Italian Gambling Customers Face More Tax Hikes

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Italy’s gambling operators are preparing for consequences after more tax hikes on the industry are announced by the government, this time targeting the customers of the operators.

Last week, Italian media got a sneak peek at the 2020 fiscal budget of their government, which includes plans to raise the tax rate on large lottery jackpots–defined as those over € 100 million–from the current 12% to 23%. Every year in Italy there are only a handful of such mega-prizes on sale, but the government is also seeking even smaller windfalls.

Reportedly, the government is planning to impose a new 12 percent tax on gamblers ‘ winnings below € 500, which accounts for most of the punters ‘ profits and is not currently taxable. The new tax system, which would extend to everything from lotteries to sports bets, would also include a variable rate that would rise along with the price of winnings, topping the above 23%.

Op-eds also warn that this new tax plan would result in less revenue from gaming tax being collected by the government than before. Typically a lottery customer who pays € 5 for a draw ticket and wins € 5 would choose to replay their winnings. But the punter’s winnings are now only € 4.40, so they’d have to pony up the remaining € 0.60 to redeem themselves, and may simply choose to keep the money in their pocket.

The state may not object to its people spending less money on gambling, even if it takes a hit from the tax coffers of the government. In recent years, Italy has introduced a number of punitive actions in the gaming industry, ranging from rises in both online and land-based taxes to the highly criticised ban on betting ads and sponsorships, all of which are allegedly aimed at curbing the desire of Italians to play.

Italy is also trying to curtail casino operators ‘ tax evasion through a proposed ban on gaming services cash payments. Deputy Economy Minister Laura Castelli, a member of the Five Star Movement (M5S) faction, said in an interview last week that the “virtuous” battle against gambling by the government will continue to go forward, not backwards.

Giorgio Pastorino, president of the local gaming industry group STS, who believed that the initiative would favour only large banks and financial institution, immediately criticised the proposal to allow gamblers to use credit or debit cards to access land-based gambling services.

Pastorino said Castelli’s remarks demonstrated “a lack of competence on the subject.” Pastorino questioned if Castelli really believed a punter would be interested in using a card to play a € 1 game or make a small wager, while at the same time claiming that operators would not be willing to accept a card for such a small amount, considering the percentage of each payment stated by the card issuer.

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