The European Commission (EC) has announced an extension of the "standstill period" for Italy’s new tender on online gambling concessions, which will now continue until November 18. This extension is in response to objections from Malta, which raised compliance and technical concerns over Italy’s proposed licensing requirements. The Malta Gaming Authority (MGA) contends that Italy’s regulatory framework introduces duplicate and restrictive demands on B2B businesses, potentially inhibiting cross-border operations. Italy must justify these additional measures to avoid violating EU market freedoms, with the new licensing framework poised to affect the structure and regulations of Italy’s online gambling sector significantly.

Malta Challenges Italy’s Regulatory Demands

Malta's Concern Over B2B Barriers: The MGA argues that Italy’s new licensing framework imposes unnecessary barriers on B2B operators, including platform suppliers and system providers. By requiring duplicate technical and compliance measures, Malta claims these rules may deter established B2B businesses, undermining efficient market operations within the EU.

Call for Mutual Recognition: The MGA suggests that a cooperative framework could recognize the existing licenses and regulatory checks of operators across EU Member States. The agency urged the EC to encourage Italy to adopt this approach, emphasizing that current requirements could be respected and validated without redundancy.

Italy’s Justification Requirement

EC’s Compliance Directive: The EC mandates that Member States provide adequate justification for any legislative projects affecting businesses in the Common Market. Italy’s requirements for B2B operators must therefore be convincingly justified to avoid obstructing market freedoms, such as the freedom of establishment and service provision.

Potential Market Impact: Should Italy fail to demonstrate the necessity of these additional requirements, it could face further objections from EU stakeholders. Italy must balance its regulatory objectives with the broader need to maintain free market principles within the EU.

The Role of the Standstill Period

Three-Month Review Process: The EC’s “standstill” period is a three-month period allowing stakeholders, including Member States, to review and comment on legislative projects. Malta’s concerns have brought Italy’s online gambling framework under further scrutiny during this phase, temporarily halting progress.

Italy’s Upcoming Response: Italy is expected to address Malta’s objections through a formal response from the Treasury, asserting the necessity and legality of the new regulatory demands. This will form the foundation for Italy’s stance as it moves toward finalizing the framework.

Structure of the New Italian Online Gambling Concessions

Licensing Duration and Fees: The Ministry of Economy and Finance (MEF) stipulates that each new license will last for nine years, with a cost of €7 million per license. Additionally, licensees will incur an annual 3% fee on gross gaming revenue (GGR), after taxes and winnings are deducted.

Extension for Existing Licenses: In alignment with Italy’s Budget 2024, current online gambling licenses may be extended until December 31, giving operators additional time to transition under the new rules.

B2C Restrictions and Compliance

Limited App and Website Use: The new regulations restrict licensed operators to “one app per gambling product type and one website” per license, effectively curbing the use of branded or “skin” websites to promote gambling products. Violations will result in strict penalties, marking a shift toward tighter online operational guidelines.

Revenue and Licensing Projections: The ADM (Agency of Customs and Monopolies) anticipates that around 50 operators will apply under the new licensing regime, expecting concession revenues to reach approximately €350 million, with annual concession fees bringing in an additional €100 million.

Implementation of Responsible Gambling Measures

Enhanced Player Protections: All operators under the new licenses must implement responsible gambling controls, enabling users to set time and spending limits. Players will also receive alerts when approaching these limits, reinforcing Italy’s commitment to safeguarding consumers within its gambling sector.

Phase One of Regulatory Overhaul: This licensing system marks the first phase of Italy’s broader Gambling Reorganisation Decree, the first major regulatory update for Italian online gambling since 2011. This framework aims to set a foundation for the broader regulatory review of Italy’s land-based gambling venues and protections.

Future Developments in Italy’s Gambling Regulations

Next Steps in the Reorganisation Decree: Following the online framework's launch, Italy will proceed with phase two of the Reorganisation Decree, targeting land-based gambling regulations across the country’s 20 regions and 100 municipalities. This approach seeks to create a standardized regulatory environment, incorporating regional and municipal considerations.

Balancing Compliance and Market Freedoms: Italy’s challenge will be to reconcile its national regulatory goals with the EU’s common market principles. As the Reorganisation Decree progresses, Italy’s adherence to open-market principles will be critical to prevent friction with other EU members and to ensure a fair playing field for all operators.

Conclusion and Investor Considerations

Italy’s new online gambling regulations bring both opportunities and regulatory challenges, particularly in light of Malta’s objections regarding B2B operator requirements. With the EC’s extended standstill period, Italy has an opportunity to clarify its intentions and address EU concerns. For investors and operators, understanding the evolving compliance landscape and its impact on revenue projections will be essential as Italy implements its long-term regulatory overhaul.