In less than two weeks’ time, the Italian Undersecretary for Sports Valentina Vezzali will reunite with the fiscal ministries in the country to discuss the possibility of introducing a fixed 1% tax on betting revenue. Each ministry will need to present its own tax proposal. If approved, the new tax charge would add an extra €160 million ($175 million) to the tax treasury.
The Brains Behind the 1% Tax Proposal
The group that came up with the new 1% tax proposal first convened on March 29. The group was represented by Italy’s Treasury and gambling regulator Agency of Customs and Monopolies, together with the ministries of Labor Policy, Finance Commission, Economic Development, and the Income Revenue Office. The group’s members are expected to come together once again in approximately two weeks’ time. In the meanwhile, each ministry will need to work on creating and presenting an individual tax proposal and bring any additional considerations to the proposal.
If one of the ministries’ proposals will be given the green light, sportsbooks in Italy will need to tackle yet another tax burden after dealing with the 0.5% betting levy on sports wagers imposed on their businesses during the COVID-19 pandemic. The extra 0.5% tax was used to support the sports industry in the country during the difficult times and it was part of the COVID-19 Revival Decree. The tax was temporarily applied for a year and a half in 2020 and 2021 and it helped inject €90 million ($98 million) into the country’s economy.
What Would a 1% Tax on Betting Turnover Mean for Sportsbooks?
The introduction of a 1% tax on betting turnover would most likely be the equivalent of revenue cut between 10% to 20% for Italian sportsbooks. The powerful hit that these businesses would suffer is expected to result in a huge advantage for the black market. While incumbents complying with the country’s legislation have not yet been introduced to a formal plan regarding the new tax, their opposition is heard loud and clear. As they would be forced to adjust their prices to adapt to the new tax on revenue, licensed sportsbooks would be paving the way to an even more flourishing black market business for unlicensed incumbents.
While continuing its battle against unregulated gambling and related money laundering activities, Italy is still confronted with a series of black market problems with illegal betting businesses operated by the Mafia. Last December, the federal police took 12 suspects into custody. The 12 were tied to a number of illegal gambling websites that were potentially under the control of the Mafia.
According to the freshets numbers in the sports betting market, the combined online and retail sports wagering on horse races and virtual games generated a yearly average turnover of €16 billion ($17.5 billion). If approved, a new 1% tax on betting turnover would result in an extra €500 million ($548 million) collected from licensed sportsbooks, with 18% coming from retail shops and 22% from online gross gaming revenue duties.