The coronavirus had a negative impact on numerous businesses around the world, and the gaming industry in Italy was no exception. As one of the countries hit hardest by the virus, Italy suffered significant losses, including in the gaming sector.
In 2019, the gambling industry reached a peak in wagers, totaling about 110 billion euros. The largest share came from wagers placed on casino games and poker tournaments. The Gross Gaming Revenue (GGR) of the gambling market in Italy is estimated at 19.45 billion euros. Meanwhile, tax revenue generated from gambling activities in the country amounted to 11.4 billion euros.
The Gross Gaming Revenue of online gambling in Italy in 2019 reached roughly 1.8 billion euros. The biggest contribution came from bets placed on online skill-based casino games and poker tournaments. This sector generated about 978 million euros. Sports betting also made a significant contribution, generating 725 million euros in 2019.
Italian cities with the most gambling venues in 2018 included Naples, Rome, Milan, and other popular tourist destinations. The two leaders, however, were Naples with 1,037 gambling facilities and Rome with 904. Naples, Rome, and Milan were also the three Italian cities to generate the highest GGR from virtual sports in 2020. These were likewise the top three locations in 2020 where Italian punters placed the most sports bets at betting agencies, generating the highest GGR for this segment of the gaming market.
In mid-March 2020, however, more than 11,000 gambling venues in Italy were forced to shut down because of the nationwide lockdown. Although the original plan was to close gambling facilities until mid-April, the continually rising number of COVID-19 cases in the country kept venues closed until mid-June. The gaming industry gradually resumed operations under strict regulations designed to ensure everyone’s safety.
Unfortunately, as coronavirus cases in Italy began rising again toward the end of 2020, gambling venues were once more forced to close in an attempt to slow the spread of the virus. This may lead to a further decline in gaming revenue for 2020. Although the overall gaming industry has suffered significant losses because of the pandemic, the online gambling sector experienced a sharp uptick during the lockdown.
Pandemic Restrictions Led to a Hike in Online Gambling
Because live sporting events were postponed during Italy’s lockdown, sports betting revenue dropped sharply. This resulted in a 10% decline in April 2020 compared with the previous month. Even so, total revenue in April 2020 reached 157 million euros, virtually unchanged from the 157.86 million euros recorded in April 2019.
Online Casinos and Poker During the Lockdown Period
The Total GGR of Online GamblingTop Performers in the Online Casino Sector in 2020
During the pandemic, online casino operators enjoyed a surge in revenue, with more people choosing to spend their time at home playing casino games online. During the lockdown, the GGR of online gambling in Italy spiked. The revenue for online casino games in March amounted to 94 million euros, while during the same period in 2019, it was 72.6 million euros. In the next two months, revenue continued to grow, hitting 98.2 million euros in April and 105.5 million euros in May.
In terms of market share, several online casino operators recorded notable growth during the lockdown in 2020. The online casino company with the largest market share in April 2020 was PokerStars, which held 14.17%. Sisal followed with 8.26%, while 888 had 7.76%.
In March 2020, the top three online casino operators in Italy by market share included a different company in the third spot. While PokerStars was still the leader with a 12.59% market share and Sisal was in second place with 8.31%, Lottomatica held the third-largest share at 7.59%. However, the following month 888 generated higher revenue, taking the third spot in April.
Fast forward to July 2020, and PokerStars was still the leading online casino operator, with a market share of 12.48%. It was followed by Sisal with 8.51% and Snai with 7.81%. In July, Lottomatica held 7.03%, while Eurobet ranked fifth at 6.69%. Although the rest of the online casino operators experienced ups and downs, PokerStars managed to remain the leading online casino operator in Italy in 2020.
Italy’s Sports Betting Industry Badly Affected
Although online casino and poker revenue grew during the lockdown, the pandemic dealt a severe blow to the sports betting industry. Online sports betting GGR reached 95.25 million euros in January 2020, but by April it had fallen to 20.9 million euros.
