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Strictly business
Increasingly crippled by the ?nancial crisis, the Italian government is being forced to slash budgets and hunt for new sources of revenue, but by doing so may be damaging one of the country's few pro?table industries Robin Harrison
himself a salary in a bid to slash expenditure – but for the government to take such a scattergun approach could be seen as a sign of desperation. Analyst Fabio Pavan of Mediobanca feels this is unlikely to lead to any major changes: “The regulatory framework is already clear so there is no reason to change something that is already working well.” However, Christian Tirabassi, managing director of gaming advisory ?rm Ficom Leisure argues that this approach could damage the market by affecting operators already challenged by low revenues due to high taxation and payout rates. “If I was in an operators’ shoes, I would be very worried by the continuing situation; former director general Ferrara left just a week before the merger and the Customs Authority is not ready to face the challenges of the gaming industry, especially as a deputy chairman with responsibility for gaming is still to be appointed by the Italian government.” By pushing through regulation as quickly as possible, rather than following the staggered approach that has seen amounts wagered online in Italy surpass €8bn this year, the government may exacerbate decline which has started to affect the sector. The introduction of cash poker and casino has seen revenues for sports betting and bingo take a hit, with the former suffering in particular. In January revenues for the vertical plummeted 71.7% yearon-year, with players preferring to spend money on new products, though Pavan does not believe sports will be further hit by the legislation allowing online slots: “It is perhaps too early to say whether slots will put further pressure on sports betting and horse racing, and I think the market will continue to grow,” he says. However, with more products being rushed out – exchange betting and virtual sports are likely to follow slots – sports could see continued decline. While the ?nancial crisis is forcing the Italian government to take desperate measures to cut its budget de?cit, it may have dealt a damaging blow to one of the economy’s few growth industries, as Tirabassi concludes: “The Italian model was successful because former minister Tremonti set up a ‘control room’ for the gaming business. Now, there is a supervisor over the regulatory body and everyone in Italy thinks it seems to be the wrong solution.”
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enerating additional revenue to boost its rapidly draining coffers was an offer the Italian government simply could not refuse. Rumours had been circulating for months that local egaming tax rates would rise, a total of €2.5bn in ?nes have been issued to Italy’s 10 gaming machine operators, followed by an abrupt declaration that online slots would be licensed and permitted, with the lack of involvement from the country’s egaming regulator AAMS increasingly conspicuous. This was followed days later by the resignation of AAMS’ director general Raffaele Ferrara, announced by the authority in a single-line press release offering no explanation as to why, nor when he would leave. A fortnight later, however, things became clearer; AAMS said it would be merged into Italy’s L'Agenzia delle Dogane (Customs Authority) to create the Agency of Customs and Monopolies in a bid to cut costs as Italy attempts to avoid the same fate as its Mediterranean neighbours Greece. This is the latest austerity measure implemented by Mario Monti’s government to affect the country’s online gambling industry after a proposed change in the rate of taxation on cash poker and casino – the only two sectors to enjoy continued growth – was brushed under the carpet, while the case against the machine operators continues to drag on with no conclusion, or communication from AAMS in sight. Such attempts to cut costs are arguably necessary – Monti is even running the country without paying
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€8BN
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the amount Italians gambled online in 2011
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71.7%
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year-on-year percentage fall in sports betting from January 2011-2012
€2.5BN
total amount in fines issued to 10 local machine operators
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www.egrmagazine.com
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