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Friday, August 3, 2018
by Andrew Tottenham  

Managing Director, Tottenham & Co

Italy, with a population of nearly 70 million, has only four casinos, all of which are located in the north of the country and are owned and regulated by local municipalities. Despite their shared monopoly they have fallen on hard times. In 2007 total gross gaming revenue (GGR) for all of the casinos was €550 million (US$ 640 million), but last year the total was only €290 million. All four are facing their own challenges, with one in bankruptcy.

So what has caused this 47% decline? Italian casino managers will tell you that it is the rise of online gambling, which became operational in 2011 and last year generated about €500 million in revenues. But I think that the casinos have been battered by a number of external forces, some of their own making, of which online gambling is relatively small.

by Luke Haward
CDC Gaming Reports

Back in May we ran an in-depth piece looking at a host of issues in the sports betting world which Europe has had to navigate, since it has possessed, in most cases, a liberal market of legalised sports betting for some decades. Now the US has to face those issues as it opens its doors to a wider legalised sports betting world. It's high time for a second glance over that piece, and for the introduction of issues which arise when sports betting becomes readily available everywhere and at all times. We won't cover match fixing in this piece, as we looked into that in depth back in May, but we'll consider other issues which arise whenever a gambling phenomenon such as sports betting becomes very widespread and available, thanks in large part to the drastic rise in online and mobile sports betting in recent years.

Furthermore, as technology continues to leap forwards, we're likely to witness a bunch of new trends in sports betting which will receive a turbo boost thanks to a quickly-growing industry in the US. Which are likely to be key, and what additional problems and opportunities might they bring? I believe the key trends will be virtual reality, first person perspectives, and a further rise in social betting. We'll circle back around to these technological fascinations in a future piece.

The Euro News Revue
Luke says: Workers' rights hit the headlines with this story from Tenerife about the staff of three state-run casinos coming together to insist on guarantees being provided to workers in any handover of operations to private companies. The government wishes to put the casinos on the market for private bidders. The Unión General de Trabajadores (UGT) will be sitting down with government representatives to discuss guarantees, but also to protest the privatisation itself, claiming that as they are profit-making enterprises the sale is not justified. They have promised protests if the sale does go ahead. The government has already assured workers that a requirement on any new owner would include a minimum of 2 years guaranteed employment for state workers going through the transition.  
Luke says: The European Sports Security Association (ESSA) is probably the most notable professional body in the sports world whose purpose is to maintain sports integrity in the EU. They now welcome their very first affiliate member, namely Perform Group. Perform have been deeply involved in sports digital media since they were founded in 2007. The London-based firm are now a leading figure in the field, with offerings in multiple areas including live streaming, sponsorship, production, and subscription services. Their affiliation is really a major shot in the arm for ESSA. Sports integrity is going to be an ever-larger issue for the international community now that sports betting will be much more widely legally available across the USA. Sporting leagues should be looking to entities like ESSA as an example of what's needed in the sports world. Still, with all their experience, ESSA still has its work cut out in addressing issues like match-fixing and fraudulent betting.
Andrew says: Five of the losing bidders in the contest to get the sole license for the principality of Andorra have filed an appeal against the award of that license to JOC SA. They had one month to appeal and, unsurprisingly, appeal it they did. The winning bid by JOC SA, the local bingo operator, in conjunction with Novomatic, promised an investment of approximately €15 million. But the award was made despite higher bids, including, notably, a €140 million retail and casino complex proposed by Genting UK.  
Luke says: We're used to hearing about executive orders in the US, but now the Ilir Meta, the President of Albania, has wielded his own personal power of "suspensive" veto in a case relating to his country's gambling tax law. Sentiment against gambling remains strong across Albania, economically amongst the poorest of European nations. The change he's blocking is the shifting from taxing gambling turnover to taxing gambling gross earnings. The president believes that the ease in the tax burden would negatively impact the nation's economic and social development, an interesting contention. [The new casino in Cyprus might be a relevant case study for President Meta's contention - what will be more important, the 4% projected boost to the country's GDP, or the negative social costs? Of course this depends in large part on how negative costs are mitigated by efforts within the industry and actions by the government.] In a further twist in Albania, the finance ministry has announced that current law already takes tax on earnings rather than turnover, and that the President's office has misinterpreted the law!
Luke says: Big waves as expected in the UK gambling world as the UK Gambling Commission lays out the new advertising rules to apply starting at the end of October. Key components include an eight week deadline for resolving customer complaints, and of course lifting any cap on the size of possible fines to be levied on companies for breaches of the advertising code. Most in the industry who had their eyes and ears open did see this kind of action coming. The UKGC has been upping its game and using its muscle with increasing vigour during the last year, and we've continued to see major incidents with big operators in the spotlight for shortcomings in customer protection, self-exclusion, AML, and the like. The action by the UKGC is timely, given that the opportunities for failings are going to grow with the spread of gaming culture generally, and the rapid development and wider accessibility of online and mobile gaming.
Andrew says: Maybe it was too late ...  Extremadura, a region in the west of Spain on the border with Portugal and famous for its fabulous jamon from free ranging, acorn eating, black Iberian pigs, has changed it gambling laws to see if it can attract a large integrated-resort developer. Triple Five, the Canadian mall developer and operator, had been looking around, but appears to have moved on to Andalusia, in southern Spain. Extremadura lacks a good transport infrastructure and has a population of just over one million, spread over more than 41,000 square kilometres (16,000 square miles). The largest town is the capital, Mérida, with a population of about 60,000. This doesn't sound like a favourable commercial proposition to me, even with the new law.
Luke says: A little bit of a silver lining has appeared in the bookies' dark cloud of the decade, the FOBTs scandal and demotion to a veritable "fruit machine" - they're getting their VAT back. The tax tribunal ruling that taking VAT on the FOBTs' revenue "breached the principle of fiscal neutrality" is an absolutely significant and fascinating one. The tribunal concluded that since similar games were available and untaxed in casinos and online during the same time period, the tax was improper. The refund could amount to around £1 billion, so it's a huge decision and Her Majesty's Revenue and Customs look set to appeal the ruling. If that falls down, many speculate government hikes in taxes on gambling could help pay for the big rebate. Others are suggesting the delay in the stakes being cut is somehow linked to this decision.
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