The European Commission (EC) has extended a temporary hold on Italy’s forthcoming online gambling licensing framework, following objections from Malta’s Gaming Authority. This delay, which now pushes Italy’s licensing decision until November 18, underscores a significant regulatory standoff between EU nations, with Malta questioning Italy’s approach to compliance for gambling businesses.

Malta Challenges Italy’s Compliance Demands

Malta, represented by its Gaming Authority (MGA), formally challenged Italy’s proposed regulations, arguing they could place undue burdens on B2B businesses, such as gaming platforms and technology suppliers. According to the MGA, Italy’s new framework might create unnecessary hurdles, citing concerns over redundant compliance checks for businesses already vetted in other EU countries.

The MGA’s primary concern is about duplicating requirements that B2B operators, licensed in other EU nations, have already fulfilled. By acknowledging licenses and compliance procedures established in other Member States, Malta believes Italy could avoid piling on additional costs and operational complexities for these operators. “Member States should recognize that B2B operators may already hold licenses elsewhere in the EU,” MGA advised, pressing for a cooperative approach to compliance.

In response to Malta’s concerns, the EC directed Italy to present adequate justification for these additional compliance requirements. The aim is to ensure Italy’s new rules don’t obstruct the EU’s principles of freedom of establishment and the provision of cross-border services within the internal market.

Italy’s New Licensing Costs and Structure

Italy’s latest licensing system, intended to span nine years, requires operators to pay €7 million per license, with an annual fee set at 3% of gross gaming revenue (GGR), minus gambling taxes and player winnings. As an interim measure, Italy’s Budget 2024 has allowed existing license holders to extend their current licenses for another year, enabling continued operations until the new framework is implemented.

The updated framework also tightens market rules for B2C operators by mandating a “one app per gambling product” restriction and permitting only a single website per license. The Italian Agency of Customs and Monopolies (ADM) will oversee these requirements, issuing penalties for operators using multiple site skins or employing branding techniques outside the guidelines. ADM anticipates that up to 50 companies could apply for new licenses, projecting initial fees of around €350 million and recurring annual fees of €100 million.

Italy’s decision to regulate the market through tighter licensing and financial constraints is part of a broader approach aimed at limiting market saturation and prioritizing accountability.

Italy’s Gambling Trends Signal Regional Concerns

Malta’s objections, and the EC’s intervention, align with an evolving gambling landscape in Italy. The Italian government’s revamped approach forms part of the Gambling Reorganisation Decree, a regulatory initiative aimed at modernizing and streamlining Italy’s gambling rules, which have remained largely unchanged since 2011.

This comprehensive overhaul is set to address online gambling first, then move on to adjust regulations for land-based gambling venues. The shift comes amid rising concerns about gambling’s social impact across Italy’s regions and municipalities, particularly in areas where gambling expenditures are notably high.

A case in point is the small municipality of Calliano, which recorded an astonishing per-resident gambling spend of €12,749 in 2023, totaling more than €19 million for the community. The Customs and Monopolies Agency has highlighted such patterns in its studies on small-town gambling trends, suggesting a pressing need for targeted regulations to mitigate potential social and financial fallout in these communities.

The next phase of Italy’s Gambling Reorganisation Decree will focus on land-based gambling, where authorities aim to tackle region-specific challenges with regulatory measures that prioritize public health and community welfare.

Italy’s Response and Industry Impact

As the extended standstill period progresses, Italy’s Treasury is gearing up to respond to Malta’s objections. Following the November deadline, the ADM is expected to roll out the new licensing model, incorporating any necessary adjustments raised during Malta’s review. Alongside these regulatory updates, the Ministry of Economy and Finance (MEF) plans to introduce responsible gambling measures, requiring operators to offer users spending and time limits, with notifications to alert players when these thresholds are met.

The industry reaction to Italy’s proposed system has been mixed, with some stakeholders viewing the increased compliance and licensing fees as overly restrictive. Analysts predict that the higher costs and compliance obligations may discourage smaller operators from entering Italy’s market, resulting in a more consolidated field dominated by larger companies equipped to handle the regulatory and financial demands.

At a broader level, Malta’s influence in this standoff may set a precedent for future EU gambling policies. The EC’s decision on Malta’s concerns could promote a push toward EU-wide regulatory harmonization, where existing licenses and compliance standards are recognized across Member States. This approach, Malta argues, would create a more integrated and competitive environment for the European gambling industry.