I’ve no idea if it’s allowed there, but I’ve been to Venice a few times (not since flying drones, admittedly) and it’s somewhere I can’t imagine I’d want to try and fly.
What isn’t water is pretty much always chock-a-block with people - and the bits that are water are very busy with boats and gondolas … and hence people.
Italy gets a bit twitchy about its many UNESCO world heritage locations - and, without checking, I can’t imagine Venice isn’t one.
I’ll be interested find out what you discover, though - and what you experience flying there is if you discover that you can.