Italians Ready to Share Liquidity, But With Who?

Legislation is being prepared in Italy that would allow the country´s online poker regulator to form compacts with other European regulated markets.

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ItalyLegislation is being prepared in Italy that would allow the country´s online poker regulator to form compacts with other European regulated markets.

According to reports in the Italian poker press, this year´s “Delega Fiscale” law could provide help for Italy´s failing online poker industry by changing the way online poker tournaments are taxed and by allowing the country´s regulator to form compacts with other European regulated markets.

If implemented, both measures could have a positive impact on online poker in Italy. However, Italy´s poker regulator – the Amministrazione Autonoma dei Monopoli di Stato (AAMS) – may find that the option of forming compacts creates it’s a new problem – who to form a compact with.

Tax Changes will Benefit Industry

The proposals to change the way in which online poker tournaments in Italy are taxed have been well-known for some time. Rather than having a tax on betting turnover, online poker operators would pay a maximum 20% tax on gross gaming revenues. Provisions in the “Delega Fiscale” also allow for this tax rate to be reduced should the decline in poker revenues (down 17% in 2014) continue.

The reduced tax liability for online poker operators will allow them to offer increased tournament guarantees, a higher level of rewards and more value to players; potentially attracting back Italian poker players who have abandoned the country´s regulated sites to play at offshore locations.

Although the changes to the tax regime could increase the benefits of playing tournament poker at regulated online sites (cash games are already taxed on gross gaming revenues), the problems related to liquidity are likely to remain.

Problems Remain over Liquidity

If the AAMS is allowed to form compacts with other regulated states, its list of options is pretty limited. It is unlikely that poker operators in regulated markets such as the UK, Denmark and Portugal would consider forming an alliance with Italy because it would mean fragmenting their international liquidity.

That would leave only the ring-fenced markets of France and Spain for the Italian regulator to form compacts with – and neither of those two countries have given the impression that they are interested in helping the online poker industry in their respective countries.

Only last week, France´s online poker regulator ARJEL announced that any changes to French legislation would not occur until after the presidential elections in 2017, while a recent “strike” by Spanish poker players demanding a change in Spain online poker laws went largely unnoticed by the country´s regulator La Dirección General de Ordenación del Juego (DGOJ).

An Alternative Solution for AAMS?

The lack of online liquidity in Italy has been blamed on offshore operators, who do not have to implement costly licensing requirements, pay high taxes or have restrictions placed on their advertising. According to Italy´s Minister of Internal Affairs – Alessandra Belardini – police reported 49,849 online gaming sites (from 55,544 that were monitored) to AAMS last year for providing an unlicensed service to players in Italy.

The AAMS is supposed to issue a warning to these unlicensed sites and give them thirty days to comply with Italian legislation. If the sites do not make the necessary changes, then the AAMS should issue administrative sanctions to have their sites blocked from Italian IPs. However, it does not take long for a blocked site to change its own IP address so that it can continue to provide a service to Italian gamblers.

A possible solution to the problem might be for the AAMS to offer compacts to offshore sites. Not only would that increase liquidity within Italy and stop so much money being wagered on offshore sites, but it might also create a competitor for PokerStars, who currently dominate the Italian online poker market with 54% of the cash game traffic and 70% of the tournament traffic.