iGaming.org recently sat down with Paolo di Feo, CEO of Giochi24.it, to discuss the online landscape in Italy and the best strategies to adapt to recent changes. We then delved into his firm’s unique business model.
What do you think about the new law regarding online concessions in Italy?
“As always, there are lights and shadows. I believe, especially for an international newspaper like yours, it is more important to understand the trends that the law establishes than the local details. Italy has often been the “leader” in legislation, and other countries will follow.
“The main point is the length (9 years, which will likely become 10 or more), coupled with covering all games and a promise of stability in taxes; this framework allows for planning and investing. The companies that want to be leaders in gambling in the future must get used to this in other countries as well.
“Another trend is the inclusion of a kind of “transitional offline network” in the concession; the market is still divided between online and offline, but this framework facilitates and smooths the ongoing transition toward online. The Italian online market is going to become much bigger than it is now in the future, and the companies that perform well in the next years will dominate it for a long time and considerably increase their value.”
Could anything be done differently?
“It’s too easy to say the price. It has been appreciated only by some big companies that hope to consume the market of small companies, but it will be quite difficult for them to digest it because those companies were capturing local and niche markets that big companies are not ready to manage. So, I do expect a bit of confusion for a while if the price is not decreased . The difference in tax revenues could be easily compensated by increasing the price to be paid for the offline network. We cannot expect 40 companies or so to just shut down and fire everyone without fighting and look for alternative solutions that will create problems , including delaying the bid.
“Normally, governments try to increase employment and companies, not decrease them; here, we have a situation where even official documents state that 1/3 of the companies will shut down. Consortiums are not a realistic option, they are just a way to answer to this situation, and everyone knows it cannot work. I still hope the government will listen to small and medium companies. I expect other countries to be wiser and to understand the alternatives because it’s possible to get more tax without destroying jobs and losing income tax and VAT. Overall, the gambling industry has to raise its voice; let’s imagine this happening in another industry.”
Do you have other suggestions?
“I would like to see something more long-term and specific regarding advertising. For example, for lotteries, which are our core business, there could be more freedom, as gambling addiction is not typically an issue. Giochi24.it allows registrations with 2 Euros, which is the average value of a SuperEnalotto or Lotto slip; our customers often play just a few euros a month. However, if we cannot communicate properly, customers will instead end up on sites that lead them down more dangerous paths. It is time to review the “Decree Dignity” with professionals who understand digital marketing. The principles of the decree were right, but its implementation has created confusion, allowing online .com illegal sites to have the top position in search engines.
“Regarding the issue of illegal gambling, I appreciate the government’s planning to combat it, which could surely benefit from AI. I believe they should make some small changes in the law and employ a few more people to work on this; the cost of this would surely be offset by the taxes that are currently unpaid.
“There are also a lot of technical issues, such as keeping the same guarantees and documents the companies already have. Generally, we must consider that 95% of the companies that will bid are already in the market. Without advertising it’s too complex to enter the market because there are no fast and legal ways to gain market share. So, at least for these companies, there is no reason to have complex procedures or new guarantees. We are talking about the top 40 or 50 companies that are just finishing the January AML submission and certification and have paid millions in taxes in the last years; fewer papers to submit would also mean the bid could be faster and the government could collect taxes earlier.
“One small thing that would demonstrate maturity and courage from the regulator would be to simplify the technical certification; no one dares to talk about it because they are afraid of being seen as relaxing the controls, but as it stands, there is a useless redundancy.”
Your business model is rather unique. Could you explain it a bit more?
“I have extensive experience in all gambling products, as well as in startups and e-commerce, and Giochi24 is probably more akin to an e-commerce site selling a commodity than to an Italian gambling site. With just a few clicks, you get what you want, and you get paid fast if you win. There is no confusion, no advertising to convince you to bet on the next soccer match with captivating odds. Customer care is provided only by experienced people, rated 4 stars on Trustpilot, without automatic replies or people who do not know the last lottery draw or lack patience; our best customers have a telephone number to call and have known the person for years. We are the only gambling site I know of that has more female players than male and we are almost leaders with over 50 years old players and with players that play since more than 10 years, we are the “ultimate” solution Churn is very small because we do not make false promises. At the same time, we can only grow progressively; there are no promotions made just to attract any kind of people and keep them engaged with calls and emails. We are not even using that much recall; if you get a bonus, it is maybe 10 euros, but it is real; you do not need to play 35 times the amount. We are building the more solid assets a company can have , reputation and brand. In few years our real value will be the brand, and will be a lot more than what the company is valued now or the turnover it has.
“However, there is one way that would be beneficial for us to grow faster and for the Government, which is allowing betting on the lotteries of other jurisdictions; this is the last important innovation that the Italian government should consider. It could generate more tax revenue than the concession revenues, and it’s going to increase the pie rather than reduce it.”
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