Betfair hit by poor judgement on Italian turnover tax

Betfair has been provided bleak options by Italy’s ADM customs and monopolies agency as to how it should calculate Italy’s temporary turnover tax on its ‘Exchange’ betting product.

Last summer, the Italian government imposed a 0.5% turnover tax across all sports wagering verticals (retail, digital and virtual sports) – a year-long measure approved as part of Italy’s ‘Covid Revival Decree’.

The decision was immediately contested by Betfair, who underlined that its betting exchange could not operate under a turnover tax applied to its wagers.

Betfair notified the ADM that combined with existing betting and corporate taxes, its online betting exchange would be operating at an overall tax rate of 111% – making the Italian market non-viable for its business.

The operator advised the ADM that the temporary tax should be modified to either an additional 3% GGR tax rate or calculated on its exchange commission rather than as a wagering charge.

The ADM responded to Betfair’s appeal by stating that for betting exchanges, the turnover tax should be calculated as a ‘summation of all amounts matched between lays and bets, minus the betting tax, calculated for each individual market’.

The judgement has placed Betfair in a precarious situation, as winning players on its Exchange will be charged higher commissions – with some likely to end up paying more tax than their net winnings.

Maintaining 96% of Italian betting’s exchange marketplace, Betfair said that ADM’s decision had severely damaged the competitiveness and appeal of its flagship product.

Elsewhere, Rome’s administrative court rejected the appeals from Italian giants Lottomatica, Goldbet and Sisal for clemency from the turnover tax, as the companies continue to operate with their retail units under enforced lockdown.

Pushing Italian betting taxes over 30% GGR (standard 20-to-24%), the latest ADM figures revealed that €20 million was paid by sports betting, horse racing and betting-exchange concessionaires for the period May-to-August.