No Retreat… Innovation is the only way to grow the Italian market

Since 2018, Italian betting operators have faced consecutive tax increases, a blanket ban on advertising and sponsorship, alongside tougher compliance controls enforced by regulatory agencies.

The SBC Digital Italy Summit began by analysing how Italian operators have navigated a market which has been in a constant state of flux, and whether a further 2021 of political uncertainties will lead to either a ‘recovery, retreat or restart?’ for embattled incumbents.

Leading panel discussions, Christian Tirabassi, Senior Managing Partner of Italian gambling advisory Ficom Leisure, questioned how leadership had adjusted to the sustained regulatory rifts which govern Italy’s marketplace.

Providing a frank response, Alexander Martin, Group CEO of  SKS365, underscored that constant regulatory interventions had ‘made the market disorientated’.  

He said: “Certainly, for us, 2019 was a year of reckoning for Italian gambling both for online and retail. The government proceeded to install the decree’s advertising ban and since then none of us have been able to promote our brands in any public viewing.”

As a result, Martin stated that the “market has become disorientated for the consumer, who is faced with disinformation of licensed operators especially across online platforms”.

Furthermore, the aftermath of the decree’s blanket ban “carries a €150 million blackhole for Italian football, which helps no-one and carries costs for TV, media and regional sports”.   

“As licensed operators, we have been denied the responsibility to market our products responsibly to consumers,” he continued. “We are also seeing no effort by the regulator to safeguard consumer channelisation to licensed operators.”

Providing an outlook on 2021 trading, Martin explained that Italian operators had been handed a further blow by the government which had introduced a 0.5% turnover tax on all sports wagering verticals.

He continued: “Whilst other industries receive support and benefits, we are told to stay closed and pay more taxes. Cafes and Restaurants have been allowed to reopen, but gambling venues have been provided no certainties…nothing has been planned.”

Yet, despite the frustrating regulatory circumstances in Italy, Carlo Di Maio – Managing Director of Gamenet Group – led his firm’s ‘consolidation of the marketplace’ – having aggressively expanded Gamenet’s retail presence to more than 17,000 betting points.

“Without advertising, 2019 forced us to accelerate our omnichannel approach, in which we were recording single-digit growth across retail and double-digit online… we were looking forward to breaking staking records until 2020 happened,” Di Maio remarked

“It was not easy, we had to support our franchisees for four months, taking in all their costs during lockdown.”

Despite facing continued retail uncertainties, Di Maio stated that Italian betting still holds significant scope to grow as “Italy has been digitally underpenetrated compared to other European markets”.  

He said: “Let’s just say that the consumer has done a bit of catch-up, and is now more aware of the digital offer, for mobile especially and also online casinos too. Meanwhile, Italy’s retail offer has been limited and static to date, with operators choosing to maintain the customer within a single vertical.”

Regarding market growth, Di Maio argued that development will come down to which operators can offer the best products and services that can accommodate rapid consumer change and regulatory conditions. 

Providing a B2B perspective, Filippos Antonopoulos –  CEO of fintech omnichannel igaming payments supplier OKTO – noted that Italy’s current regulatory landscape simply mirrors other European jurisdictions.

“We have to judge the market through the eyes of the regulator,” explained Antonopoulos. “For Italy, the pandemic has changed many pre-conceptions of the market. Whilst Italy needs urgent innovation, the regulator is concerned about player anonymity and problematic gambling.”

Antonopoulos agreed with Di Maio’s observation that “retail agents have always tried to ring fence the player away from digital operations, which is a hard custom to break as Italian betting operates on a franchise model”.

Facing further uncertainties, Antonopoulos highlighted the need for investment in new technologies across Italian gambling’s value chain in order to accelerate the market.

He concluded: “We should approach this as a restart for Italian gambling. However, the betting shop must be thought of as an ally for operators, as they stand as a secure entry point for many consumers.”