High taxation not a good idea in online gambling

The Bruno Leoni Institute in Italy as concluded from a recent study what operators have been complaining about for years – over taxation is counter-productive and results in weaker player protection as punters are driven into the arms on unlicensed operators who can make better offers.

Reporting on the Leoni study titled “Gambling: More Taxes, Less Income,” this week, the publication Pokerfuse reports that the Institute found that Italian online poker tax rates are second only to those of France in severity, and are having the same dampening impact on the ring-fenced national networks.

Marginal taxes on poker tournament entries are 27.3 percent and 25 percent on cash games, compared with similarly high rates in France of 25 percent and 37 percent.

For Italian operators, the impact has been considerable, with declining profit margins and game volumes, illustrating the negative influence which over-taxing exerts on pay-out percentages and promotions.

For players, the increased operating costs result in less attractive offers, prompting their departing to more tempting venues that are not licensed or regulated in the national jurisdiction, and may be riskier in terms of consumer protection.

“The main alternative to legal gambling … is not non-gambling but, in many cases, illegal gambling. This is especially true for online gambling, considering that foreign sites, even if illegal, are easily accessed,” concludes the Leoni report, noting that enforcement initiatives have not deterred illegal operators from offering their services to French and Italian players.

The Institute’s recommendation to the Italian government is to reduce tax levels in order to support and help the legal industry to be more competitive against illegal operators, bringing players back from the illegal sector where they will be safer and will ensure businesses grow.

Pokerfuse notes that the regulated and legal Italian online market has been in decline for over two years.