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Online Poker Revenue in Italy Plummets

In its yearly report Italian state regulator, L’Amministrazione Autonoma dei Monopoli di Stato (AAMS) according to PokerFuse.com, a clear sign that legalization and regulation is not always the antidote for online poker players. The news that online poker revenue fell 43% year-over-year is a harbinger for Nevada, as one of Italy’s main problems is a lack of players, along with the extremely high taxation rate which trickles down to the players in the form of higher rake and tournament fees.

After initially only allowing tournaments at online poker sites, in 2011 Italy legalized cash games for licensed online poker providers, a move that was supposed to be a boon for the industry. Unfortunately, the boon was short-lived, and both tournament and cash-game revenues have fallen in 2012 –tournaments by 75% and cash games by 41%.

According to PokerFuse.com, the report shows a reduction in tournament revenue from €35.3 million in January of 2011 down to just €9.1 million in August of 2012.

Italy is an online poker model that Nevada and other states in the US should take notice of as they push forward with their plans of intra-state online poker legislation. Italy’s main problem is their lack of a player pool, having to draw only from Italian residents and in the process having to impose higher taxes in order to make the industry viable for the government.

Based on the Italian model there will always be a market for online gaming, but if the US wants the industry to thrive on a state by state basis they may need to rethink their plans and look towards an inter-state model much like the state lotteries run.

Nevada is planning to launch their first online poker site in the coming weeks, and the general fear among the cynical poker crowd is that an online poker room with 30 or even 300 real-money players will do more harm than good in the efforts to get a federal online poker bill crafted as the main argument has always been that online poker legislation would be a cash-cow for the government.

Italy is trying to tackle the same issues and end their cyclical problems of a small player pool and high taxation, which leads to a smaller player pool, which leads to higher taxation. The AAMS has reportedly been in talks with Spain in an effort to combine the two countries player pools which may lead to more countries also joining the alliance (France, Estonia, and Belgium are some of the other countries that have legalized online poker) which would still need to clear a number of hurdles including the formation of a European online poker regulatory body that each country could agree on!

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