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December 2, 2010 News & Reports

It could hardly be disputed that when it comes to remote gaming (such notion including Internet, mobile and interactive tv), the Italian market is at present the most, and probably also the best, regulated gaming environment across Europe. So much so, that the basic principles of the Italian regulatory model combining the possibility to offer quite a wide range of remote gaming services to the requirement of doing it only and strictly under the scope of a locally-granted licence, have been replicated also across the Alps by other jurisdictions (notably France and Denmark) that recently decided to open up their domestic markets. More European countries are now poised to follow suit in the months to come (Spain for one) although they are understood not to be aiming at copy/pasting the Italian model altogether given also the various peculiarities (highlighted in bold below) of such model whose main features can be summarised as follows

  • A licence granted by AAMS (the Italian regulatory body) is required to provide remote gaming services to Italian residents. Hence not only offshore-based, but even operators licensed elsewhere in the EU are not allowed to carry out across-the-border services in Italy using the licence held in their home countries
  • Between the late days of 2006 and July 2009 AAMS awarded some 60+ remote gaming licences which are all already operational. A new licensing round is now scheduled to be launched early in 2011 with up to 200 fresh remote gaming licences being put up for award upon simple application
  • A full purpose AAMS remote gaming licence covers fixed odds/pool sports and horserace betting, skill gaming (including online poker and any other card tournaments which are all eligible for skill gaming classification), instant lotteries (subject to a sub-distribution agreement with the current exclusive licence holder), online bingo, online casino, online poker and other cash games, bets on virtual events and betting exchange (subject to these two latter games being regulated by AAMS)
  • The one-off cost of a full purpose AAMS remote gaming licence is €350.000 plus Vat at 20% and it will last 9 years.
  • The AAMS licence is open to any applicant based in an European Economic Area jurisdiction (“EEA”, ie European Union countries plus Iceland, Norway and Liechtenstein). It can be granted directly to a foreign applicant provided he holds an EEA passport
  • The AAMS licence may be issued even to a non-operator (such as a startup or a company coming from a totally different business) subject to: (i) release in favour of AAMS of an €1,5 million bank guarantee, and (ii) certification by an independent auditing firm that the applicant holds all required technological infrastructure and management resources to run the prospective licence
  • Remote gaming services may only be offered to Italian residents through a dedicated, ring-fenced platform to be certified by an AAMS-approved testing lab and that must be linked up the central control system ran by AAMS via its technological partner SOGEI so that each bet/wager placed by an Italian customer may be recorded, monitored, tracked, validated and taxed in real time
  • Provision of remote gaming services from a foreign-based ‘.com’ platform to Italian residents is strictly forbidden and subject to the blacklist restrictions currently enforced by AAMS
  • Whoever offers online gaming services in Italy without holding an AAMS-granted licence is subject to imprisonment from 6 months up to three years. Whoever organises, offers and takes remote bets in Italy on any games regulated by AAMS but in a way other than that required by the AAMS rules, is subject to arrest from three months up to one year and to a fine ranging from €500 to €5000 even if the violator does hold an AAMS licence
  • Foreign-based AAMS licensees are allowed to keep their gaming servers abroad provided they are located in the EEA space and a full, real time connection with the AAMS central control system is in place
  • The gaming software of the poker and casino games available on the Italian platform must be certified by an AAMS-approved testing laboratory

As mentioned above, nearly 60 remote gaming licences or so are already active in Italy which means that the local market is very crowded and highly competitive even though the current licences do not yet allow operators to offer such popular games as online poker, online casino and other Vegas-style cash games that will notably become available when AAMS launches the new licensing round early in 2011. Accordingly the current AAMS licensees willing to offer poker and casino games will be required to: (i) have their gaming software certified by an AAMS-accredited testing house, (ii) seek an AAMS authorisation to go live with such new games, (iii) sign an addendum to their AAMS licence agreement to upgrade it and put it on a par level with the new standard AAMS licence agreement that will be introduced in the 2011 licensing round.
With the above very imminent developments in the AAMS pipeline, the biggest challenge for the Italian regulator is to be able to effectively and timely cope with massive filings from both existing licensees and new applicants, that almost inevitably will pile up and well possibly trigger a bit of a red-tape jam in the AAMS offices. As for the operators, those already holding a licence will strive to go live with their online poker and casino products before any other competitor, while the newcomer ones will want to gain a pole position in the application filing race when AAMS actually reopens the licensing process any time soon. In this regard, bearing also in mind that due to heavy budgetary restrictions the Ministry of Treasury (from which AAMS depends) is not expected to beef up the gaming regulator’s staff, it is well possible that the existing operators’ filings could be somehow prioritised and thus processed ahead of all the fresh licence applications. As a resut, as things stand now the likeliest time to market for the existing AAMS licensees to be entitled to go live with poker, casino and other cash games appears to be some time in Q1/11 while the newcomer applicants should realistically look at some time in Q2/11 to be awarded their AAMS licences.
Once the existing AAMS licensees and the newly-licensed ones are all granted their respective titles to operate fully in compliance with the new AAMS rules, an even fiercer battle will kick off on the ground at customer recruitment/retention level, and more generally in terms of expensive advertising and marketing campaigns. Indeed with most blue-chip operators of the online gaming business already holding (or however poised to soon secure) an AAMS licence, Italy will no longer be a place for small to medium size operators hence it is envisaged that the local market will see more merger and acquisition deals with further consolidations and business integrations than already occurred thus far. Also, in an effort to diversify and expand their business model thereby better meeting the needs of a very demanding and still hungry market, not only at player level but also in terms of non-gaming companies with a strong brand and a solid customer database that are increasingly looking at ways of fast-entering the lucrative gaming business, it is anticipated that more AAMS licensees will develop a business-to-business service to be ran alongside their own business-to-consumer, traditional operations.

*Quirino Mancini (qmancini@scm-partners.it) is a partner – Head of the Sports, Media & Gaming practice at Sinisi Ceschini Mancini and co-founder of www.gaminglaw.eu a gaming-related portal of articles, news and legal commentaries

Quirino Mancini

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