July saw Ficom Leisure and Gioconews appearing on a panel at iGB Live! in Amsterdam. We discussed the recent law decree issued by the Italian government, which includes a full gambling advertising ban. Other members on the panel were Kindred Group’s country manager (Italy), Barbara Beltrami; Francesco Gaziano, SKS365’s chief marketing officer and country manager (Italy); and gaming and M&A lawyer Rodolfo La Rosa.
The law, which came into force on 14 July 2018, means that:
● All forms of gambling advertising, carried out by any means (including sporting, cultural or artistic events, television or radio broadcasts, daily and periodic press, publications in general, billboards and the internet) are banned.
● From 1 January 2019 sponsorship agreements are also banned.
● No new contracts can be signed and existing advertising contracts are deemed valid only until July 2019. These contracts have to comply with previous gambling advertising regulations.
● Fines will be whichever is the highest of a) up to 20% of the total value of the sponsorship deal or cost of advertising campaign; or b) a fixed sum of €50,000.
THE ITALIAN ONLINE BETTING AND GAMING MARKET
The Italian market was one of the first to regulate all online betting and gaming products with a sustainable tax structure. Legislation was introduced in 2006 that permitted the offering of sports betting services in retail locations and online, following the amendments in the casino regulation that was introduced in 2011. The tax regime for online betting and gaming operations, applicable from 1 January 2019, is 25% tax on GGR for games of skill (poker tournaments and cash games), casino and bingo; and 24% tax for sports betting. The Italian online betting and gaming market has been growing year-on-year, with the main GGR drivers being casino and slots, and sports betting. In 2018 the total online market generated revenue of €1.5bn (+17% YoY). In the first semester of 2019 the total online GGR was €850m (+13% over H1 2018), 48% of which came from casino and slots, followed by 42% from sports betting, 9% from poker cash and tournaments, and about 2% from bingo.
However, the online betting and gaming market still represents less than 8% of the total Italian betting and gaming market.
The Italian communications regulator Autorità per le Garanzie nelle Comunicazioni (Agcom) has published the first set of advertising standards guidelines covering Italy’s forthcoming ban on gambling advertising. Since 15 July 2019 no advertising on any betting or gaming product has been allowed on any medium. This includes TV, radio, outdoor, sponsorships and search engine marketing. The annual value of this advertising represents more than €140m.
The advertising ban does not have an impact on the fascia of betting shops or slots and bingo halls. The ban is likely to have a different impact on companies that operate online-only, as well as those operators with an omnichannel offering.
Online companies are currently evaluating different opportunities, including M&A where they are looking to acquire a land-based operation (betting shops, bingos, betting halls) to promote their online presence under the same brand, or acquiring a smaller operator in order to increase the market share. Operators are also engaging in social marketing activities, where they can offer virtual money gaming, which will give visibility to their brand.
Right now, all licensed betting and gaming operators are evaluating how best to recruit and engage with players. It is a challenging situation for online betting and gaming operators, which up to now have only had one way to recruit new players – and that is through affiliation.
Affiliation is not covered by the advertising ban, but the message carried by affiliate websites needs to be strictly informative, covering bonus terms, jackpots, chances of winning and minimum bets. It should not actively promote play.
A number of European countries are looking to introduce some limitation on advertising in gaming. With this in mind, the industry may have to introduce some advertising guidelines, as the over-exposure of betting and gaming operators on TV and radio in Italy was what drove the introduction of the advertising ban in the first place.
ABOUT FICOM LEISURE – GAMING ADVISORY AND INVESTMENTSFicom Leisure is an M&A advisory and consultancy company which has specialised in the offline and online betting and gaming industry since 1996. It has more than 75 years of combined experience and expertise in all segments of the B2B and B2C international gambling industry: betting, casino, lottery, live casino, bingo, poker and skill games for land-based and online, mobile, social gaming and esports.
We provide strategic and corporate advisory, business consultancy and sell-side and buy-side investment-related services from locations in London, Rome, Madrid, Malta and Miami.
More information is available at ficomleisure.com
