Italy: Is online gaming dependent on offline?

Online gaming is heading towards hybrid models of business where offline services are still relevant, but this approach needs to deal with regulatory restrictions.In a country like Italy when most of payments are still performed in cash, the offline presence of online gaming operators is becoming more relevant. It might sound unexpected, but the digitalization process still requires the physical contact between operators and players.

Offline authentication and registration can help

Italian gaming laws require to collect the players’ IDs within 30 days from the opening of their account. And according to the current position of the Italian regulator, such requirement cannot be replaced by other forms of identification. Likewise, players’ registrations require to fill in a large number of fields.

The process of collection of players’ IDs is usually managed using the camera of smartphones, but it is still a problem for players that are not IT skilled. Therefore the usage of affiliation shops to perform such activity can represent a substantial support. However, it needs to take into account the restrictions provided by Italian anti-money laundering law as well as the privacy related potential issues in case of misconduct in the usage of players’ IDs. The same occurs for players’ registration that cannot be performed by affiliates in place of players, but just with their support.

Offline offering of online gaming

Traditionally the turnover generated through the offline offering in Italy is considerably higher than the online offering. This is why online gaming operators are trying to expand their offering to shops. This circumstance led to the installation of gaming terminals (the so called “totem“) connected to an online platform in a number of shops. However, both the license agreement regulating the operations of Italian online licensed operators and primary laws set “unclear” boundaries as to the practices that are prohibited.  The result of such unclarity is that some operators are taking high risks of challenges.

Gaming payments, how to handle them?

I already discussed about the legal issues deriving from the management of deposits and withdrawals through affiliation shops. While deposits do not lead to major issues if performed by individuals that already sent to the operator the copy of their IDs, the management of withdrawals through shops can lead to both gaming and banking law issues. In order to overcome such issues, some operators decided to enter into deals with banks or e-money issuers to obtain their branded prepaid card.

Because of such increased relevance of offline, a number of online operators are considering to acquire betting shop licenses as part of the tendering process to be launched later this year.