By Jana Sedlakova
Significant new barriers have been implemented by the Italian government against gambling advertising. The so called ‘Baduzzi’ decree lays down these restrictions. As Giulio Coraggio, Senior Associate at DLA Piper, specified*, “the decree banned any advertising aimed at “creating an incentive to gambling activity or to exalt the game”. This, when it is interpreted literally, could mean a practical ban on any ‘advertising campaign’. “Indeed, any ad of a gambling website per se encourages players to play on its platform and for instance the banner where a welcome bonus is promoted could be deemed to create an “incentive” to gambling.”
A fine in the case of a breach of these rules could be as much as €500,000. This obviously raises concerns in the industry as it may be applicable “against media owners on which the ads are shown. As a consequence, it is unlikely that any media owner (Google for instance) might accept to show a gambling ad without a prior favorable opinion of the Italian gambling regulator, AAMS.” Giulio expressed.
“If there was a risk that gambling advertising is almost completely banned, the approval of a self-regulatory code would not make too much sense. Also, given the lack of case law on the new gambling advertising provision just approved by the Government there is the risk that an ad is deemed to be compliant with the self-regulatory code, but then considered in contrast with the terms of the decree.” Giulio Coraggio added*.
The news might have been initially welcomed by the operators, but some say, that the extent was not fully understood by them. It might only have been believed that it would affect minors, whilst it addresses any gambling advertising. In addition the “AAMS will not be able to “correct” the scope of the provisions as its interpretation cannot beyond the limits of the primary law.” Giulio added*.
It is disputable that the industry growth would significantly be affected, let alone the barriers for those interested in entering the market. Another matter is the risk that unlicensed operators may take the advantage of the limitations that licensed operators face and to push hard their campaigns. Importantly the changes in question are more of a principle than “specific mandatory provisions”, highlighted Stefano Sbordoni*.
It will be interesting to see whether the industry has sufficient time to prepare for the changes, as it comes into force fairly soon after Parliament’s ratification. The legal changes are unlikely to affect software providers but more so the gambling operators. Furthermore, Stefano Sbordoni commented that* “software providers shall follow the indications of the operators, so they will have to wait the operators reaction to the new advertising rules.”
Prior to the decree ratification by the Italian Parliament earlier this month the hope was for the amendments to have the gambling advertisement judiciously regulated and not prevented. Indeed, it implemented some changes.
* prior to the Parliament’s ratification
“First of all, the fine is very high, as you know, minimum 100 K maximum 500 K (DL 13 September 2012, No. 158, Art.7 c. 6). Certainly, in the near future, all the gaming companies will be more cautious with ads, especially about the quality and the content of the sales promotion. Certainly, we can consider that the fine is too high, but the key point is, for the gaming companies and the media, that the ads don’t have to incite gaming (Art. 7, paragraph 4 Law No 158/2012). This is a very controversial point. Actually, it will be difficult to understand if and when an advertising message is compliant to the new Law or not. It will not be easy, in concrete terms, to promote a product and at the same time to avoid inciting the consumers to purchase it and to spend more money (it will be difficult to find the balance point). There is a large and discretionary evaluation power by the Authority.”
However, this strict and severe regulation is the consequence of a period of excess (in which many times the ads targeted youngest, and used incorrect messages etc.). During last 3/4 years, there was a big pressure on the Italian market, especially among the online companies to conquer new slices of the market. After the Law No 88/2008 that offered new licenses for the online market, dozens and dozens of new companies arrived in Italy: the competition was strong and consequently the temperature of the ads rose on the battlefield. This situation has provoked a big pressure on the consumers, targeted continuously and in every manner, every hour and day, without any serious attention to minors and vulnerable people.”
The companies have made large investments, for millions and millions of euro (tv, internet, magazine, ect.), to promote their brands. This big wave of money was good for the media in a period of economic crisis, and was oxygen for the ads and media companies.
Under the new law, the owner of the media and gaming company are considered at the same level of responsibility in terms of violation. In my opinion this mechanism is severe, but is the only to guarantee the enforcement of the rules.
All this big pressure has provoked a reaction in the public opinion and at the political level. Many MPs had invoked and proposed the prohibition of any form of ads for the gaming products (several Bills were presented in the Italian Parliament similar to the prohibition of tobacco). Now the situation is complex. After a period in which the issue was totally unregulated the reaction of the public powers, as often happens, was too severe and too strong.
I think that the new rules could have the effect to cool the market of the ads and it’s possible to forecast negative consequences in terms of revenue growth for media companies and maybe also for the gaming companies, but I don’t think there will be nefarious effects, I don’t imagine a catastrophe in the short term.
I think that it’s important that advertising and every kind of promotional activity respects limits and fairness, especially to protect minors and vulnerable people. The new regulation will impose more responsible behavior.”
“By now we just have few articles on gambling advertising with a bigger focus on public health. Honestly I think that it is too early to jump to conclusions and we do have to await the discussion by the two chambers of the Parliament. In general I think that it is a lost opportunity for the Igaming industry (mostly operators) to have the Parliament ruling on advertising: it would have been better to have a joint proposal for self regulation coming directly from an industry which is so highly involved in Responsible gaming. The main concern of the legislator is protecting under 18 years old from exposure to the gaming advertising.”