Recent draft legislation set forth by the Italian regulator are setting the scene to introduce new bets and new betting programs in order to face the slight betting market fall registered in 2012 compared to previous years.
On 16 July the EU compulsory stand-still period for the draft directorial decree on customised events betting programs complementing the one offered by the Italian regulator, the Autonomous Administration of State Monopolies (AAMS) as notified to the European Commission1, came to end. As no objections were raised within the European notification process, the enactment process of the draft decree is now in progress.
The draft regulates the licensees’ offering of customised programs on sports and other events, in addition to those offered by the AAMS (so called ‘palinsesto’ in Italian gambling parlance) according to basic legislation, namely Decree no. 111 of the Minister for Economic and Financial Affairs of 1 March 2006. It follows other recently notified drafts decrees regulating betting on virtual events and remote betting exchange and represents a long-awaited innovation within the Italian betting system. This set of newly drafted provisions is aimed to enable licensed operators to broaden their betting portfolio and to significantly diversify their offerings in the Italian betting market.
Italian central system and customised program
According to the current legislation, each bet in Italy is part of an events program (‘palinsesto’) that includes sports events and some variants on traditions (such as the Sanremo music Festival, Miss Italy elections, etc). Moreover, licensee’s processing system must be connected to the national central system (the national tote) of the AAMS according to specific communication protocols established by the regulator.
With this draft of directorial decree entering into force, licensees will be able to offer supplementary events and bets to the palinsesto, having as subject matter sporting events and non-sporting events, such as the news or gossip, as identified by the licensees and verified by the AAMS.
There are general limitations concerning events on which bets may be placed in accordance with the draft decree. First of all, the events and bets shall not already be listed in the events program provided by AAMS. Nevertheless, in relation to events listed within the palinsesto, the licensee may offer any bets not included in the AAMS program in the supplementary program. To be noted, horseracing and simulated bets are for now excluded from the customised programs2.
Finally, subject matter of the bets within the supplementary program must not include any sort of violent, indecent or discriminating offer or be against data protection3.
The AAMS has the power to verify the results of such events, according to a prior endorsement by the regulator of the events listed in the licensee’s supplementary programme and a real-time acquisition of the events shown in the supplementary programme by the central system – national tote, as further described below.
Entities entitled to offer such customised programs
According to this draft decree, the entities authorised to offer and manage the supplementary program are the current licensees authorised to collect and operate fix-odds sports bets on physical networks and/or remote channels (telephone, interactive TV and internet), connected to the national tote. Indeed, the tender procedure for the awarding of up to 200 new gaming licenses according to the AAMS decree dated 9 March 2011, ended by 31 December 2011.
The decree set forth a specific application to be submitted to the AAMS describing the events and bets included in the supplementary schedule (the sporting discipline or pertinent category for non-sporting events; the show at/in which the event is to take place), the nature of new event types and/or any bets which it intends to include in the program and the procedures to verify the results of events.
Indeed, technical documentation within the application must specifically contain the characteristics of the licensee’s processing system used to manage the supplementary betting programme and describe the organisational and technical procedures to manage and certify events included in the supplementary programme, including managing live events, which must involve the use of at least two documented sources of information to verify results, to be identified in relation to the type of event on which the bet is placed4.
Technical documentation must also describe the compulsory registration procedures, real-time time stamping, storage and traceability of data related to events included in the supplementary programme for at least 10 years. Licensees shall adopt solutions to facilitate AAMS’s access to information (especially of documents related to complete live events) so it can carry out its’ monitoring and inspection activities. The application shall be approved by AAMS within 30 days that will add the events in the supplementary program along with their results, in real-time through the national tote to form an integral part of the official events program.
Supplementary programs containing sporting and non-sporting events on which bets are placed must be publicised by the licensees through their own sales channels, which shall provide information to anyone who requests it, specifying which events and bets form part of the supplementary program and the rules used to verify the results in the supplementary program.
Article 7 of the draft decree requires the licensee to promote responsible gambling and to prevent its own staff, and anyone else involved in developing its gaming platform in any way, from gambling. In general, the licensee is obliged to promote responsible gaming conduct, monitor its adoption by players and exclude access to gaming by minors, and display prohibition signs in each of the virtual gaming environments it runs, either in betting facilities or through remote gaming channels. For remote gaming, licensees are required to implement self-limitation and self-exclusion devices to enable players’ access to the gaming area.
Conclusions
This interesting scenario to foster the current Italian betting system is not as perfect as it seems. First of all, it is worth recalling that even if the program is established and verified by the licensee, it must be connected in real time with the national tote according to the specific communication protocol that must validate the program and the bets, while the results of the events and the winnings must be communicated.
Another issue is, according to art. 12 p. 2 of the draft decree, the additional taxation of 0.5% on the bets should be added to the current taxation5. This is objectionable for at least two reasons. Firstly, current taxation is still fixed on the total of the bets (with a year average of 4.2% for 2011) instead of on gross profits (net of winnings). This decree is no doubt another missed occasion to move the taxation basis to gross profits as it has been done for the virtual betting draft decree (whereby taxation is set at 20 % of gross profits).
Secondly, the additional taxation to be added reduces significantly the appeal of customised betting towards the licensees. Indeed, the verification of event results in relation to the events shown in the supplementary program is the financial responsibility of the licensee.
It reduces its competitiveness, especially with regard to international unlicensed operators that still operate in Italy, through data transmission centres or over the internet, without being properly challenged. Consistency with the aim of the Legislative Decree No 39 of 28 April 2009 on urgent action to assist people affected by the earthquake in the Abruzzo region in April 2009 was to enable the products offered by authorised licensees to take bets to be adapted to international standards, ensuring greater flexibility in terms of games offered and enabling individual licensees to differentiate their offering with a view to combating and limiting illegal gambling – could be challenged.
The Italian betting story and notably recuperation of gaming shares from the illegal market has not yet ended.
1. Notification under no. 2012/238/I.
2. Fixed-odds betting on simulated events should be introduced with a pilot phase by the end of this year according to a separate draft decree notified to the European Commission under no. 2012/30/I.
3. Article 3 states it shall not: “relate to events or conduct contrary to ethics, public order or decency; directly or indirectly incite crimes or administrative violations, or incite violence or discrimination based on racial or ethnic origin, language, gender, economic status, sexual orientation, religious beliefs, membership of political parties, trade unions or religious, philosophical, political or labour associations or organisations, or based on physical or mental disabilities; and/or pertain to the results of pending or potential judgments before the courts in Italy or overseas or by boards of arbitration; and do not concern, or in any way involve, sensitive data or any other areas of private life protected by the “Code on Personal Data Protection” under Legislative Decree No 196 of 30 June 2003 and subsequent amendments and additions.”
4. Such as the registration of videos related to events; official sources of information from sporting federations or similar institutions; independent sources of information of proven reliability.
5. Art 12. p. 2 set forth a commission: “the licensee, in relation to the supplementary program, must also pay AAMS a commission for the technical/administrative management of the supplementary program equivalent to 0.5 per cent of its bet revenue”.