How the Roman Empire Laid the Foundations of Italy's Gambling Industry: From Il Ridotto to Online Casinos

History of Gambling in Italy

Step back to ancient Italy, where gambling was already a popular pastime among the population. In the grandeur of the Roman Empire, gambling was not just a hobby but a part of citizens' daily lives, a fact that continues to fascinate us today.

Games such as Tesserae, Ludus Duodecim, and Scriptorum were invented by Roman legionaries. Starting with a simple game to pass the time, the soldiers quickly figured out how to bet on the outcome of a throw. These games were popular not only among the common people but also among the nobility.

Interestingly, gambling in the Roman Empire was outlawed; those who gambled were fined.

Therefore, gambling houses, as a rule, were located in the back rooms of inns and shops.

After the fall of Rome, many gambling traditions continued, gradually transforming and evolving. Thus, in the 15th century, Felix Falgierain invented a new game, drawing inspiration from a dice game with nine faces from old Italian folklore. This game was dubbed “baccarat” - Italian for “zero.” The game soon reached the shores of neighboring France, where variations and changes in the rules were introduced, leading to the version of baccarat we know today.

The world's first casino appeared in Italy. In 1638, in Venice, in the left wing of the church of San Moise, a casino named Il Ridotto opened, which became the prototype of modern gambling clubs. Due to high stakes and a strict dress code, only aristocrats could enter the establishment. Thus, gambling became exclusive entertainment intended only for rich people. Ridotto operated for 136 years and was closed in 1774 to preserve “piety, sound discipline, and moderate behavior.”

The aristocracy did not accept the loss of such first-class entertainment and began to organize gambling in their villas. These semi-legal casinos became a meeting place for public figures and representatives of high society, creating a special atmosphere of luxury and excitement.

That situation continued until the 20th century. As gambling gained momentum and Italy gradually became a center of betting and wagering, a state body was created to regulate such activities. Mussolini's government began to control the gambling industry in the 1930s. After that, gambling in Italy became available to a wide audience. The first land-based casinos opened in the country, offering various games, including roulette, poker, blackjack, and slot machines. However, official rules and policies to be implemented throughout the republic were not introduced until 1948.

Today, gambling is an important part of Italy's culture and economy, attracting millions of local and foreign players and being a key sector of the country's entertainment industry.

Regulation of Land-Based Casinos in Italy

Italy has come a long way from completely banning all gambling to legalizing some under certain conditions. The main reason why the Italian government kept strict regulations was to avoid possible negative consequences associated with the industry.

Compared to other countries, gambling laws in Italy are quite mild. Although sports betting and lotteries are allowed in various places throughout Italy, gambling in private clubs or public places is considered illegal. Only the state can authorize gambling activities.

Until 2012, licensing was carried out by the Autonomous Administration of State Monopolies (AASM). In 2012, under Law No. 135/2012, the AASM was incorporated into the Customs and Monopolies Agency (Agenzia delle dogane e dei Monopoli, ADM). It is now the sole regulator of gambling in Italy.

Italy's gambling industry is focused on preventing gambling-related financial leakage abroad. The country operates four casinos close to the borders, considered “strategically important” locations. This means they are on the way to Monte Carlo, Switzerland, France, and Slovenia — countries that also have casinos.

• San Remo is located near the French border.
• Di Campione is on the border with Switzerland.
• The casino in Venice is near Slovenia.
• De La Valle is on the way to Monte Carlo.

Under Italian criminal law, gambling, regardless of where it takes place — in public places or private clubs — is considered illegal. However, there is a distinction between games of chance and games where the outcome depends on the player's skill. Therefore, most gambling is authorized and strictly regulated by many decrees and regulations.

Since 1986, casinos in Italy have been partially reorganized: they are all owned by municipalities. There is no common tax policy; each region determines its tax rates.

