 2028). For online gaming, in particular, there are three fees in place which future online gaming concessionaires will face and the amounts included in the Decree have been increased significantly. The ‘one-off concession fee’ goes up from the previous €250,000 to €7 million (an increase of 2,800 percent); there is an ‘annual fee’ equivalent to three percent of the Gross Gaming Revenue (GGR) (double that of previous years); and an ‘annual fee’ equal to 0.2 percent of concessionaires’ GGR which is dedicated to investments in information and communication campaigns to prevent and treat gaming addiction.

The Decree also puts an end to the use of cash for online games. In fact, those who wish to top up their gaming accounts in retail locations with amounts above €100 in cash will be obliged to use traceable and secure electronic payment tools. This is considered an important measure in the fight against money laundering which the current Italian government has been at the forefront of since its onset.

Further to that, and to preserve legality, to ensure the traceability of financial flows and prevent criminal infiltration and money laundering, future online gaming concessionaires will have to trace all financial transactions including deposits, payments, winnings and commissions paid to their retailers.

Among the requirements and conditions which participants in the public tender must comply with, there are specific conditions concerning internet presence. The is “the activation by the future concessionaire of a website with a national top-level domain directly managed by the same, subject to authorization by the Agency (Italian Regulator) and compatible with its specific technical requirements, associated to its concession and owned by it. It is prohibited for the same concessionaire to put the aforementioned website with any technical or interface solutions, at disposal of third parties, even if they are part of the same corporate group of companies. For the sake of transparency and traceability to the authorized concessionaire, the website and related apps (paragraph 6, letter d), should present the logo or trademark of the concessionaire. In the absence of the concessionaire’s logo or trademark, the Agency (Italian regulator) shall suspend the concession and, in the event of multiple violations, may proceed with the withdrawal of the concession.”

The Legislative Decree states that each concessionaire then has the right “to provide access to any type of gaming product indicated in the concession agreement, through a specific App whose technical requirements are defined by the Agency (Italian regulator)”.

Provisions are made for the online operations of licensed games to be subject to the stipulation, also by electronic means, of a gaming account contract between the concessionaire and the player. While participating in the public tender, potential candidates should guarantee that the identification of players is fully compliant with the minimum terms & conditions of the gaming account contract, which should be sent to and validated by the Agency (Italian regulator). In fact, it must be ensured that “the opening of the gaming account should be exclusively executed through the use of a valid identity document or other digital identification tool, also with a second level security, acceptable in Italy, as indicated by public order of the Director of the Agency”. Splitting any sums constituting the balance of a gaming account in the process of managing gaming products or apps is prohibited and compliance must be assured.

As for retail locations where players can top up their gaming accounts, another sensitive issue for the overall gaming market, the Decree states that these locations must be registered in a public register and should pay an annual fee of €100 (instead of €200, as initially indicated in the draft Decree). Top-up transactions carried out in these locations, however, should remain within the overall weekly limit of €100, even when in cash.

Lotto tender amended

The Decree, accepting the observations of the Italian parliamentary committees, also provides a comprehensive overview of the future Lotto public tender.

The Lotto public tender procedure shall be launched under the following essential conditions: (a) the duration of the concession shall be nine years, non-renewable; b) the winner will be selected based on the criterion of the most economically advantageous bid and, with regards to the fee component, government expectations are of possible bids beyond the auction base of €1 billion; c) anticipated payment of the fee by the winning candidate should be equal to €500 million at the time of the award, €300 million at the time of the actual market launch in the year 2025, and the remaining amount by 30 April 2026; (d) the successful concessionaire will have the right to use any retail network for the direct or indirect provision of lotto services to the public, provided that it is compatible with the object of the concession and the opinion of the Agency (Italian Regulator); (e) the remuneration due to the winning bidder for its services will be equal to six percent of turnover; f) the winning candidate must update the technological system and gaming terminals according to highest standards of quality in order to guarantee maximum security and reliability, according to the investment plan submitted in the public tender, as part of the commercial offer; (g) the winning candidate will have to return annually to the Italian Treasury any sums not invested in accordance with the investment plan as indicated in point (f);

The Decree also states that, in order to manage the forthcoming public tenders effectively, an ad hoc commission will be created, composed of five members, of whom at least the chairman and two members should be selected from among highly qualified professionals, including retired judges or State lawyers, and the other members selected from among top public officials employed by the Agency (Italian regulator). The commission will operate under the Agency (Italian regulator), which will provide secretarial services and the remuneration of the members of the commission shall be established by the Agency by ministerial decree.

As for the prevention of problem gambling, the Decree states that public concessionaires should promote, communicate and disseminate messages with social responsibility only, aimed at creating a safe and responsible gaming environment for the protection of consumers, in particular the most vulnerable group. They must also apply their company logo and branding to these social marketing materials.

Under the terms of the Decree, the concessionaire will also have to invest annually a sum equal to 0.2 percent of its net gaming revenues (not exceeding €1,000,000.00 per year) in information campaigns or responsible communication initiatives on problem gaming related issues, defined annually by a government commission, after consulting the Italian Observatory for the fight against problem gambling and the phenomenon of serious addiction created by the Italian Ministry of Health.

Another very interesting initiative, which is prescribed by the Decree, is the institution of the “Permanent Council of Authorized Public Games in Italy”. This body will have a mandate to monitor the progress of public gaming activities, including preventing and fighting any illegal and/or unauthorized gaming initiatives, their effects on the health of the players, as well as proposing to the Government suitable measures and programming to combat problem gambling.