Spain Profits From Internet Gambling
This coming Friday the Spanish government will award licenses to online gambling operators for the first time. Gaming association Jdigital predicts that Spain’s online gambling market will yield as much as 800 million euros by 2014.
To date foreign players have dominated the online gaming scene, one of the main reasons why Codere Spain’s betting giant decided to enter the fray. So far the Spanish government has not set a limit on the amount of betting licenses it is going to issue. In total 59 companies have applied, some of them have not met the government’s criteria and will most probably be turned down.
Sportingbet and Bwin.party digital firms listed on London’s stock exchange have been active in Spain’s unregulated market, these two firms are expected to be the heavyweights, short on their heels are Ladbrokes, 888 and Betfair.
President of CEJ (a Spanish organization for bingo sites), Fernando Henar said, “The sector is on fire, and it looks like if you are not online, there is no future. But we will have to see who makes it through, because online businesses can be expensive to get off the ground. The business is based on marketing.”
Spain’s Online Gambling Tax Rate
Online gambling firms will have to pay a gross tax profit in the region of 10 and 25 percent. However, Spain’s current central bank chief issued a stern warning this week that the country might struggle to refinance 98 billion euros of debt in order to pay 52 billion Euros in arrears. Gambling raised from online betting will only be a fraction of this amount, but still a useful resource since sports and especially football has drawn many punters that wager via tablet computers and smart phones.
According to the latest data Spain’s gambling sector is on the up, the amount of money wagered increased by more than 7 billion euros from 2008 to 2010, which stood at 27.3 billion euros in that year. That said, punters are more cautious to part with their hard-earned since the global markets are still gripped by recession. Sportingbet said that the average bet size in the region is down by more than half over a two year period to 9 pounds ($14).
Sports betting companies such as Sportingbet and Bwin who sponsor Real Madrid are so keen to enter the newly regulated Spanish market that they don’t mind paying 70 million euros of back taxes. They believe that Spain’s gambling market has enormous potential.
In May 2011 when the new gambling laws were promulgated companies already started paying tax. Due to pressure from local operators and citing decrees going back as far as 1966 and 1977 authorities requested that companies pay retrospective taxes.
Albert Agustinoy, an attorney with DLA Piper in Madrid said, “It is a shame this was done to take advantage of the opportunity of licenses being launched,” It damages the perception of Spain as a trustworthy place to do business.”
Agustinoy continued in the same vein by saying that the move would have led to lengthy court battles which would have been a waste of time. He concluded, analysts at Peel Hunt said that certain groups might question the tax authorities. Spain might revise its present tax laws in a bid to encourage Las Vegas Sands to construct a ‘EuroVegas’ $35 billion casino metropolis in Madrid or Barcelona. This project will be half the size of the Las Vegas Strip, leaving many Spanish politicians drooling.[addtoany]