Italy raises gambling machine tax, extra punter’s prize

Italy’s retail gambling machine operators will bear the brutality of the country’s new tax plan, and punters have saved the proposed tax on gambling money.

The Italian government on Thursday saw it send out a 2020 budget plan to the European Commission for approval. The draft sent to Brussels has undergone a fierce revision over the past week and includes plans to raise €650 in new annual revenues from the gaming industry, most of which will come from the country’s gambling machine operators.

As currently written, the budget requires a tax increase on profits derived from play along with commodities (AWP) and video lottery terminals (VLT). As of February 10, 2020, the AWP tax rate will rise from 21.6% to 23%, and the VLT tax rate will rise from 7.9% to 9%.

The government expects an additional €268.4m in AWP tax increases next year, and the VLT increase will result in an upward hike of £230.5m per year. It is worth noting that the lower tax rates mentioned above were not scheduled to begin until January 1, which was only announced in the so-called Dignity Act, which was announced in July 2018.

In 2018, the operator, who runs a large Italian retail business, including Playtech, through local operator Snai previously warned investors that previous tax increases would affect the company’s annual earnings. Playtech’s shares have lost about 9% of its value in the past month as rumors spread that the Italian government plans to draw a budget bullseye to the gambling sector.

The government is also seeking a raft of new measures to reduce illegal gambling activities, including a central registry for all gambling licensees overseen by a genzia delle Dogane e dei Monopoli (ADM) regulator, as well as new penalties of up to €1.3m for local financial institutions that process payments on behalf of operators who do not have an Italian license

The government wants to monitor gambling operators using undercover agents to see signs of tax evasion or allow individuals under the age of 18 to access gambling products.

On the plus side, the proposed progressive tax on gamblers’ prizemoney did not make the final draft of the budget, apparently once the word leaked and once proved a non-starter last week.

The question now becomes how much more abuse that can be expected to be taken by the government, which would be willing to solve all financial problems by punishing the gaming industry reasonably by either operator or punter.

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