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Online Gambling Initiatives in Spain

By: Mark Freedman, Saturday December 18th 2010
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Spain appears to be the next European country to introduce legalization and regulation of online gambling. The final form of a draft bill is ready and the Spanish regional and federal regulators are expected to meet this week to discuss it. The bill is scheduled to be presented to Parliament early next year.

Both, online players and online gaming operators are appreciative of the initiative taken by the Spanish government in this regard. But they are apprehensive as well. Therefore some online gambling trade associations have indicated that if the bill is brought to the public domain then a wider consultation process can be engaged in. The main fear is the tax rates envisaged in the bill. Many online gambling operators are unhappy with the prevalent tax rates on online gambling in France. The licensing process in Denmark is being delayed because the brick and mortar gambling tax rates are high and land based operators have taken the matter to the European Commission. The Spanish online gambling industry does not want such events here.

The rumor is that all other forms of online gambling will be taxed on gross gaming revenue whereas online sports betting will be taxed on turnover. Gross gaming revenue is turnover less the winnings paid out. Agustin Torres, Secretary of Spanish Association of Online Gamblers (AEDAPI) pointed out that this will be counterproductive even if the tax rate on sports betting is less than the proposed 10%. Taxing the turnover does not allow operators to offer competitive products to consumers and many of them will stay away. Taxing online sports betting on the basis of gross gaming revenue will bring consistency to the Spanish online gambling market as well. Torres added, "AEDAPI estimates that more than €100 million in sponsorship and advertising revenue is currently invested each year by the major European sports betting operators in Spain, and this is at risk under this proposal."

Another disadvantage of the proposed system is that because of the uncompetitive licensed market many consumers will continue patronizing products offered by unregulated operators. The regulated online gambling regime introduced in France prior to the World Cup applies a high turnover tax to sports betting and has resulted in unhappy bettors and operators. The influential European Gambling and Betting Association (EGBA) and the Remote Gaming Association (RGA) are supporting the AEDAPI view. They have stated that the online gambling industry would welcome the opportunity to share its expertise during a public consultation in order to ensure that Spain gets the best regulated regime.

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