20 July, 2021

Did the Industry Cry Wolf over Italy?

Tim Poole looks back at the dramatic quotes of late 2018, when Italy decided to ban gambling advertising, and wonders if the success of the market since has undermined those who argued against the move

In September 2018, Quirino Mancini was adamant. The gaming lawyer told a sports betting conference: “I still have nightmares when I wake up in the middle of the night, thinking about how stupid, short-sighted and biased this was, and how dangerous the precedent it sets – that could spread out across Europe – is.” What horror was he referring to? It could have been anything, based on that description, depending on how vivid your imagination can be. Step aside Agatha Christie, the gambling industry has its own thriller in the works...

Yet in actual fact, Mancini was discussing the Dignity Decree, the Italian law that was to outlaw gambling advertising from 1 January 2019. And, in hindsight, you have to wonder what all the fuss was about. Advertising was duly banned in Italy: there has not been any “dangerous” spread throughout Europe since and most strikingly – as we will explore later– Italy’s gaming revenues have not suffered in the slightest. So it begs the question: did the gaming industry cry wolf about Italian advertising?

It was not just Mancini, of course, who derided this law, although the associate at Tonucci & Partners was unequivocal in his view of it. He continued: “The Deputy Prime Minister, Mr Luigi Di Maio, came up with this proposition to get the gambling threat out, because he kept talking about very desperate people that go to the nearby slot outlet every day. The beauty is this will continue as usual. The ban hits the pure online operators because it prohibits any type of gambling advertising. But, when it comes to retail, you can continue to have your nice sign outside the door and those desperate guys can still come in and gamble at the slot machines.”

Niklas Lindahl, LeoVegas Italy's Managing Director at the time, shared similar sentiments in an August 2018 exclusive interview with Gambling Insider. “It’s an insane law that goes against the recommendation of the European Union,” he lamented, suggesting the ban will seriously harm licensed operators and push players to the illegal sector. There is a real sense of irony, however, in these quotes being delivered by a LeoVegas executive, given the success that followed in Italy for the operator.

Indeed, during its Q4 2020 financial report, CEO Gustaf Hagman was full of praise for the company’s performance in the Italian market. He said: "With the exceptions of Sweden and the UK, our core markets showed high double-digit growth during the quarter. Above all I want to highlight Italy, which has now become one of our five biggest markets." When asked how LeoVegas had done so well in spite of the advertising ban, Hagman told Gambling Insider that players have flocked to the company with the best product, in the absence of marketing or advertising.

In other words, the advertising ban hasn’t really affected Italian market performance at all. And what’s more, data from Global Betting & Gaming Consultants – exclusively provided for the May/June edition of Gambling Insider magazine – proves Italy was simply unaffected by the ad ban. As per the data, betting volumes remained constant until February 2020, with online gaming even rising still. When the Covid-19 pandemic hit, betting dropped but later soared, while online gaming continued its steady rise. The pandemic demonstrated an immediate impact on the data, whereas the advertising ban did not – nor even did the cut-off point for gambling companies' existing advertising deals at the time.

So what can we learn from this whole episode? Sure, governments will sometimes look to curb advertising, winning the popular vote and upsetting gambling companies in the process. But if gaming levels aren’t actually affected by it, why kick up a fuss? It does appear the industry completely overreacted here just to make a point. If, as Hagman believes, players who want to gamble are simply drawn to the brand with the best product, they will still gamble. Perhaps it’s time for firms to step up in the development department and stop spending huge resources on marketing that doesn’t majorly boost the bottom line. From the way Mancini, Lindahl and many others reacted to the Dignity Decree, you would have expected Italy’s gaming market to have simply plummeted since 2018. The data, however, and even the comments of company executives, has suggested the exact opposite. The industry is constantly asking governments and regulators to use data when assessing policy. On this occasion, it looks as though the gaming sector itself ignored those two principles. It’s always wiser to pick your battles or, as the tale goes, you'll end up being ignored when the real wolf arrives at your doorstep.