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Home » Uncategorized » Legal Online Gambling in Italy: The AAMS Model

Legal Online Gambling in Italy: The AAMS Model

Legal Online Gambling in Italy: The AAMS Model

July 15, 2020March 17, 2020 by John

The legalization and regulation of online gambling has been a hotly debated issue for more than a few years now, and in the wake of last year's Black Friday event has taken on even greater import for players, governments and casino operators worldwide.

Last month we kicked off a new in-depth article series with an an assessment of Black Friday and the subsequent shut down of Full Tilt Poker. We followed it up with an interview with several leading marketing experts in the gambling industry who gave us their opinion on the future of legal online betting in Europe. Here, we continue the series with a look at gaming laws in Europe's leading online gambling markets.

First up is Italy, a country widely considered the original franchising authority on internet betting. Its Independent Administration of State Monopolies (AAMS) oversees all online gambling activity in Italy via extensive regulations and the restrained issuing of licenses to casino and poker operators who comply with its very stringent requirements.

The purpose of its regulation and taxation protocol, according to AAMS itself, is two-fold: to maintain authority over public order and social mores; and to keep gambling within the financial reach of the Italian government.

MARKET GROWTH FOR LEGAL GAMBLING IN ITALY

According to H2 Gambling Capital, the leading supplier of market intelligence consulting services for the gambling industry, Italy’s gross gaming yield (a measure of total customer cash held by betting operations) from online casinos, poker rooms and bingo websites will increase from just over €400m in 2008 to nearly €1.6 billion in 2012.

As the below chart indicates, Italy has been and is expected to continue to be the most lucrative of online gambling markets in Europe. It's no wonder then that online casino and poker operators are clamoring for a piece of the action. But getting in on that action requires an AAMS license, and Italy's gambling authority has been diligent in closely regulating – and more specifically, taxing – online gambling revenue.

MOST POPULAR AAMS-APPROVED GAMBLING WEBSITES

Online casinos that receive AAMS licenses are competitive, and most are showing steady growth.

Lottomatica maintains an average 30% of market share. GD Casino, operated by Bwin.Party (formed by the 2011 merger of Bwin Interactive Entertainment and PartyGaming plc), maintains the second largest share of the legal Italian casino market. In third place is Snai Casino, which holds firm at an average 10% of market share. 888.it and Betclic are also in the game, and Unibet rose from a consistent 00.1% to 0.74% of market share in the latter part of 2011.

THE AAMS MODEL

The Italian model for regulating online casinos has proved successful thus far. Offering remote legal gambling services in Italy requires that operators obtain an AAMS-granted, 9-year license. The one-time cost of the licence is €350.000 – plus a 20% Value Added Tax (VAT) – to be paid when the license is issued.

Which Types of Betting Does an AAMS License Cover?
The AAMS license covers a number of online bet types. These include fixed odds/pool sports and horserace bets, skill games (including tournaments) and online scratch cards, which are subject to a sub-distribution agreement with the current lottery license holder.

Who Is Eligible for an AAMS License?
Any gaming operator based in an European Economic Area jurisdiction (“EEA” i.e. European Union countries plus Norway, Iceland and Liechtenstein) may apply for an AAMS license.

Foreign operators may apply for an AAMS license provided that they hold an EEA passport. The latter condition means that are not required to incorporate an Italian company (discussed in depth below).

Additionally, non-operators like startups or companies venturing into gaming from a different business sector) may also receive AAMS licenses. However, they must submit a €1.5 million bank guarantee and an audit to be provided by an independent party stating that they have a sound technological infrastructure and sufficient know-how and management resources to maintain adherence to AAMS strictures.

Requirements for Receiving an AAMS License
To receive this license, operators must meet several conditions. Among these are the following:

  • provision of a dedicated and ring-fenced platform identified by the ‘.it' suffix that is fully  linked to and run by the AAMS centralized control system via its technological partner SOGEI, in order that each wager/stake/bet placed by Italian players can be recorded, tracked, monitored, verified and taxed;
  • a winning percentage of at least 90% for every one hundred billion spent;
  • payment of winnings must not exceed 7 days;
  • maintenance and enforcement of measures to secure transactions and maintain privacy of users;
  • employment of software that can be proven to ensure a safe gaming environment where the risk of fraud and deception is zero;
  • procurement of methods to responsible gaming, particularly when it comes to children – online casinos bearing AAMS approval must provide all information necessary to prevent against addiction (in short, gambling must remain a form of entertainment and not of bondage);
  • availability of Italian-speaking customer-service agents who have passed an examination that verifies they possess sufficient technical and service skills and are available even after the offices of the casino provider are closed (i.e. 24 hours daily; seven days per week).

Meeting all of the above requirements is no small task, and thus most AAMS-licensed online casinos are supported by powerhouse software companies like Playtech and Microgaming.

Taxation of AAMS Legal Online Casinos
The AAMS taxation model in Italy is made up of two components: turnover-based (“TOB”) and gross profit-based (“GPB”). The below games and corresponding levies are subject to TOB taxation:

  • sports betting (average 3.5%)
  • horserace betting (almost 10%)
  • skill games (3%)
  • bingo (almost 11.5%).

New remote games are subject to GPB taxation at a flat 20% rate. These include:

  • online casino
  • poker and ring games
  • betting exchanges and bets placed on virtual events.

Penalties for Non-compliance with AAMS Requirements
Given the above requirements, it is likely that some online casino operators will attempt to circumvent complying with them. They would be wise, however, to think twice before trying it. Providing remote gambling services to Italian players from foreign ‘.com' platforms is illegal and those who do so are subject to blacklisting, heavy fines and imprisonment up to three years and no less than six months.

Should a provider that holds an AAMS license organize, offer and/or receive bets in Italy in a manner other than those laid out by AAMS requirements, he is subject to arrest and imprisonment for three months to one year and a fine ranging from €500 to €5000.

THE FUTURE OF AAMS

Despite Italy's successful regulation of online gambling, there remain several unresolved areas. Among these is bingo, bets on virtual events and mobile gaming. The latter was originally included in the ‘remote gaming' definition of regulated bet types. However, as a result of mobile gambling's widespread appeal, it is now deemed a separate field.

What is clear is that the AAMS model works. While some may disagree with its stringent requirements, strict enforcement and harsh penalties for not adhering to said requirements, Italy's AAMS has proved effective in providing Italian gamblers a protected environment in which to wager online and it has carved a path that other European countries are beginning to follow.

About the Author

John

John has worked in the online gambling industry for over a decade. He has a vast amount of experience working for online casinos and takes a particular interest in the latest releases and innovations from developers. In his spare time he is a keen blackjack player and has been known to enter the occasional poker tournament.

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