30-second summary

• Italian authorities win ruling on lottery tender process
• StanleyBet alleged that the tender structure discouraged competition
• Case could act as a springboard for many other European authorities
• It comes at a time when the gambling sector in Italy is troubled

Italian authorities prevail

The European Union Court of Justice has ruled in favor of the new strict control framework for Italy’s state lottery. The ruling ends a case brought by StanleyBet, a company based in Malta.

This case was in the works for 18 months. The ruling said that the concessionaire model that the European Lotteries (EL) and Toto Association are using is legal according to EU regulations. The secretary general of the lottery authority is happy with the result.

He commented: “The judgment points to the particularities of our sector where restrictions can be put in place in the general interest and which must be kept free from companies that have been referred to a criminal court. EL welcomes the confirmation in this ruling.”

The ruling says that any organization that has not been given authorization by the Italian government and is offering a lottery-type product is illegal.

Background of the case

The lottery operates through a dual concession system. That means there is a distinction between having an exclusive concession in the lottery management (choosing the winning numbers, managing the sales network, etc.) and putting those concessions on the table for selling the lottery products.

The national gaming authority in Italy was challenged in the European courts by StanleyBet over its 2016 tender, in which the IGT-Lottomatica led a consortium that won.

StanleyBet claimed that the sole concessionaire model and some of the participation tender conditions were too excessive. They alleged that the process discouraged some parties from participating in the competition for the tender, which would be a restriction of market access.

The Italian Council of State brought the case to the European Court of Justice (ECJ). The goal was to have the European court provide a preliminary ruling on the EU law interpretation in relation to the concession rules of the Italian lottery. In particular, it would focus on the freedom to provide services and for the right of establishment.

Details of the preliminary ruling

The Italian Council of State and the ADM were on the right side of the ruling. The court ruled that the Italian tender proces, in this case, fit the criteria of a fair process.

This case could be noteworthy for other European countries. With increasing regulations and more of an emphasis on consumer protection, it could further restrict the tender process throughout the continent.

This case will now go Italian courts for a decision. However, it stands an example of the guidance the ECJ is giving to regulators in Europe. It will show how they can properly follow EU law during the gambling procurement process.

Italy’s gambling sector

While this was a positive result for the authorities in Italy, it will not have much of a positive effect on the gambling sector. Cracks are?starting to appear in this area, mainly because of the anti-gambling coalition government.

One of that government’s first moves after gaining power in 2018 was to ban gambling ads. No gambling companies can advertise their offerings to customers in Italy. The ban also extends to gambling sponsorships of sports teams and events. This is a crippling move in itself.

Many teams and organizations rely heavily on this type of sponsorship to survive. The government believes that gambling advertising creates a serious problem by rapidly increasing the number of problem gamblers in the nation.

More recently, the government announced increased tax rate hikes for online casinos and sports betting taxes increasing.? The tax rates at physical locations will also rise.?The government is also considering an increase in the tax rate on video lottery terminals and slot machines.

The gambling sector did see some growth in 2018. However, this was largely because it was a World Cup year.? The advertising ban only came into effect on January 1, 2019, so it could not affect 2018 revenues.