The following amendments liberalized the market in 2006:

1. Legalizing real-money games and betting;
2. Opening the Italian gambling market to operators from EU and EFTA countries;
3. Introducing a new licensing tender to reorganize the offline bookmaker network and allow online gambling operators to offer their services on a legal basis.

The 2007 Finance Law was another milestone in regulating gambling in Italy. It legalized skill card games, specifying that such games must be played in the form of a tournament with stakes equal to the tournament entry fee. This automatically legalized Texas Hold'em poker. Other poker and video poker games based on the same rules were banned because they depended entirely on pure luck.

The Comunitaria decree adopted in February 2011 was a real breakthrough for the gambling industry in Italy. It established the rules for cash poker and casino games and consolidated the changes made to the previous version of the decree. One of its most notable aspects was a new tax regime based on profits rather than turnover.

Also, the new decree obliges operators to return at least 90% of the money bet to players as winnings. The maximum buy-in of a poker tournament was set at €250, and the maximum initial bet for each gaming session could not exceed €1,000.

Thus, the gambling business in Italy is strictly regulated and controlled, which ensures its stability. This model has its pros and cons, but it generally allows the state to control the outflow of funds abroad, enrich the budget, and create jobs for residents.

Players in Italy can choose from a wide range of gambling games, including roulette, blackjack, baccarat, and poker. The minimum age to gamble in casinos is 18, provided you present a valid photo ID.

Gambling operators must strictly comply with the quality standards set by the state, and all gambling establishments must be licensed by the regulatory authority.

Taxation of the Italian Gambling Industry

The Italian government applies taxes to licensed gambling operators as a major source of public revenue. Tax rates and structure differ between gambling sectors:

• Sports betting is taxed at 4.5% of gross gaming revenue, replacing the previous turnover tax.
• Casinos are taxed at 20% of gross annual profits.
• Municipal income taxes may also apply.
• Bingo halls and other games of chance are taxed at a flat rate of 11% of gross billings.
• Poker tournament fees are taxed at 3% of the total tournament buy-ins collected. Cash games are exempt from the tax.
• Slot machine operators pay a flat tax on slot machines plus municipal fees based on location and number of machines.
• Betting on horse racing is subject to a sales tax of ~18% plus municipal income taxes.

Overall, the regulation of land-based casinos in Italy aims to create a favorable and safe gambling environment that simultaneously considers the interests of players, operators, and society.

Legislation and Regulation of iGaming in Italy

With the advent of the 21st century, online gambling has become increasingly popular across Europe. Taking the lead, Italy became the first EU member to comprehensively legalize, license, and regulate its online gambling industry. This included three rounds of licenses: in 2006, 2011, and 2018. This move was taken to control online gambling and ensure the safety of players.

The licenses issued in 2018 cost a lump sum of €320,000, plus two-year concession fees were to be paid on top of this initial amount. The exact amount payable depends on the casino's turnover in the previous six-month period. It is strictly forbidden to run an online casino without a license, and players are advised to stay away from any site that does not have one.

Under the umbrella of this legislation, a system of online gambling licensing has been created. Operators wishing to offer their services in the Italian market had to obtain a license from the AAMS (Amministrazione Autonoma del dei Monopoli di Stado Stato).

The licensing process involves a strict set of requirements, including:

1. verification of financial stability,
2. verification of compliance with technical standards,
3. verification of the provision of appropriate security measures and protection of player data.

These measures aim to ensure the integrity of the game, prevent fraud, and protect players' interests. With the onset of licensing, many online casinos and bookmakers have emerged, offering a wide range of gambling games, including slots, roulette, blackjack, poker, and sports betting on various events. The Internet has become a platform for the development of new forms of gambling, such as virtual sporting events and e-sports.

Online gambling in Italy has continued to show steady growth in recent years. Strict regulation and licensing have helped to build player confidence in online casinos and bookmakers, as well as creating a favorable environment for the development of the industry.

