22 May 2020 - Article
The ‘Decreto Dignità’ – which came into force on 14 July 2018 with the aim of fighting gambling addiction by banning the advertisement of services and products related to gambling and betting – has now been converted into Law no. 96/2018 by the Italian Parliament and published on 11 August 2018.
Betting and gambling providers are now prohibited from carrying out any advertising in publications or on billboards within Italian territory. Moreover, as from 1 January 2019, the ban will also include advertising during games or sponsorship of sports or cultural events. All those who fail to comply will be hit with a financial penalty, now increased from 5% to 20% of the value of the deal or alternatively € 50,000.
Betting and gambling industry representatives have criticized the new regulation on the basis that this far-reaching ban does not follow scientific recommendations for treating gambling addiction and pathology. Despite the ban on the advertising of cigarettes (introduced in Italy in 1962), reportedly rates of smoking addiction have not decreased since.
The impact of the new law on agreements that are already in force with betting and gambling companies should be assessed. The new legislation provides that any sponsorship agreement concluded with (Italian or foreign) betting or gambling companies before the enactment of the Decreto Dignità will continue to be in force until their expiry or 14 July 2019, whichever occurs first. Afterwards, any sponsorship agreements with a betting company will be illegal.
It is worth highlighting that, currently, 11 out of the 20 clubs competing in the Serie A Championship have sponsorship deals in place with betting companies. For example, AS Roma entered into a three-year deal with online bookmaker Betway, while FC Internazionale Milano has recently signed an agreement with Asian online betting and gaming partner Letou. As a result of the new regulation, by 14 July 2019 these sponsorship deals will in all likelihood no longer be valid and cease to be in effect (at least with respect to the Italian territory), resulting in a serious loss of profits for these clubs.
From a financial perspective, the new regulation will no doubt significantly affect Italian sports stakeholders and will result in a growing financial gap when compared to other European countries, like France and Spain, where such a ban is not in force. With this new law, Italian professional championships will lose a considerable source of revenue and, consequently, be less capable of attracting top athletes. To better understand the impact of the new ban, between 2008 and 2017 the total amount of investment into football by gambling companies amounted to $663 million USD (Nielsen Sports World Football Report 2018). A study carried out by the European Gaming and Betting Association further showed that, every year, betting contributed circa €120 million EUR to sponsor the Italian sports industry. A number of betting companies have already declared that they will appeal to the European Courts in order to prevent the new law from affecting their ability to financially contribute to sports taking place in Italy
through advertising and sponsorship.
The impact on international sports competitions
Changes to Italian law will not only impact Italian clubs but also any international sports competitions held in Italy.
What will foreign football clubs, which have a betting company as a jersey sponsor, be required to do when they play matches in Italy? It seems that clubs may be forced to cover the logo of the betting partner that is normally displayed on the jersey. Within the UEFA Champions League framework, it is stated that clubs must comply both with the applicable legislation of the match venue and UEFA’s regulations. As an example of this rule, in a recent match played in the Netherlands between Ajax and AEK Athens. AEK Athens had to remove its betting partner’s logo from its jerseys, since such advertising is prohibited under Dutch regulations on gambling.
The implementation of this new law may also result in a further issue for clubs where failing to show the sponsor’s logo would leave the club in breach of their contract and therefore liable to a considerable reduction in sponsorship. It is therefore vital that clubs have adequate provisions and carve out clauses to ensure these scenarios are best prepared for. Clubs such as Celtic Football Club and Rangers F.C. who are both sponsored by a beer producer have already followed this approach when playing in states where an alcohol sponsorship and advertising ban is present. Inevitably, as from July 2019, Italian clubs and their betting sponsors will have to make adequate provisions in their contracts and carefully negotiate their sponsorship agreements to avoid financial penalties.