Italy’s Gambling Tax Revenue Drops for the First Time

Italy’s gambling tax revenue has declined for the first time since the pandemic, signaling significant shifts in the gaming market.

With a 6.5% drop in tax collection, the Italian gambling industry faces challenges amid new regulatory reforms and changing consumer behavior.

Explore how ADM’s stricter licensing framework and economic fluctuations are reshaping Italy’s once-thriving gambling tax base.

Learn more about the impact of these changes and what they mean for operators in this competitive market.

Italy Reports First Gambling Tax Decline Since Pandemic Amid Regulatory Overhaul

Key Points:

1. Tax Revenue Decline: Italian gambling tax revenue dropped 6.5% year-on-year, falling to €8.05bn for January–September 2023.
2. New Licensing Framework: ADM’s nine-year gambling licenses now cost €7m each, with annual fees at 3% of GGR.
3. Sector Trends: Gaming machines lead tax contributions at 41%, but Q3 saw a sharp 16% revenue drop across the gambling sector.

Gambling Tax Revenue Drops in Italy Amid Regulatory Overhaul

Italy’s gambling industry has experienced its first tax revenue decline since the COVID-19 pandemic, marking a pivotal moment in the nation’s gaming landscape. According to the ADM (Agenzia delle Dogane e dei Monopoli), tax revenue from gambling fell by 6.5% year-on-year, amounting to €8.05bn between January and September 2023.

This decline contrasts sharply with other sectors regulated by the ADM. While tobacco tax revenue rose by 5.77% to €4.18bn and customs revenue grew by 2.98% to €6.84bn, gambling tax collection faltered.

What’s Driving the Decline?

The downturn was particularly noticeable in the third quarter, with gambling tax revenue dropping by 16%, from €3.3bn in Q3 2022 to €2.22bn this year. Expenditure on gambling during this period fell by 26%, reaching €4.35bn.

Gaming machines were the largest contributors, accounting for 41% of gambling tax revenue at €910m. Number games and lotteries followed closely, contributing €870m (39.08%), while betting accounted for €180m (8.17%) and other games added €260m (11.64%).

ADM’s New Licensing Framework

The ADM has introduced a new licensing framework aimed at reshaping Italy’s regulated gaming sector. Licenses will now:

• Last for nine years and cost €7m each.
• Include an annual fee of 3% of gross gambling revenue (GGR).
• Restrict operators to one app and website per product type, banning branded “skin websites.”

The Ministry of Finance defended the increased fees, citing market consolidation dominated by multinational operators. The ADM anticipates around 50 operators will apply for these licenses, potentially generating €350m in initial fees and €100m annually.

Stricter Compliance Measures

In parallel, Italy’s Decree on the Reorganisation of Gambling continues to advance land-based gaming reforms. Additionally, media watchdog AGCOM is implementing mandatory age verification measures for adult content, including gambling. Platforms will require users to verify their age through Italy’s SPID digital identity system before accessing restricted services.

The decline in gambling tax revenue signals a transformative phase for Italy’s gaming sector. While economic challenges and changing player behavior contribute to the drop, ADM’s stricter regulations and enhanced licensing framework are poised to redefine the industry.

For operators, adapting to these changes is vital. The market’s evolution underscores the importance of regulatory compliance, innovation, and customer engagement in sustaining growth in this competitive landscape. With ADM’s measures setting new benchmarks, Italy aims to create a more transparent and sustainable gambling ecosystem.