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Though world-renown forits romantic reputation andthe many waterways whichcriss-cross through it,Venice had also made itsmark on the casino gamingindustry. “Il Ridotto” wasopened in the Italian city in

1638 as the world’s first government-sanctionedcasino.

In exploring the current status and future ofgaming in Italy, we’re fortunate to be joined byGiulio Coraggio, a highly experienced technolo-gy & gaming lawyer based in Milan. (a short bioof Mr. Coraggio follows the interview).

G&L: Italy’s Gaming Authority, AmministrazioneAutonoma dei Monopoli di Stato (AAMS) wasestablished in 2002 to monitor and regulate thenational gaming industry. AAMS also publishesregular reports on the status of the casino industry.What do recent AAMS statistics indicate for thehealth of the Italian gaming industry?

GIULIO: The last data published by AAMSshows an amazing growth of the Italian videolot-tery market in the first 5 months of 2012 with aturnover of † 8,772 million which is more thanthe double of the turnover generated in the sameperiod during year 2011 and is accompanied byan aggregate growth of the land-based marketgenerating † 20,607 million from January toMay 2012. It is worth it to mention that suchdata is on the top of those generated by theItalian four "real" casinos and refer only tomachines located outside of them, mainly in theso called "mini-casinos" where AWPs and VLTscan be located.

This market represents a massive opportunity forexperienced casino operators which might bringtheir experience in a market where so far only 4casinos are allowed and local operators struggle increating the look and feel of real casinos. Indeed,we recently saw some joint ventures betweenlocal operators which can bring their know-how

on local regulations and foreign casino companiesthat are able to contribute with their experiencein running casinos and results achieved by suchjoint ventures.

For this purpose, it may be useful to mentionthat the management of a VLT casino does notrequire a local gaming license, but just an agree-ment with the 10 licensed entities (which willbecome shortly 13) managing the network con-necting the machines to the servers of AAMS.This makes an easier entrance into the marketbut the timing might be crucial as obviously anumber of foreign casino operators are currentlylooking at Italy.

As per the online market, the launch of cashpoker games and casino table games in July 2011gave a massive boost to the sector if it is consid-ered that the turnover of the Italian online gam-ing market was of † 9,849 million in the entire2011 and has already reached † 6,842 million injust the first 5 months of 2012. Also, the fact that

some of the new entrants in the market obtained arelevant market share in short term shows thatthere is still room for new entrants as far as they areable to distinguish their products and services fromthose of competitors consolidated in the market.

G&L: 3rd December 2012 is an important datefor the Italian online gaming market. What willthe AAMS decree allow starting this December?

GIULIO: The 3rd December 2012 is an impor-tant date as from that date Italian licensed gam-ing operators will be entitled to launch onlineslot games. Indeed, the regulations governing thekind of games were already in place from mid-2011 as they were part of the package of regula-tions introducing poker card games and casinotable games, but the lobby of land-based videolottery operators had pushed for a delay in thelaunch of online slot games since such gameshave features similar to those of land-based videolotteries but are subject to a better tax regime.

Given that online slots represent at least 50%-60% of the turnover for most of the online casi-no operators, it does not seem too optimistic toforesee that the turnover of casino games willreach the same results achieved by cash cardgames which was † 3,808 million in just the first5 months of 2012 and represents together withskill games, poker tournament games and non-slot casino games 65.4% of the entire Italianonline gaming market.

G&L: The Politecnico di Milano monitors theItalian gaming market. Recent reports show thatthe online gaming market grows faster than anyother type of e-commerce. How do statisticscompare between traditional games and neweronline games?

GIULIO: There is no doubt that the launch ofcash poker games has led on one hand to a con-siderable increase in the turnover of the onlinegaming market, but on the other hand has ham-pered traditional games such as sports bettingand bingo. Indeed, card games and casino games

Bill Healey

GIULIO CORAGGIO, TECHNOLOGY& GAMING LAWYER IN MILAN, ITALY

INTERNATIONAL GAMING

Giulio Coraggio l a highly experienced technology& gaming lawyer based in Milan.

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now represent 66.8% while sports betting and bingo games saw a reduction intheir turnover higher than 20%.

However, AAMS' recent moves might help such products because of the decreerecently notified to the European Commission allowing the placing of bets thatare not included in the official AAMS schedule (the "palinsesto"), the decrees justapproved by the European Commission for betting exchange and bets on virtu-al events and the upcoming decree allowing operators to offer bingo variations.

