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April 21, 2009 2009

An overview of the Italian Gaming Affiliate Market

Over the last couple of years the Italian affiliate business has undergone major changes which coincided with the progressive opening up of the domestic gaming market in the wake of the sector liberalisation implemented by the local authorities in the summer 2006.

Notably the summer 2006 reform legalised for the first time ever in Italy such brand new games like remote skill games and betting exchange and paved the way for the introduction shortly thereafter of a restricted and lighter type of real money poker in the form of online poker (and indeed other card games) tournaments which were in fact granted regulatory status of skill-based games.

In addition to the introduction of new games a licence tender was called in October 2006 by the Italian regulatory body (“AAMS”) for the award of nearly 14.000 fresh betting outlet licences as well as an unlimited number of pure remote gaming licences covering sports and horserace betting, skill games and instant lotteries.

The licence tender was launched in October 2006. Two and a half years on, the Italian gaming market looks a very crowded arena where competition is fierce and all top names of the online gaming business with very few exceptions are now holding an Italian gaming licence. Following legalisation and regulation of online poker tournaments during the course of 2007 also some of the biggest poker rooms like Poker Stars and Party Gaming since got an AAMS licence and other important poker operators too are understood to be on the verge of applying for a licence in Italy.

The unprecedented legislative and regulatory changes that in such a short period of time so deeply affected and reshaped the domestic gaming market obviously had a dramatic impact also on the affiliate business. Indeed the introduction of new games and the legalisation of remote gaming altogether freed up a lot of new and lucrative business opportunities for offline and online media companies enabling them to offer their services, virtually with no restrictions. for purposes of advertising, marketing and promoting AAMS-licensed operators.

Particularly for those AAMS-licensed companies who are totally newcomers to the Italian market but also for some licensed operators whose names equally appear in the AAMS official blacklist of foreign-based, illegal ‘.com’ sites, building their brands, enhancing their visibility and promoting their ‘.it’ legal business is essential. Hence strategic affiliations with the right sector magazines, portals, testimonials, etc. are one of the keys to a successful and speedy market entry. Affiliates can in turn carry out their job in quite a safe and legally correct way provided few basic rules are strictly complied with which can be summarised as follows:

1. Promote and procure business only to those gaming companies that do hold an AAMS licence. Affiliates should in fact be aware that notwithstanding various rulings handed down over the past few years by the European Court of Justice (in re Gambelli, in re Placanica, etc) under the European law theory of the free offer of services across the border, the mere fact that a company might hold a gaming licence granted in another EU jurisdiction is not just enough to entitle it to carry on business in Italy without thereby running into trouble with the local law enforcement authorities

2. Even if the affiliating company is licensed in Italy, the gaming services it can actually offer are not unrestricted. Let alone the only four brick-and-mortar Italian off-licence casinos, elsewhere there still is in place a gambling ban which covers casino, roulette, Vegas-style slots, poker and other cash games (but not online poker tournaments which are eligible for skill game classification). In the case of a company holding an AAMS-granted remote gaming licence the games that can actually be promoted, advertised and marketed (whether directly and/or via its affiliate network) are sports and horserace betting, skill games and instant lotteries. When later this year new and more European-friendly remote gaming rules will be implemented, subject to payment of an extra €50.000 licence fee online bingo too will be added to said list

3. No matter the money at stake, do avoid acting in Italy as the official representative of a gaming company unlicensed yet equally soliciting ‘.com’ business locally. This might expose a local affiliate to the risk of being possibly prosecuted in Italy and because a foreign-based company is not supposed to have any physical presence nor official company representatives, its local affiliate guy could ultimately stand all liabilities in case something should go wrong

4. Make sure you know the actual rules of the game. It might look an easy slogan but it is quite not. By way of instance, since AAMS legalised and regulated online poker tournaments, many Italian poker clubs and other event promoters started organising live poker tournaments on the totally wrong assumption that even offline poker tournaments were affected by the liberalisation, which actually was not at all the case. Actually a regulation of live poker tournaments is in the Italian regulator’s pipeline however when it is enacted (hopefully later this year) offline poker will still be covered by a separate set of rules. Until then though live poker tournaments will remain in a grey regulatory limbo and an Italian affiliate of the poker company promoting it might well end up in trouble with the law enforcement authorities

5. Quick tip marketing/advertising-wise. Let alone the underage gambling ban and the quite standard responsible gambling caveats, there virtually are no advertising/marketing restrictions provided the affiliating company operates in Italy under the umbrella of an AAMS licence.

Quirino Mancini, partner
Sinisi Ceschini Mancini (qmancini@scm-partners.it)

Quirino Mancini

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