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The Italian gaming market will remember this Wednesday for the very large number of companies, shops and individuals subject of actions taken by Italian police authorities.
What happened in the Italian gaming market?
Italian police authorities performed an action against over 50 individuals deemed to be involved in a mafia organization which was apparently illegally offering games in Italy through a network of CTDs (i.e. Internet cafes connected to foreign licensed gaming websites) in breach of Italian criminal laws preventing it and performing through the proceeds of such crime money laundering activities and tax frauds.
The adopted measures were not performed only in Italy since 45 Italian companies and 11 foreign entities were seized together with 1,500 CTDs and 82 websites which included both Italian licensed and foreign licensed gaming platforms.
The status of CTDs in Italy
The peculiarity of Italy is that there have been for many years so far two different types of betting shops. Those run under an Italian betting license and those operated as Internet cafes connected to foreign licensed gaming websites (the CTDs). The position of the latter is that the Italian licensing regime is in breach of the European Union principle of freedom of services and therefore they cannot be prevented to operate under their foreign license.
The CTDs have become so popular in Italy that their number is close to (or even higher than) licensed betting shops. And this is the reason why the Italian Government tried last year to “cure” their status allowing them to be authorized to operate as if they were licensed in Italy through the commitment to pay back-dated taxes at a discounted rate. However only 2000+ CTDs decided to cure their position, while the others opted to insist on their initial position, despite of the recent decision of the European Court of Justice on the matter.
What will happen after the earthquake?
The sanctions for the illegal offering of games are up to 3 years of imprisonment, but if they are combined with those applicable for mafia organization, money laundering and tax fraud, the case becomes substantially relevant.
The market is questioning itself on what in going to happen next. A relevant gaming provider had its assets seized and a domino effect might derive on the websites of its network, considerably shuffling the positions in the market which might create opportunities also for new entrants.
At the same time, these events show that measures restricting the offering of games only lead to an increase in criminal activities while an adequate licensing regime with deep controls as those ensured by the systems of the Italian gaming regulator coupled with an appropriate tax regime and obligations that are not excessively burdensome and allow a competitive gaming offering is the best solution to limit potential criminal conducts.
I will follow the developments of the matter, but someone sees such action from the Italian police as
the sunrise of a new age
for the Italian gaming market.
