Must $x$ and $y$ be different in a statement of the form $\forall x \forall y \cdots$?
For any formula $\varphi$ in which $x$ and $y$ are free variables, $\forall x \&gt; \forall y \&gt; \varphi$ quantifies over all possible values for $x$ and $y$. As a result, $x$ and $y$ may be different objects or they may be equal; for the statement to hold, $\varphi$ must hold in both cases.

Following this reasoning, a valid interpretation for your formula would be "an Italian is happy regardless of who wins the World Cup" (assuming "WC" stands for "World Cup"), with "Italian" standing for $x$ and "who" for $y$. Thus, $x$ is happy if they win the World Cup ($x = y$) but also happy if someone else does ($x \neq y$); hence "regardless".



The other statement can be expressed in predicate logic as follows:
$$\forall x (\text{italian}(x) \to (\text{winWC}(x) \to \text{happy}(x)))$$

In fact, this evaluates to the same truth value as the first formula precisely when you pick the same values for $x$ and $y$.

Assuming the most reasonable domain (i.e., persons in the world) and interpretation in this setting, you could argue there is an Italian which is happy only if the Italian national team wins the World Cup and is unhappy otherwise. Pick this person as your value for $x$ and an arbitrary non-Italian (e.g., German) person for $y$; then the second formula evaluates to true under this variable assignment (since $\text{italian}(x)$ is true and $x$ is happy if $\text{winWC}(x)$, that is, the Italian national team wins), but the first evaluates to false (since $x$ is unhappy if $y$'s team, that is, the German national team wins).