Forget about the United States and anti-gambling legislation. A new fear has been introduced by Italy. Imagine if all of Europe made internet gambling illegal for companies outside of their own country. France has been known to give online casinos a hard time but they haven't banned internet gambling completely. Many northern European countries won't allow for international internet lottery companies. Italy, on the other hand, has passed legislation that makes it illegal for any Italian Internet Service Provider (ISP) to allow connection to an offshore gaming site. This affects over six hundred internet casinos, poker rooms and sports books which the Italian Ministry of Economics and Finance have deemed are operating a gaming operation. The Italian Finance Act of 2006 went into effect on February 24th and could be considered by other nations in Europe especially considering the current rise in economic protectionism that is so popular today.

Just a small while ago Italy would not have been able to do such a thing to the internet gambling industry as it was part of the Services Directive from the European Union. The Services Directive dictates the areas of trade that are covered by all agreements between EU member nations and once covered the area of online gaming. However, recently the EU has taken online gambling from its Services Directive. Unfortunately, with its removal the online gaming industry is open to attack. As such the Italian government was free to change the law as they saw fit.

The Fiscal Decree of the 7th February 2006 combined with The Italian Budgetary measures of 2006 required that ISPs in Italy will block websites that are not licensed in Italy. ISPs which violate this legislation will be fined EUR180,000 every time they allowed Italian internet users to access sites on the blacklist of online gambling operators. The goal of this law is to override competition in betting. Of course, Italy has stated that this “oscuramento” is intended to protect Italian players from ‘phishing’ and not to protect the Italian gambling monopoly.

Betfair, an online sports book, is speaking out against the Italian off-shore gambling ban. Betfair held a press conference in Milan where Mark Davies, Managing Director of Betfair’s international lobbying arm, used harsh words against the Italian decision: “We’re giving consideration to what legal action we’ll need to take to protect our current position so that we can continue to offer our services to the hundreds of thousands of Italians that might legitimately want to use them." He continued to add “Under the new legislation, Italian consumers will no longer benefit from the competitive prices offered by Betfair and other online gambling service providers in Europe. The reduced competition will ultimately reduce the value Italian punters get, leaving them at the mercy of the existing monopolist AAMS. The new law not only restricts our ability to offer services but our fundamental right of commercial free speech. Censorship for the benefit of a local monopoly is a disgrace; it is the technological equivalent of book burning.”

The Remote Gaming Association mirrored the comments made by Betfair. The Chief Executive of the RGA, Clive Hawkswood, stated that "All remote gambling operators in the RGA are licensed for gambling purposes within the European Economic Area. They adhere to high standards of regulation and social responsibility. There is no legitimate reason why they should not be allowed to provide their services to Italian residents." He added "The implementation of these restrictions on ISPs is a clear breach of European law, in particular the freedom of establishment and freedom to provide cross-border services that are set out in Articles 43 and 49 of the EC Treaty and which have subsequently been upheld by the European Court of Justice. Our members are presently considering what legal action to take and we have already raised our concerns with the European Commission. The Italian authorities should be in no doubt that the industry will fight hard to stop this protectionist and unfair law.”

The Italian Finance Act actively discriminates against operators which are not licensed in Italy. As such it violates at least five categories of EU principles, specifically, the freedom of establishment and freedom to provide cross-border services as enshrined in Articles 43 and 49 of the EC Treaty and the recent ECJ case law; the freedom to supply telecommunication services as per Directive 2002/20/EC on the Authorisation of Electronic Communications Networks and Services; Personal data protection contained in Directive 2002/58/EC on Privacy and Electronic Communications; State aids rules in Article 87.1 of the EC Treaty; and the notification of technical standards and regulations affecting services of the information society in Directive 98/34/EC laying down a procedure for the provision of information in the field of technical standards and regulations.

Didier Dewyn, Secretary General of the European Betting Association (EBA) is infuriated with the ban and stated that “We need the [EU] Commission to do something and to accept and discharge its responsibilities. It has to ensure the respect of EU law. Urgent action is needed unless they want the EU business community to believe that the Internal Market is a joke". The Commission, however, isn't listening and is allowing Italy to continue with the ban through their lack of response.

With Italy's ban on off-shore gaming sites and the trend towards economic protectionism with governments today one has to wonder where this ban on off-shore gaming will mean to the future of internet gambling. The United States is supposed to be cleaning up their laws by April in accordance with the World Trade Organizations ruling last summer. Perhaps they will follow Italy's lead, however unlikely. I do think that more European countries, such as France, will follow Italy's example as they tend to be against anything that isn't their own. This will be a pity not only for the internet gambling community as a whole, but also for the players who will miss out on the better deals made through healthy competition. A monopoly is never fair pricing for the individual.

Posted on: March 23, 2006

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