Italy's efforts to reform its retail gambling sector have stagnated, placing the onus on judges rather than lawmakers to dictate the rules, industry officials reported at last week's SBC Summit in Lisbon. During the panel discussion titled "Beyond the Reform: The New Italian Gaming Landscape" on September 30, Quirino Mancini, co-founder and executive committee member of IMGL, expressed skepticism that any government would prioritize reorganizing the retail gambling network prior to the upcoming general election. "I would struggle to imagine that, in the year before elections, any government, no matter the colour, would seriously address the reorganisation," Mancini stated. He attributed the stagnation to the sensitive nature of gambling issues in Italy.
The significance of this deadlock cannot be overstated; retail gambling constitutes approximately three-quarters of Italy's gambling market, which is valued at over €21 billion. While the online sector is undergoing a significant transition with new regulations set to take effect on November 13, land-based reforms have yet to commence. Mancini highlighted that discussions about reorganizing the network first arose in the 2016 Stability Law, marking nearly a decade without meaningful progress. He emphasized that the technical aspects of the reform are agreed upon: the central government determines network size, density, operating hours, and distances from sensitive areas, while local authorities manage implementation.
The panel also coincided with a recent ruling from the Council of State regarding Italy's top-up outlets, known as PVRs, where players can add funds to their online gaming accounts. This ruling upheld a €100 weekly cap on cash and non-traceable top-ups, which has been in effect since May, and confirmed the prohibition of cash withdrawals at these outlets. However, the court deemed a total ban on internet-connected devices in these shops as disproportionate.
Responding to the ruling, Mancini remarked, "Wherever there is a vacuum in the legislative power, the judicial one steps in, and that becomes the regulation, which is never a good thing. With all due respect to the magistrates, most of the time they do not know exactly how our industry works."
The lack of clarity is adversely affecting operators who run both online and retail businesses. Davide Diodato, CEO of Novomatic-owned HBG Online, described the mismatch between the nine-year terms for online licenses and the yearly renewals for retail concessions as a significant hurdle. "You don’t fly aircraft with two flight plans and different information. But it’s actually what we have to do every day. So it’s pretty tough," Diodato said.
This uncertainty is particularly challenging for small business owners in the retail gambling sector. "Every year, they ask us what’s going to happen next year," Diodato noted, emphasizing the difficulty for these shopkeepers in making investments or hiring.
Sisal Managing Director Marco Tiso characterized retail gambling as subject to regulations that are largely outdated, noting it is a "missed opportunity." He pointed out that customers face disparities in products, payouts, and promotions depending on the platform.
In contrast, Marco Castaldo, CEO of Microgame, labeled Italy's new regulations as "hyper-regulation" marked by an intricate complexity rarely seen elsewhere. He suggested that many regulated markets will resemble Italy's in the near future. The most significant consequence, according to Castaldo, is an acceleration in market consolidation, with the top five operators currently capturing 85% of the market’s gross gaming revenue and that share expected to rise.
Fabio Bufalini, the country director for Stake Italy, highlighted the challenges faced by licensed operators in advertising bonuses while their unregulated counterparts can promote without restrictions on social media, calling it an inequitable playing field.
Despite the challenges, panelists concurred that the online market holds promise, as its penetration remains below that of some northern European markets. However, there was a consensus that retail’s role is evolving rather than diminishing. Castaldo asserted there will always be value in personal customer interactions in retail, adding that operators need to refine the experiences they offer in conjunction with digital platforms.
Tiso envisioned a future for retail environments where shops transform from mere points of sale to venues that provide assistance and foster community interactions. He also predicted a possible shift wherein online platforms could begin directing customers back to retail locations, allowing for a comprehensive gambling experience that encompasses social elements unavailable online.
The generational shift in gambling habits is becoming evident. For many years, players often initiated their journey through retail environments before transitioning online; however, younger audiences are more likely to engage first through online content or communities. This dynamic suggests retail may shift from serving as an initial entry point to a tool for retaining customers.
Even Bufalini, who operates exclusively online, acknowledged that the future of retail need not oppose the online sector. He insisted that both regulators and industry stakeholders should consider the gambling ecosystem holistically.
Diodato concluded by emphasizing that while illegal operators can replicate games, they cannot replicate the unique connection that retail establishments foster with their communities.
