Stanley M.D. Issues Surprise Letter to Italy's Big Four

While the Italian betting and gaming market continues to boom, to many on the outside, it still appears an impenetrable, Wild West-type environment.

The bookmaker Stanleybet International continues to haul the authorities through the courts on a regular basis; parallel networks of outlets still exist, cheek-by-jowl, alongside licensed betting shops; and, in the more lawless South of the country, banks of slot machines remain disconnected from the government’s specialized database, funding organized crime rather than Italy’s Treasury.

To fully understand the complex and confusing market that exists in Italy, it is important to understand how the betting and gaming sector has developed over the last decade.

Back in the 1990s, Italy had, in common with most European countries, a monopoly regime governing betting and gaming. However, with a population notoriously difficult to govern and, at the same time, well known for their passion for football and betting, the Italian public became a target for bookmakers based in the United Kingdom, where fixed odds betting was legal.

At the time, Italy had the most popular football pools game in Europe -- Totocalcio -- and a flourishing and well-organized black market betting business known as Totonero. Once the activities of overseas bookmakers became well known, the entrepreneurial skills of the Italians themselves soon led to many new betting operations being set up by Italian gamblers, in the United Kingdom, keen to jump on the bandwagon: Eurobet, Globet and Let’s Bet, to name a few.

Having seen their domestic laws challenged successfully by the United Kingdom bookmakers, and witnessing millions of euros worth of bets leaving the country each week, the Italian authorities were the first in Europe to break rank and leave aside the monopoly system -- at least for sports betting -- and establish a form of regulated market in Italy, albeit via an ultra-protectionist bid process that excluded all of the major overseas bookmakers.

The authorities’ inability to put their protectionist tendencies to one side in effect led to the legal chaos that has ensued since Stanley, the Liverpool bookie, successfully challenged the Italians at the national -- then European -- courts. And the rulings that were handed down at the European Court of Justice -- Gambelli and Placanica -- helped bring about an opening up of gaming markets throughout Europe, but the imperfect tender processes for betting shop licenses led to anomalies that still remain in the Italian marketplace today.

Having excluded major overseas bookmakers from bidding for 1,000 sports betting shop licenses in 1999, the number of companies opening outlets exploiting the European rulings and sending bets to overseas bookmakers ran into the thousands.

Known as CTDs, the outlets were then copied by Italy’s newly licensed operators who created satellite “agencies” in bars and cafés, known as Punti Remoti. The result: by the mid-1990s, there were less than 800 or 900 official betting shops and several thousand outlets where it was possible to make a bet with either overseas bookmakers or online Italian operators.

To bring order to the first newly regulated market in Europe, the authorities organized a more open tender in 2006, in which most of Europe’s gaming operators participated.

However, the authorities still blocked one company: Stanley.

This year, the situation has become more stable, but the unlicensed outlets still exist, both those of Stanley and others linked to other companies, or sometimes no bookmaker at all.

But on April 6, in a spectacular move that raised eyebrows even amongst those more used to the unpredictable nature of the Italian market, Stanley’s managing director, John Whittaker, invited the heads of the country’s Big Four betting operators -- Snai S.p.A., Sisal S.p.A., Lottomatica S.p.A. and Intralot Italia -- to join with him to help combat operators running “illegal” betting outlets.

Mr. Whittaker added in explanation: “Stanley operations are legal. After the rulings of the European Court of Justice and National Courts, including Supreme Court of Cassazione, you will understand that these bodies accept our position. Our case is ‘unique’. We have been barred from entering in the market in both the ‘CONI’ (1999) and the ‘Bersani’ (2006) tenders. As a consequence Italian tribunals say that Placanica ruling apply ‘in our case’ and that the offer of our services is 100% legitimate. Whilst you may not like it, this is the reality.”

Given the countless rulings that have gone in Stanley’s favor -- both in Italy and in Europe -- Mr. Whittaker does seem to be telling the licensed operators an uncomfortable truth, the situation being directly the result of the mismanagement of the “Stanley problem” by the Italian authorities in the past.

Mr. Whittaker went on to say: “I would like to invite you and the other chief executives to whom this letter has been sent to put to one side any historical problem between us and instead to join forces. You might find this concept difficult to accept but if you are able to look at this pragmatically I think you will realize that what I am saying makes sense.”

In effect, in what would be a bizarre piece of logic anywhere in the world apart from Italy, a company, which was prevented from obtaining licenses, is offering to work with licensed bookmakers to help rid the country of operators who have never wanted a license at all.

Quite what the response of the Big Four will be is anyone’s guess.

However, Stanley’s decision the following day to donate 1 million euros to fund reconstruction work in the earthquake-stricken area around L’Aquila -- where the company had a number of its outlets destroyed or damaged -- will no doubt prevent the licensed operators from painting Stanley as some illegal cowboy outfit. Indeed, the decision to donate will put pressure on the Big Four to make a similar gesture at a time when Italian public opinion has all eyes on the quake-hit region and the response of the country’s businesses.

In many respects, Italy is most certainly a world akin to that of Lewis Carroll's "Alice in Wonderland;" but at the same time, it is also immensely profitable for the country’s gaming operators who understand it. The last few days have made it appear a little bit more confusing, but may be the first steps toward a form of order being established.