Italian court reduces gaming concessionaire’s penalties in betting and VLT dispute

A court in Italy reduced the contractual penalties sought by a gaming concessionaire from an operator that had failed to remit sums owed, according to a report on the ruling. The court upheld the termination of the contracts and the operator's obligation to pay the outstanding amounts, but cut the penalties by about 75.5% after finding them manifestly excessive. The ruling was issued by the Tribunale di XXXX, with the parties' identifying details omitted.

The dispute concerned five contractual relationships covering national totalisator numerical games, additional services, online collection from the physical network, sports betting and VLT machines. After the operator failed to pay, the concessionaire declared the contracts terminated and sought the unpaid sums plus about €170,000 in penalties. The sports betting point contract set a penalty of 3% of net collection over the previous 12 months, with a minimum of €100,000. For VLT, the terms provided €3,500 for connection costs plus €15,000 for each installed videoterminal; in this case four machines produced a total request of €63,500.

On the evidence, the court held that the electronic borderò, generated by automatic recording of bets from networked terminals, are mechanical representations under article 2712 of the Civil Code and, absent a challenge, carry full probative effect. The contracts also made the accounts final and uncontestable if not disputed within 15 days of receipt; the court classified these provisions as agreements on proof under article 2698 of the Civil Code. The operator did not appear in the proceedings and raised no challenge within the deadlines.

On the penalties, the court found the amounts were set in contracts prepared unilaterally by the concessionaire and were independent of the value of the unperformed obligation, the prior and remaining duration of the relationship and the profit the concessionaire could reasonably have obtained from regular performance. It applied the same reasoning to the €100,000 minimum penalty for the sports betting point, whose fixed amount did not depend on the actual extent of the breach. The court also noted that the betting and VLT relationships had been performed regularly for about two years before termination, and that the unpaid amount also related to other contracts.

The court said that although it had invited argument on whether the penalties were appropriate, the concessionaire provided no concrete elements supporting the proportionality of the amounts sought. In recalculating the sums it considered the extent of the breach, the duration of the relationships, the nature of the contracts, the economic harm the parties had sought to quantify in advance and the concessionaire's ability to find another operator. The penalties were reduced under article 1384 of the Civil Code. The report states that the power to reduce manifestly excessive penalties is already provided by that article and that the ruling cites earlier decisions in similar disputes.