Despite its successful development, the online gambling sector in Italy faces challenges such as competition with illegal operators and the need to adapt to a rapidly changing technological environment. However, thanks to an effective regulatory system and a high level of consumer protection, internet gambling in Italy remains popular and promising for further development.

The Future of Online Gambling in Italy

All Italian internet gambling licenses will expire at the end of 2024. Therefore, the tender for new licenses is expected to be announced in the coming months. In early March 2024, the Italian Council of Ministers approved new rules establishing a legal framework for online gambling, including a regime for issuing new remote gambling licenses.

This reform represents a major change from the past law. The legislative decree is very complex, we will highlight the most important provisions:

1. A call for tenders for 50 new online gambling licenses will be issued by December 31, 2024, as all current licenses will expire then.
2. Each 9-year license will cost €7 million, and an annual license fee equal to 3% of GGR, less gambling taxes, will be paid. Future concessionaires must also pay an annual fee equal to 0.2% of their net income.
3. Concessions will be limited to five licenses available to each operating company, such as SNAI, Flutter Entertainment, Lottomatica, Entain, or SKS365. This resolution is necessary as MEF seeks to end the practice of “skinny websites” selling products from a single concessionaire.
4. Very strict requirements must be met to meet the suitability criteria, and potential fines have also been increased to deter operators.
5. Skin/white-label websites are subject to strict restrictions. Any operator must have one website with an Italian top-level domain name and its logo displayed on it. No provisions have been introduced to allow additional rebates for paying the potential fee.
6. Stores selling top-up cards for transferring funds to gambling accounts are registered in a special registry and pay an annual fee of €100 per store. Any gambling activity or withdrawal of funds from stores is also restricted.
7. Stricter rules were introduced against the offering of games in Italy through unlicensed gambling sites, as well as through the introduction of payment-blocking measures.

This is a summary of the most important changes introduced. We must cancel that the license price has become extremely high compared to past tenders—€7 million instead of €320,000. In addition, there is no indication that the Italian ban on gambling advertising will change its terms.

Rising prices for remote licenses combined with a ban on gambling advertising could create a significant barrier to entry into the market, forcing some operators to conduct their business illegally or cease operations.

Indeed, the Ministry of Finance assessment shows that more than half of the current operators will not participate in the new tender. While these measures will undoubtedly strengthen the position of large operators due to reduced local competition, they may inadvertently contribute to the growth of the unlicensed market.

Another aspect of the reform is the protection of minors and the prevention of illegal gambling. Both technical and regulatory measures will be used for this purpose, which include:

• Reduction of gaming and win limits;
• Mandatory ongoing training for operators and traders;
• Improved self-exclusion tools for players, including a national registry where people can voluntarily exclude themselves from games with monetary rewards;
• Defining the essential characteristics required for gaming halls and other gaming venues;
• Requiring certification for each slot machine.
• Prohibiting betting on amateur sporting events exclusively for minors under 18.

In addition, the reform provides that online gambling operators may only use physical stores to offer ancillary services. This excludes any offering of remote gambling or the payment of related winnings. This approach is intended to combat the trend seen with some online gambling operators who operate chains of stores without gambling licenses but operate in a similar way to betting stores, accepting deposits and paying out winnings.

Thus, Italy's remote gambling market is undergoing significant changes that could dramatically alter its landscape. Huge barriers to entry and unprecedented tax increases will remove smaller players from the market, giving exclusive opportunities to a few large operators.

Illegal gambling In Italy,

the Administration and the Anti-Mafia Office estimate the total turnover of unauthorized gambling at 25 billion dollars. Due to its particular ability to penetrate, the illegal online sector occupies at least 75% of the market, with a turnover estimated at around 18.5 billion euros.

• In illegal casinos, gambling operations are often carried out in cash, contrary to all national and international money laundering regulations.
• The “About Us” or “Contact Us” pages of offshore companies' websites are often blank or contain information that is too general to be useful to users.
• Player protection — in the event of a dispute over possible winnings — is virtually non-existent.
• After all, the only point of recourse is a company that holds a license and is based in some low-tax offshore country.

