Proposed new gambling tax rates aggravate Italian casino, betting sectors’ malaise from upcoming implementation of blanket ban on gambling ads
Italy’s government has stricken the nation’s gambling industry once again with a newly emerged proposal for an increase in the gambling taxes collected from both the land-based and online sectors, local news outlets reported earlier this week.
If the proposed reforms in the gambling tax rates gain traction, they will take effect on January 1, 2019, the exact same day on which a blanket ban on all forms of gambling advertising is set to be enforced.
The proposed changes include a hike in the tax collected from online casino games to 25% from a current rate of 20%. Italian ministers believe the move will result in €50 million in additional annual tax revenue being produced.
Online sports betting revenue will be taxed at 24%, two percentage points above the current rate of 22%. Retail betting operators will, too, see a 2% tax hike to 20% on their annual revenue. According to the government’s projections, the increase in betting taxes would generate approximately €30 million for the coffers.
The Italian government is in a rush – urged by EU authorities – to close a gaping budget hole and ministers have picked the nation’s gambling industry as a temporary solution to the problem. News about the proposed gambling tax hike arrive just days ahead of the implementation of a full ban on all forms of gambling advertising in the southern European country.
The Industry’s Reaction to the Newly Proposed Tax Rates
As one would suggest, the latest blow on the nation’s gambling industry has not been received extremely well by the industry itself.
Commenting on the matter, Moreno Marasco, President of Logico, told local news outlet Agimeg that while the industry realizes that the Government needs to make money, it has to express its “utmost concern” about the proposed new gambling tax rates. Logico is the Italian trade body that represents the online gambling companies that hold licenses from the local gambling regulator, Agenzia delle dogane e dei monopoli.
Mr. Marasco went on to say that the implementation of higher taxes would only give competitive advantage to casino and betting operators that are not licensed to operate in the country. The Logico President further pointed out that the regulated online gambling market is particularly vulnerable, as such unlicensed operators can circumvent existing laws and bans and lure Italian gamblers more easily.
According to Mr. Marasco, higher taxes would not bring the projected additional revenue. Instead, the country can lose part of the revenue that is already guaranteed as the tax hikes would affect licensed operators’ ability to draw customers with more attractive gambling offers.
The link between gambling taxes and player channelization has been discussed broadly over the years. According to a report by leading Nordic economic consultancy Copenhagen Economics, higher taxes have a direct negative impact on the channelization of gamblers, that is the percentage of gambling customers attracted to the regulated gambling market of a given country.
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