The absence of live sporting events in Italy during the lockdown was the primary cause of this steep decline. Bettors could still wager on a limited selection of sports, yet the sector suffered the largest loss in the country’s online gambling industry.
Poker Games and Tournaments Revenue In Lockdown
Reopening After Spreading of the VirusItalian Cities with the Highest GGR from Online Sports Betting
Despite the sharp decline in sports betting in Italy during the lockdown, once gambling venues reopened and live sporting events resumed, several Italian cities contributed significantly to sports betting GGR.
When we examine revenue generated from bets placed at betting agencies between January and August 2020, we see that the top five Italian cities contributing the most were Naples, Rome, Milan, Turin, and Bari. During this period, Naples generated 52.64 million euros, while Rome contributed 29.59 million euros. Milan brought in 20.31 million euros, Turin generated 15.91 million euros, and Bari reported 14.7 million euros. As these figures show, Naples led the country in revenue from agency sports betting in 2020.
The five Italian cities that dominated virtual sports betting were almost the same as those listed above. The only difference is that Palermo occupied the fifth position. Between January and August 2020, Naples generated the highest GGR from online sports betting at 19.76 million euros. Rome followed with 8.13 million euros, and Milan with 6.95 million euros. Turin reported 6 million euros, while Palermo contributed 5.65 million euros. These figures confirm that Naples also led Italy in online sports betting in 2020.
The sports betting operators contributing the most to the GGR of the top five cities included bet365, Snai, Eurobet, Sisal, Planetwin365, Goldbet, and several other major virtual sportsbooks. In April 2020, bet365 held the largest market share at 22.1%, making the biggest contribution to online sports betting GGR in the top five Italian cities for 2020. Snai’s share in April 2020 was 13.6%, while Eurobet and Sisal stood at 9.6% and 9.4%, respectively. Planetwin365 and Goldbet followed with 8.8% and 8.2%.
Industry Response to the New Turnover Tax
In May, the Italian government introduced a new turnover tax intended to aid the recovery of the sports sector after the lockdown caused by the coronavirus pandemic. Through this levy on the sports betting turnover of licensed operators, the government hopes to raise about 90 million euros by the end of 2021.
Decreto Rilancio, or Decree Law No. 34, introduces several measures that the Italian government will take to strengthen the healthcare system, support employers, and help the economy recover after the pandemic. The funds generated from this tax will be distributed to the Ministry of Youth and Sports, helping professional and amateur sports throughout Italy recover from the losses incurred during the lockdown.
The new 0.5% tax will be imposed on sports betting wagers placed both online and at retail shops. It must be collected quarterly until the end of 2021. The government’s goal for the end of 2020 was to collect up to 40 million euros through the new turnover tax. Expectations for the following year were for an additional 50 million euros in tax revenue. The decree also states that if the expected amount is collected sooner than anticipated, the levy can be withdrawn before the end of 2021.
The new tax on sports betting turnover was criticized by the Italian operators’ association Lega Operatori di Gioco su Canale Online (LOGiCO), which deemed it unreasonable and economically unsustainable. LOGiCO argued that the levy does not ensure tax equity and that the primary beneficiaries will likely be offshore operators.
Moreno Marasco, president of LOGiCO, also noted that a 1% turnover tax is equivalent to a 20% GGR tax. When this levy is combined with the existing 24% GGR tax, the gaming industry would have to pay almost double the current amount in taxes. Marasco suggested that, instead of relying on a turnover tax to support the sports industry, the betting sector could help through various sponsorships. That approach is, however, impossible because of the gambling ad ban introduced at the beginning of 2019.
Italian retail betting associations Acadi and Sistema Gioco also warned about the unfair turnover tax. According to them, it could lead to a tax burden exceeding 30% across all licensed betting operators in Italy. The sports betting sector suffered a sharp decline in revenue during the lockdown period, and the new turnover tax may further slow its recovery after the pandemic.