Italy Posts Disappointing Figures for Sports Betting Growth in 2018

Italy flag and European union political balls smash into each other.

While Italy’s 2018 sports betting revenues were up almost 11% over 2017, the level of growth did not reach expectations. Previous years showed stronger growth.

Expectations were high that 2018 would continue those strong levels of growth, but that did not materialize. The revenues for 2018 sports betting were just under $1.5bn (£1.2bn).

The total betting turnover for the period was $125bn (£98bn), an increase of $1.14bn (£897,000) over 2017. These figures were included in the end-of-year report from the Agenzia delle Doganee dei Monopoli (ADM).

Trouble ahead for Italy’s gambling sector

A lot of improvements were made in the sports betting sector in previous years and it was a significant source of revenue for the country. Italy has crippling levels of debt and is struggling to stay above water.

In the past, Italy could simply devalue its lira currency to make its exports a lot more attractive to other countries. However, since adopting the euro, the country can no longer do that. Now Italy is struggling to finance its debts and needs as much revenue as possible from alternative sources, such as gambling.

Previous governments focused on improving conditions for sports betting operators in the state. However, the coalition government that came into power last spring has been constantly hitting the sports betting and gambling sectors with cuts and bans and looking for new ways to curtail the sector.

Crippling changes

One of the first measures that the Five Star Movement Party took after gaining control of the coalition government was to introduce a ban on gambling advertising. This was met with an outcry from gambling operators and politicians across the nation.

The ban, which came into effect on January 1, prohibits gambling operators, including sports betting operators, from advertising their services to residents of Italy.

In such a competitive industry, operators use creative advertising campaigns to attract customers. Without this ability, it is almost impossible to stand out from the crowd. It is also difficult to let people know about new offers and markets they are offering.

The coalition government is even trying to push this ban to the European level. Spain and Belgium are considering similar bans themselves, but not everyone is taking it lying down. LeoVegas, for example, is pursuing legal action, hoping that European courts will deem Italy’s ban to be unjust.

Sponsorship ban

As part of this advertising ban, teams and events are no longer allowed to have gambling companies as sponsors. This is a massive blow to the sporting scene in Italy because sponsorship money is a major source of revenue.

Most teams in recent years have affiliations with gambling sponsors, either through kit sponsorship or billboard advertising. With many teams already struggling to keep up with financial fair play rules, this is seen as a crippling move. Teams will have until this summer 2019 to find alternative sponsors before this part of the ban is enforced.

The coalition government also announced tax hikes on the gambling sector. The online casino tax will increase from 20% to 25%. The government hopes to generate an additional $57m (£44.8m) in revenue from this move. The online sports betting revenue tax rate will increase to 24% from 22%, and physical betting facilities will also have a 2% rise, up to 20%. These increases will cost operators as much as $34m (£26.7m) annually.

There is talk that the government will also increase the tax rates on slot machines and video lottery terminals. This move, combined with the advertising ban, is likely to drive a lot of operators out of the Italian market.

A bleak future ahead?

As a result of these crippling measures, many believe that sports betting revenues in Italy will decrease significantly in coming years. While there was a growth of almost 11% in revenues in 2018, that was before a lot of the measures came into effect.

It was also a FIFA World Cup year, which is always a windfall for sports betting revenues. There are already some signs of a slowdown. The December figures, for example, were poor. Revenue figures fell 55% year on year. Operators involved in the Italian gambling market will be carefully considering their positions going forward.

Leave a Reply

Your email address will not be published. Required fields are marked *