Italy’s Ring-Fenced Poker Market Not Working

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Tuesday, June 30th, 2015 | Written by Shane Larson

When Italy regulated its online poker market in 2010, the country decided to separate its player pool from other European countries, presumably to reap all the potential rewards of the industry for itself. However, that decision has proven to be a costly one as there are no longer the number of players online to make the game attractive and the Italian iPoker market has continued to shrink ever since. As a result, the country of 60 million people is once more considering sharing its players with those of other international markets, and as gaming lawyer Giulio Coraggio from DLA Piper explains:

“The online poker market is facing considerable difficulties worldwide and in countries like Italy, Spain, and France the impact of such crisis might be even higher given that they are closed loop markets. But if poker international sharing liquidity will be allowed, the scenario might considerably change.”

Ring-fencing Unfeasible

Italy followed in the footsteps of France when it ring-fenced its online poker pools, and the next year Denmark and Spain did likewise. Previous to this, European players had been able to compete against other poker enthusiasts around the world, in particular millions of Americans, but on April 15, 2011 Black-Friday occurred and to all intents and purposes so too was online poker’s heyday. Now, the fragmented ring-fenced iPoker markets of countries such as Spain, Italy and France continue to decline and the Italian regulatory body, AAMS, has now revealed that in 2014 the industry’s GGR was worth just €178 million, with cash games down 21% and poker tournaments down 18% compared to the previous year.

iPoker Less Popular Pursuit

Furthermore, failing to protect the industry has resulted in just 223,000 Italian online poker players competing in 2014, 17% fewer than in 2013, and of even more concern is that by failing to make it appealing to its core audience the sharpest decline in popularity was noted amongst the younger generations, namely the 18 to 24-year-old demographic, thus signalling a further lack of sustainability for the Italian online poker market further down the line.

Punitive Tax Regime

Italy’s ring-fenced market has lead to shrinking online poker traffic, operators raising the rake paid by its customers, as well as online sites reigning in the bonuses they usually offer. In addition, the punitive 20% tax poker operators have to pay on their profits has asphyxiated the Italian iPoker market, thus making the need for a radical overhaul of the industry all the more pressing. This is expected to come from the Delega Fiscale (delegation tax) which seeks to introduce a series of amendments to the country’s gaming law to align online poker more closely with that of other countries in the EU, including shared online poker liquidity amongst EU member states, as well as changing the tax burden placed on the operators themselves. As gaming analyst Coraggio further explains:

“Italian gaming laws are going to be considerably amended as part of the so-called Delega Fiscale law which, among others, is likely to change the regime of sports betting and poker tournament to 20-percent Gross Gaming Revenue (GGR).”

Other iGaming Verticals Prospering

Whilst Italy’s online poker industry has waned either due to regulatory mismanagement or changing tastes, other online gambling games have reflected the state of the wider international gaming markets and are thriving, including casino games and sports betting. Last year, for instance, online casino games produced €255 million in revenues for Italy, a 6.7% improvement compared to the previous year. Moreover, online slots accounted for 57% of revenues, which in itself was a 9% increase in revenues over 2013’s figure.

Likewise, sports-betting noted an impressive 11% in revenues year-over-year, and while 11% less wagers were placed on football games, revenues improved significantly on tennis, up 9% over the past two years, and basketball up by 1% compared to 2013. Finally, mobile gambling continues to be the way of the future with revenues rising by 104% in 2014 from a year earlier, and currently representing 13.7% of Italy’s overall iGaming GGR last year.