GME3: Fee-ding the Machine, DSA Makes X SAD, and Pandoro Panic!

For 2023’s final edition of the GME3, we have an EU special! First, the Italian Council of Ministers is discussing a massive increase to their gaming licensing fee, an official investigation into X has been opened under the EU’s Digital Services Act, and an Italian influencer finds herself in hot water for misleading consumers. Read the full stories below!

Gambling

Fee-ding the Machine

The Italian Council of Ministers is currently discussing new legislation that would significantly raise the cost of gambling licensing fees in the country. The proposed change would see Italy’s licensing fee increase from €200,000 to €7 million (over $10.2 million CAD!) – an increase of over 3500 percent. This would make Italy the most expensive country to obtain a gaming license in the EU.

The European Gaming and Betting Association (EGBA) has expressed concerns about the new fee structure. For one, combined with Italy’s stricter laws around gambling advertising, the additional fees are likely to deter new entrants to the Italian gaming market and force some existing license-holders out of the country. This, the EGBA continues, will force more operators back into the “grey market” – which will lead to less government oversight and more risk to problem gamblers. The EGBA argues that Italy already hosts one of the EU’s largest grey markets (generating €1 billion in annual revenue), and increasing the cost of obtaining a license is unlikely to help that situation.

The EGBA has urged the Italian government to reconsider its position on the licensing fee. In the best-case scenario, they project that the revenue from the increased fee will range from €105-140 million, and is likely to be far less. The Association suggests that the Italian government instead implement their previous proposed license fee – a more modest  €2.5 million – but ditch the other elements of their original plan, such as limiting the number of licenses to 40 across the entire country.

We’ll have to see what the Council of Ministers decides on (and how many operators will be willing to fork over the increased fee) in the New Year.

Media

DSA Makes X SAD

In more news from Europe, the EU has officially opened a formal infringement investigation against X for violating the EU’s Digital Services Act (DSA). Passed into law in November 2022, the DSA aims to bring greater accountability to online social media platforms. Part of this involves actively working against the spread of illegal content.

X is being investigated to determine whether the company has done enough to moderate the proliferation of illegal or misinformative content on its platform. Other elements under investigation include the misuse of “verified accounts” and determining the success of the new Community Notes feature. Community Notes were introduced as a method of outsourcing fact-checking to users of the platform, allowing them to add context or challenge the veracity of posts that seem suspicious. However, some have criticized X for this approach, arguing that there should be a dedicated team at the company with the mandate to verify posts that could violate the platform’s Terms and Conditions.

The investigation will proceed into 2024 primarily via interviews, inspections, and additional, more detailed requests for information.  X has responded that they “remain committed to complying with the Digital Services Act, and is cooperating with the regulatory process.” 

2023 was a big year for Twitter/X. Since being acquired by Elon Musk earlier this year the platform has undergone some massive changes and has also been at the centre of a lot of controversy regarding the proliferation of hate speech. With advertisers leaving in droves we’ll have to see what they have planned in 2024 to turn things around.

Entertainment

Pandoro Panic!

In our final European story for the week (and of 2023), an Italian influencer has come under fire for misleading consumers.

Chiara Ferragni, who has close to 30 million Instagram followers, has been fined €1.075m (close to $1.6 million CAD) by the Italian government. Ferragni is accused of misleading followers by promising that sales of her designer” pink pandoro would contribute to funding a children’s hospital. Instead, Balocco, the company that manufactured the cakes, donated a flat contribution of €50,000 months before the initiative even began. All revenue from the cake sales was kept.

The Italian Competition Authority argues that the campaign intentionally exploited consumer “sensitivity to charitable initiatives, especially those aiding children with serious illnesses”. A consumer advocacy group known as Codacons has also expressed its intention to launch legal action seeking restitution for anyone who bought the cake.

Ferragni has since apologized for her role in the scandal, claiming that she had simply made a mistake in attempting to link commercial and charitable endeavours.  To make amends, she has committed to donating €1 million to the hospital herself. However, she also says she plans to appeal against the Italian Competition Authority’s ruling and “unjust” fine.

In short – don’t do this. If you’re an influencer trying to determine if a promotion violates any laws (a greater challenge than ever considering the FTC’s revised endorsement guidelines from earlier this year) reach out to Zack here at GME Law!