Betfair has lost an appeal to stop imposing a temporary sports tax of 0.5% on exchange wagers after a court in Lazio ruled in favor of Italian gambling regulator Agenzia delle Dogane e dei Monopoli (ADM).
The 0.5% Recovery Tax, or Salvasport Tax, was introduced in May 2020 as part of the Decreto Rilancio, or Decree of Resurgence, and applies to all online, retail and virtual sports betting.
This tax regulation reads: "The collection of bets on sports events of all kinds, including in a virtual format, carried out by any method and by any means, both online and through traditional channels."
The amount of tax is limited to the amount that can be collected by the Italian government each year. In 2020, there was a maximum fee of €40m, with a cap of €50m (£43.3m) in 2021.
Betfair claimed that its exchange model does not actually collect bets from players, but instead allows players to bet against each other before being charged a transaction fee.
As such, a subsidiary of Flutter Entertainment claimed that the 0.5% tax was unlawfully applied to Betfair.
In addition, the company argued that imposing a tax on winning trade bettors would make trade wagering less attractive, leading players back into fixed odds betting where they would be taxed anyway.
Betfair also stated that the tax is contrary to EU law as it imposes a trade barrier on the free movement of goods and services.
However, judges at the TAR Court in Lazio dismissed Betfair's appeal that it did not act as a bet collection agent for the players.
“From a systematic study of both the concession agreement and industry legislation, it becomes clear that a betting exchange is both technically and legally a collection of bets, because without intermediary activity and in the absence of a platform that they manage, players could not interact with each other and , ultimately, could not collect bets, ”the judges ruled.
“Thus, even if it is a rate-collecting activity carried out in a way that is clearly different from the methods used for traditional rates, there is no doubt that the rates-exchange concessionaires are collecting rates, and that such collection, for example, all others must be taken into account in the will of the legislator subject to this regulation, albeit with possible differences,” the judges added.
The court ruled that Betfair could not be exempt from the 0.5% refund tax as it would undermine all legislation.
“The broad wording of the provision does not allow any form of sports betting collection carried out by state concessionaires to be excluded from the recall,” the judges said.
"Bet exchange is one of the methods allowed by the concession for the remote collection of games and bets, and therefore, subtracting from the entered output only the collection of bets" with direct interaction between players "would constitute an unjustified difference in treatment with respect to the collection, as well as her goals,” the court added.
However, the judges also requested ADM to reconsider the calculation of the tax for the exchange, as the current application of the tax is considered unfair, was neither motivated nor justified, and Betfair provided alternatives that could be implemented to achieve the same public interest. but without undue harm to exchange operators.
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