In early April 2024, Italy officially published a decree to reorganize the online gambling sector by raising license fees, changing terms and setting new regulations to comply with, but not abolishing the system of granting licensing (concessions) via tender. In total, the new decree announced an increase in the cost of online licenses to €7 million, as well as an annual license fee of 3% GGR. The decree also set time and deposit limits, a new license term of 9 years, and prohibition for groups of companies to obtain more than 5 licenses.
All this happened right before the current concessions’ (licenses) terms expire. They will cease at the end of 2024, which means that new licenses will have to be obtained for much more money.
Ivan Kurochkin, Partner and Head of Eastern Europe Desk at 4H Agency, has analysed the situation.
Who benefits from the sharp rise in the cost of licenses?
Of course, the Government. There is no mystery about the fact that this approach will significantly increase the state budget, and preserved concession system will assist with distribution of the budget risks.
The current regulation of the Italian gambling market provides for a tender process for issuing licenses for almost all regulated verticals: online (casinos, betting, lottery) and offline (slots, betting), with the only exceptions being land-based casinos and lotteries operated by public and private monopolies. Back in 2022, licensed operators who received their concessions under the previous (and last at the moment) tender, were due to expire by early 2023, but in December of 2022 their concessions have been extended until the end of 2024; most likely in calculation of successfully implementing the new regulations and ensuring license renewals for an increased fee.
The Ministry of Economy and Finance estimates that the country will receive at least €350 million if at least 50 operators apply for licenses’ renewals, and another €100 million annually if all want new licenses. Of this amount, €3m a year will come from a registration fee for the approximately 30,000 online agents offering payment services. Each of them will pay €100 per year.
Responsible gambling is the new black.
Of course, the state is positioning all these new changes as aimed at ensuring responsible gambling and protecting minors.
Under new regulations, online operators will be required to contribute 0.2% of their net revenue to promote and implement responsible gambling, as well as to limit possible monetary losses and periods of gaming sessions. For example, by implementing automatic messages that would alert the user when spending limits and session lengths are exceeded. Gambling accounts now must be opened strictly and only for adults, confirming this with appropriate documents - for example, SPID.
A ban on gambling on unlicensed sites and measures to block payments received there are also introduced.
European Lottery Tender.
The oldest Italian lottery has been run by IGT (formerly Lottomatica) for more than 30 years now, but its license expires in November 2025. In this part, the strategy of the Italian government has changed and there are no more automatic renewals of the previous concession, only a fair fight. The possibility of winning a tender for the chance of operating a monopolized lottery has already attracted the interest of two major market players, but this is not the limit.
A €1 billion European lottery tender would guarantee the licensee a net income of around €200 million for 9 years, according to a report published by the Italian Treasury together with the aforementioned decree. Since the licensee's annual commission of 6% has been confirmed by law and the company's annual turnover is estimated at around €7.7 billion for 9 years after 2025, the gross remuneration due to the licensee will be around €460 million per year.
While government agencies are still preparing the documents, it is predicted that the tender notice will go out as early as the end of 2024. Announcing the tender a year earlier will guarantee new resources for both 2024 and 2025 by splitting the tender proceeds into two tranches. The starting bid for the lottery tender is set at €1 billion: €500 million will be paid after the tender is completed, €300 million in 2025 and the remaining amount of at least €200 million must be paid by 30 April 2026.
All this happened right before the current concessions’ (licenses) terms expire. They will cease at the end of 2024, which means that new licenses will have to be obtained for much more money.
Ivan Kurochkin, Partner and Head of Eastern Europe Desk at 4H Agency, has analysed the situation.
Who benefits from the sharp rise in the cost of licenses?
Of course, the Government. There is no mystery about the fact that this approach will significantly increase the state budget, and preserved concession system will assist with distribution of the budget risks.
The current regulation of the Italian gambling market provides for a tender process for issuing licenses for almost all regulated verticals: online (casinos, betting, lottery) and offline (slots, betting), with the only exceptions being land-based casinos and lotteries operated by public and private monopolies. Back in 2022, licensed operators who received their concessions under the previous (and last at the moment) tender, were due to expire by early 2023, but in December of 2022 their concessions have been extended until the end of 2024; most likely in calculation of successfully implementing the new regulations and ensuring license renewals for an increased fee.
The Ministry of Economy and Finance estimates that the country will receive at least €350 million if at least 50 operators apply for licenses’ renewals, and another €100 million annually if all want new licenses. Of this amount, €3m a year will come from a registration fee for the approximately 30,000 online agents offering payment services. Each of them will pay €100 per year.
Responsible gambling is the new black.
Of course, the state is positioning all these new changes as aimed at ensuring responsible gambling and protecting minors.
Under new regulations, online operators will be required to contribute 0.2% of their net revenue to promote and implement responsible gambling, as well as to limit possible monetary losses and periods of gaming sessions. For example, by implementing automatic messages that would alert the user when spending limits and session lengths are exceeded. Gambling accounts now must be opened strictly and only for adults, confirming this with appropriate documents - for example, SPID.
A ban on gambling on unlicensed sites and measures to block payments received there are also introduced.
European Lottery Tender.
The oldest Italian lottery has been run by IGT (formerly Lottomatica) for more than 30 years now, but its license expires in November 2025. In this part, the strategy of the Italian government has changed and there are no more automatic renewals of the previous concession, only a fair fight. The possibility of winning a tender for the chance of operating a monopolized lottery has already attracted the interest of two major market players, but this is not the limit.
A €1 billion European lottery tender would guarantee the licensee a net income of around €200 million for 9 years, according to a report published by the Italian Treasury together with the aforementioned decree. Since the licensee's annual commission of 6% has been confirmed by law and the company's annual turnover is estimated at around €7.7 billion for 9 years after 2025, the gross remuneration due to the licensee will be around €460 million per year.
While government agencies are still preparing the documents, it is predicted that the tender notice will go out as early as the end of 2024. Announcing the tender a year earlier will guarantee new resources for both 2024 and 2025 by splitting the tender proceeds into two tranches. The starting bid for the lottery tender is set at €1 billion: €500 million will be paid after the tender is completed, €300 million in 2025 and the remaining amount of at least €200 million must be paid by 30 April 2026.