These new regulations might help traditional games to recover after the launchof casino and cash card games, but everything will depend on whether AAMS willswitch also for bingo and sports betting games (as already done for casino and cashcard games) from a tax regime based on the turnover to a taxation based on GPT.

G&L: Each year, the University of Milan holds a conference on gaming. Whatare the ongoing discussions regarding non-Italian licensed websites that attract arelevant share of Italian players? Are there considerations on controlling thesenon-licensed, black market sites?

GIULI: The data show that the black market is still around 35% of the entireItalian online gaming market which is an indicator that the regulated marketstill has considerable potentials to grow. The launch of casino and cash cardgames led to a reduction of the black market since players found that licensedplatforms have the same games available as the un-licensed websites, butstronger measures against non-licensed operators are in the pipeline.

Indeed, regulations were approved last year requiring the notification toAAMS by financial entities of transactions engaged by Italian players withwebsites in AAMS' blacklist which needs only an implementing decree tocome into force. This measure might force both players (who can face criminalpenalties themselves for playing on non-licensed websites) and operators(which might face a criminal proceeding if found offering games to Italianswithout a local license) to switch to the regulated market.

At the same time, AAMS recently published a bulletin circular clarifyingthat non-licensed operators offering games online or through betting shops(the so called "CTDs") to people located in Italy are obliged to pay Italian gam-ing taxes plus applicable penalties for lack of payment. Such circular is likelyto be followed by actions from AAMS and the Italian tax authority againstoperators for the recovery of retrospective taxes as recently occurred in Spain.

Such changes are likely to force operators to get an Italian online gaminglicense if they want to keep targeting Italian players.

G&L: Will an online gaming company need to be established in Italy (or theservers located in Italy) to apply for an Italian gaming license?

GIULIO: Absolutely not! This is a very common mistake, 2011 regulationsentitle companies based in any country of the European Economic Area (includ-ing Gibraltar or Malta for instance) to hold an Italian license. Likewise, the serversof the company can be placed in any country of the EEA.

No regulation requires operators to have infrastructures or offices in Italy andthis leads to a major tax saving as foreign operators will pay Italian gaming dutiesbut will pay corporate taxes of their country of establishment.

G&L: Have foreign operators been encouraged to invest into the Italiangaming market?

GIULIO: This is definitely the approach from AAMS. Foreign operatorscan bring their experience and knowledge of a market that is still in a start-

up phase and they might contribute to its growth bringing value and a bet-ter service to players.

Traditionally Italy has always encouraged investments as far as new entrantsaccept to comply with local laws. Also the current economic crisis is likely to leadto regulations fostering the sector because of the considerable tax entries generat-ed by the gaming market.

G&L: Is there anything further you’d like to add?

GIULIO: My comments above are a mere snapshot of a market that is still in astart-up phase and this might be the right time for investors to enter into themarket before it reaches a mature phase where investments will become moreexpensive.

G&L: We’d like to thank Mr. Coraggio for his vast insight into the Italian gam-ing industry. A bit on his background:

Giulio Coraggio (giulio.coraggio@dlapiper.com) is a gambling and Internetlawyer qualified both in Italy and in England and Wales and is working forDLA Piper, one of the largest international law firms in the world.

From experience gained through assisting world leading online and land-based gambling, e-commerce, e-payment and search engine operators, Giuliohas become among most distinguished lawyers in the Italian market in advis-ing clients on gambling law, e-commerce and information technology matters.In particular, Giulio advises many prominent foreign gambling operators onboth their day-to-day matters and major regulatory issues, the acquisition ofother gambling operators and suppliers, software/technology transfer andlicense agreements, payment and sponsorship deals, advertising and privacyissues as well as on disputes with other operators and players.

Giulio has been a frequent speaker at many conferences on gambling andInternet law topics, and is the blogmaster of the blogwww.gamingtechlaw.com on gambling and Internet law issues.

Based in Bali, Bill has been consulting, installing and supporting solutionsin the global golf and leisure industry since 1982. He has been involved withover 1000 systems installations in 40+ countries from North America toAfrica to Asia & Australia.

Casino Sanremo, Province of Imperia, Italy

GIULIO CORAGGIO, TECHNOLOGY & GAMING LAWYER IN MILAN, ITALY

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