Italy – Administrative Court Accepts Betfair Appeal

On April 14, 2021, the Administrative Court of Rome accepted the appeal of Betfair (Betfair Italia s.r.l.), thus voiding the part of the challenged Italian gambling Regulator’s notice that refers to betting exchange additional taxation, in order for the latter to issue a new notice that clarifies the grounds and preliminary information for the tax application and calculation criteria.

The case in question refers to the so-called “Save Sport Fund” additional taxation which was introduced by Italian lawmakers during the first COVID-19 emergency period in Italy in early 2020. It was designed to deal with the pandemic’s negative effects on sports activities and finance a fund dedicated to sports (notably: sports actors, sports amateur clubs and sports-competition organisers). Therefore, for the years 2020 and 2021, all betting licensees have the obligation to fund sports through an additional payment of 0.5% of their offline and online betting collection – including virtual betting.

The challenged notice of the Regulator ADM – Agenzia delle Dogane e dei Monopoli — was published later in September 2020 to apply the Save Sport Fund additional taxation towards all betting licensees and betting products. The challenged notice included horse racing and betting exchanges among those that should also contribute to the funding of sports through this additional tax collection.

Betfair – among others – challenged this ADM notice before the Administrative Court of Rome, first of all to reconsider the field of application of this additional taxation so as to exclude betting exchanges. Secondly, Betfair requested that the Court render void its calculation rollout.

To put things into context, the Court in the first instance did not accept the exclusion of betting exchanges from the additional taxation field of application, stating that the primary law was sufficiently broad to cover any type of betting collection carried out by ADM licensees.

More precisely, the Court accepted the voidance of the ADM implementation notice in the part that refers to betting exchanges, for its lack of preliminary information and for not making clear why the Save Sport Fund additional taxation calculation should apply to betting exchange taxation.

The Court pointed out that there wasn’t any evidence provided by ADM to explain said calculation, given the peculiarities of betting exchange compared to fixed-odds betting.

On the contrary and notwithstanding the implementation discretionary power granted to the Regulator, its reasoning should have been either aligned to existing betting exchange regulation or alternatively made explicit in compliance with the principle of equal treatment between different betting products and more in general with the principles of fairness and proportionality of any administrative proceeding.

To this end, the Court invited the Italian gambling Regulator to involve, if it deemed appropriate, the concerned licensees in order to acquire any useful information for the redrafting of the implementation notice for betting exchanges.

For now, the Regulator should not only take this opportunity to settle the current claim, but, more proactively, finally pave the way to the introduction of a stakeholders’ consultation process for betting and gambling regulation.

Sad to say, but until now, it has been very rarely used by the Italian gambling authority, with one unique exception back in 2017 in regards to the betting regulation draft of reform – appreciated by the Highest Administrative Court in its opinion release in February 2018 but not yet applied.

In recent years, there hasn’t been any consultation process with the betting and gambling industry, and this short-circuit to an open dialogue, this mistrust may be among the reasons why there has been a significant increase in legal claims brought against the Regulator.

There’s no doubt that the Regulator should therefore seize this opportunity to enlarge it to other hot topics in betting regulation, apart from taxation. One of these could be, for example, combatting match-fixing — which requires close cooperation and collaboration between all stakeholders.

Betting stakeholders’ engagement should be the starting point for fair betting legislation.

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