Despite being hit hard by the Lockdown last year, the Italian gaming market has still managed to make great progress down the road to recovery but how far have they left to go?
Regulatory framework issues have, at times, stifled the growth of the online sector but as we move into the second half of 2021 it seems new opportunities are emerging that may finally allow Italy to reach its full potential.
We caught up with Moreno Marasco, Chairman of the Italian Online Gaming Association, LOGiCO to hear his opinion on the current market and regulatory conditions and what the implications are for future growth.
The Italian market has seen some incredible growth over the last year and I’m keen to get your perspective on what this means for the future, especially when considering the regulatory landscape.
“This is actually a misconception, let me explain it here and I’m bringing some of the concepts also to your questions below. In 2020 the growth for the online segment was insignificant compared to the sheer potential. The retail segment (i.e. shops) in 2019 accounted for 91% of regulated gambling revenues in Italy. Having retail failed to satisfy the demand of their customers, due to the closure of shops following anti-COVID measures, had all retail customers shifted from retail to online, we would have experienced a growth in an entirely higher order of magnitude, e.g. +1000%!
“Even taking into account a variety of reasons why customers actually stopped gambling, anything less than a +100% growth (i.e. doubling) would have been a mere fluctuation and in fact, we were tracking at a fraction of even that lower threshold, also considering that the vast majority of the growth was due to multi-channel strategies by brands offering both in-shop and online.”
The Italian sportsbook market has seen a steep rise in activity coming out of the lockdown. With the majority of online players being initially converted from the already established retail brands, is there still an opportunity for new online brands to grow in this market?
“If you factor in that for almost an entire year the demand that would have normally been met by the retail offer, which in 2019 accounted for 91% of the pie, literally disappeared from the regulator’s radar and the shift to online was neglectable compared to the actual potential growth, meaning that either customers stopped playing entirely or – more likely – they turned to unlicensed operators, which thanks to an ingenious advertisement ban have a clear advantage over legal brands, it shouldn’t come as a surprise that once the market started reopening, demand resumed under the regulated radar.”
The general consumer shift towards digital and mobile gaming could mean increased potential for problem gambling issues to occur. What strategies can we implement as an industry to keep consumers better protected whilst still providing an enjoyable playing experience?
“It’s rather the opposite, considering the Italian regulated framework, the general consumer shift towards digital and mobile gaming will mean a decreased potential for problem gambling issues to occur. The online regulation provides for added safety in terms of customer protection, underage gambling prevention and counteracting money laundering compared to the retail counterpart, due to the thorough real-time monitoring (a unique case at a global level) provided by the deep technical integration between the operator’s gaming platform and the regulator’s monitoring systems, all based on customer identification – whereas retail gambling is completely anonymous, with the exception of transactions over certain AML thresholds, It wouldn’t be a far-fetched statement saying that if all customers shifted overnight (and unfortunately it didn’t happen, for “notorious” reasons) from retail to online, there would be less of the problems that you outlined, at least when it comes to the Italian regulated market and its peculiar framework.”
The Italian regulatory framework has been well known for its stringent rules. Most recently with payment blocking legislation and a new 0.5% turnover tax on all sporting events. What impact do you think this will have on market growth going forward? How can key stakeholders in the industry work better together to improve market competition levels?
“If by “payment blocking legislation” you refer to the intention of blocking all payments directed to unlicensed operators, that would be a very welcome step towards a healthier regulated market. So far, the regulator only provided very flimsy DNS blacklists, easily bypassed by even the less computer-savvy internet users.
“Even though in the past years we have been indeed struggling with ill-informed decisions by a self-professed “populist government”, we would be naïve in labelling what has happened so far as an Italian naiveté, as we can clearly see similar trends at a European level, to say the least. It is clear that the industry should improve its positioning with regards to its perception by the public opinion, to avoid such bumps on the road. A road that is still very long for a recovery, but the Italian market is still very attractive and – thankfully – the current legislation is already giving signs of sanity compared to the previous two mandates. With tenders coming soon across the board and a proclaimed review of the overall gambling regulation and offer, I’m confident that the legislator will reconsider some of the approaches, eventually.”
Managing public opinion has been a continual challenge for the iGaming sector with many companies investing heavily into responsible gaming strategies. Is there any evidence that we are making real progress as an industry and what can be done to improve this going forward?
“Let me answer with a provocative question: even though gambling is often associated with the tobacco industry (wrong analogy, as there is no “moderation” in smoking, it is harmful for smokers and the community around them, regardless of quantity), the booze industry is much closer indeed, as in recreational use is not harmful. Still, how many CSR initiatives analogous to “drive-beer”, etc. and the likes have you seen by the industry, and what was the percentage of advertising budget dedicated to them?”
Editor’s Note: Moreno’s perspective on the Italian market conditions has brought into context the true significance of the seemingly impressive growth rates being achieved in this region. Although online wagering activity has gone up (40% YOY), when compared to what it could be with higher retail to online conversion (up to +1000% YOY), it’s clear there’s still much work to do before online gaming can fulfil its potential.
It’s encouraging to see that new legislation being implemented is being significantly better received than the previous two mandates. Alongside this, the new tenders coming across the board proclaiming a review of the overall gambling regulation is a positive step forward for this sector. Exciting times ahead!