iGB Intelligence reports iGB Market Monitor December 2018 - Page 6

Part 1: Spain – the state gives with one hand… Part 1 Spain – the state gives with one hand… First the good news. Back in April, in a surprise Willem van Oort, consultant and founder of move the then Spanish government coalition led Gaming in Spain, says the government will soon by Prime Minster Mariano Rajoy proposed a cut in see the benefits from the move. “The general online gambling taxes, to 20% from 25%. Putting opinion is that this will create sustainable growth it before the Spanish lower house, the Congress of for the coming years,” he adds. Deputies, then finance minister Cristóbal Montoro said the move was designed to attract more Esther Martin-Ortega, head of public affairs for licensed operators to Spain and further limit the Paddy Power Betfair in Spain, agrees: “Spain has money flowing offshore. The move is to apply to done a good job in terms of building a robust yet all online products including sports betting and viable operating framework. The gambling market casino. shows a strong performance growing year-on- The argument that a high tax rate encourages year and we believe the government should be offshore operators has been voiced in numerous proud of the levels of supervision, management jurisdictions and happily, it looks to have hit and customer protection achieved.” home in Spain, where online gambling was first As can be seen later in this report, revenues for regulated in 2011. Since then the product suite has the second quarter — which include one month of been widened to encompass online casino and in activity from the recent World Cup held in Russia gross gaming yield (GGY) terms the market has — rose 40% year-on-year to €167.2m. As it stands, benefitted accordingly. it looks likely the market is on its way to being Despite the change in government in the worth more than €700m for 2018 and this report summer, the tax cut proposal survived and came forecasts it to be worth more than €800m in 2019 into effect when the budget was passed. (see Table 1). Santiago Asensi, lawyer at Asensi Abogados in Both forecasts might be on the low side if Madrid, says the logic of the argument regarding the tax cut encourages any substantial influx lower gambling tax rates leading to less offshore of new market participants. As it stands, the play has won the day. market is led by many of the bigger names in the “My view is that the DGOJ realised that the past European gambling ecosystem, including Bet365, tax rate was too high and suggested its lowering William Hill, GVC (via the Sportium joint venture within the ministry of finance,” he says. “Then, the with Cirsa), 888 and others including domestic ministry found the right moment from a political operators Codere and Luckia. A lower tax rate might tip the balance and point of view to make things happen.” Table 1: Spain quarterly igaming revenues forecast Q318-Q219 Market Monitor forecast Q318 Q418 Q119 Q219 €178m €190m €202m €215m Source: Market Monitor third quarter 2018 forecasts iGaming Business Market Monitor • December 2018 3