Italy starts 2019 with betting expense climb

The Italian government has rung in the new year by introducing a series of tax increases for gambling operators, which come into force alongside its blanket ban on gambling advertising.

The Italian government has rung in the new year by presenting a progression of assessment increments for betting administrators, which come into power close by its sweeping restriction on betting advertising.

As of January 1, iGaming licensees are subject to a tax of 25% of gross gaming revenue on online casino and bingo, an increase of 5%, with online fixed-odds betting tax increased from 22% to 24% of GGR.

Land-based sports betting operators, meanwhile, will now pay a 20% GGR tax, up from the previous rate of 18%. Virtual sports are also subject to a new 22% gross revenue tax, having previously been taxed at 20% of GGR.

This is accompanied by increases on taxes paid on amusement with prizes (AWP) machines and video lottery terminals (VLTs). The AWP tax rate has risen by 1.35 percentage points to 18.85%, while VLTs will be taxed on 6.75% of revenue following a 1.25 percentage point rise.

Payout rates have also been amended for these land-based machines, with AWP payouts reduced to 68% of stakes, and 84% for VLTs.

The new tax rates were passed late last month as part of the country’s budget for 2019, alongside broad spending plans until 2021. This aims to reduce the country’s deficit to 2.04% of Italy’s Gross Domestic Product, down from its original target of 2.4%.

The European Commission, which had originally rejected the budget proposal put forward by the country’s coalition government, accepted the revised proposals. These were then approved by the Italian Senate and Chamber of Deputies in the final days of 2018.

The tax hikes are likely to significantly impact both operator and suppliers’ profits from the Italian market. Playtech has already noted that it is likely to see its adjusted earnings before interest, tax, depreciation and amortisation for 2019 decline by up to €25m as a result, though may take action to mitigate the tax increase.

The duty climb corresponds with the presentation of a sweeping restriction on betting advertising, the alleged Dignity Decree, which bans betting administrators from advancing their administrations through promoting and sponsorship assentions. While existing sponsorship arrangements will be permitted to run their course, administrators will be obstructed from reestablishing the associations.