The online gambling black market thrives despite the actions and controls of the financial administration and law enforcement raids. In 2022, ADM blocked access from Italy to 9685 illegal gaming sites available to Italian players. Despite their efforts, the existence and growth of the black market mean that enforcement measures alone are not enough.

Italy's strict advertising restrictions on licensed operators seem to favor the black market inadvertently. The lack of adequate advertising by licensed operators makes consumers less informed about which platforms are regulated and safe.

Addressing the online gambling black market in Italy requires a multifaceted strategy that prioritizes consumer protection, tightens regulatory enforcement, reviews advertising restrictions, and promotes collaborative approaches to policy and regulation. Such a detailed strategy will contribute to a safer and more compliant online gambling environment in Italy.

Economics of the Gambling Industry

In Italy,  the gambling boom of recent years has significantly impacted the Italian economy. With each passing day, the country's casinos, lotteries, and sports betting are gaining popularity and bringing significant economic benefits. Let's take a look at the numbers.

• Gambling produces 1% of the GDP of the Italian economy.
• In 2022, gross gaming revenue in the Italian gambling market peaked at more than €136 billion, up 23% from 2019, before the coronavirus pandemic (COVID-19).
• Similarly, Italy's gaming industry recovered from the pandemic's effects, exceeding €20 billion in 2022 in gross gaming revenue (GGR).
• Winnings amounted to €115.6 billion, representing a share of 85% of the total collection.
• Gross collections from scratch cards, lotteries, and online gaming reached €19.6 billion.
• Gross collections from poker, casino, and betting amounted to €3.7 billion in 2022, a further increase compared to previous years.
• However, amusement machines such as slot machines and video lotteries are declining, with a 17% loss over three years, from €10.2 billion in 2019 to €8.5 billion in 2022.
• Italy is the fourth online gambling market in Europe, with a market share of 8.1%, almost at the level of France.
• Italy's online market share is noticeably larger than the European average (23.2%) compared to the land-based market share.
• Gross revenue from online gambling exceeded €73 billion in 2022, representing approximately 55% of total gaming revenue.
• Accordingly, each Italian adult spent €1,719 on online gambling per year.

In this expanding market, three companies stand out in betting and registration volume: Lottomatica, Snaitech, and Sisal. There are around fifty active operators in the Italian sports betting market. Despite the dominance of a few leading operators, competition remains fierce, and each operator is looking for its niche in this growing market.

Online gambling and online casinos represent an important resource for the Italian economy, guaranteeing growing revenues to the state coffers yearly.

Overall, gambling in Italy thrives, attracting more players and stimulating the creation of new jobs throughout the country. The increased gambling activity has created a demand for skilled staff in various sectors, including customer service, security, marketing, and administration. At the same time, online gambling platforms have required the hiring of software developers, IT specialists, and customer service staff. Thanks to the gambling industry, many people have been able to get out of unemployment and find steady employment.

The gambling industry, online or land-based, certainly has a beneficial effect on the Italian economy and its situation in general. Its contribution lies both in tax revenues and in the creation of income for certain categories of citizens.

Social Acceptance of Gambling

Too often, when gambling in Italy is talked about, it is associated with its negative aspects, namely gambling addiction and the loss of large sums of money by individuals and often entire families. However, gambling is an industry that can have a beneficial effect and directly transmit it positively to society.

The reputation of gambling in society is closely linked to the industry's economic impact. If gambling positively impacts the economy, society is more likely to accept it. Gambling's key contributions to the economy are job creation and revenue generation.

The gambling industry offers various employment opportunities, from casinos to related sectors such as hospitality, entertainment, and tourism. This labor market helps improve unemployment rates and financial stability in the region.

These aspects have led to a change in the image of gambling, once quite bad, in recent years. The games now enjoy a fair reputation in both traditional and online casinos.