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Economics of Gambling in Spain

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Spain’s gaming industries are substantial, with the exception of betting, which is not supported by a domestic horseracing industry and an absence of legal structure conducive to a sports betting sector. Bingo, gaming machines, casinos, and lottery are all well established in Spain.

The National Gaming Commission has created a team to look at developing a legal framework to regulate gaming on the Internet in Spain. In the meantime towards the end of 2002 the Spanish Parliament approved an Information and E-commerce Act which includes reference to gaming on the Internet. The Act requires individuals or companies to register commercial websites with the Mercantile Registry.

Despite the long history of regulation of the Spanish gambling market, there continue to be pockets of significant illegal gambling activity. For instance it has been estimated that there are as many as 60 illegal premises operating in Asturias alone, generating a gross turnover of approximately €18 million.

Furthermore in the Canary Islands there are between 80 and 90 bingo halls operating illegally due to lack of administrative inspections, according to estimates of the regional bingo halls entrepreneurs’ association.

However, Spain is one of the EU countries that has the most developed framework for treating problem gamblers. There are a number of organisations in Spain that specialise in prevention and treatment of problem gambling. In some Spanish regions, problem gambling specialists are routinely included in the local Mental Health Departments. Other regions, for example Aragon, have created specialist anti-addiction centres.

GAMING SECTOR ANALYSIS

Lotteries

Spain has three major lotteries: Loto Catalunya (Entitat Autónoma de jocs Apostes), the Spanish Association for the Blind (ONCE), and Organismo Nacional de Loterías y Apuestas del Estado (LAE – the National Lottery). The largest lottery in Spain is Organismo Nacional de Loterías y Apuestas del Estado (LAE).

ONCE operate approximately 8,200 kiosks for sellers who are blind or partially sighted. The number of kiosks depends on licenses given by local authorities. The majority of ONCE’s sellers sell in the streets. Nearly 23,000 people who are either blind or have other disabilities sell tickets for the lottery, making it the principal source of employment for the blind in Spain. The numbers of employees for the past five years are presented below. They do not include anyone employed in Fundacion ONCE, but include those who work in the distribution of lottery tickets network.

ONCE’s programmes are aimed at seeking employment and the elimination of barriers for people with disabilities other than blindness. Fifty percent of ONCE’s sales are allocated as prize money; 25% are earmarked for operating costs, and 25% allocated to support for the blind and, through the Fundación ONCE, working with other disabled groups.

Casino Gaming

Casinos were legalised in Spain during 1977 after the Franco regime, and are regulated by the Ministry of the Interior. Originally located outside of metropolitan areas, national rules required that the distance from a city centre would be based on the city’s population.

However, casinos are now permitted within major cities such as Madrid, Seville, Bilbao and Barcelona, though to date these cities only have one property each. Three of Spain’s casinos were state-owned in 2003, with a further two in joint state/private ownership and the remaining twenty-seven owned and operated entirely by private sector interests. In 2004 there were 33 casinos in Spain. In 2005, two new casinos opened and another two were planning to open.

The casinos are not required to pay Value Added Tax (VAT) in Spain. They pay separate taxes on table and slot machines operations. Below are detailed gambling tax rates for table games in each region in Spain. Such taxes are paid as a percentage on GGR, based on the amount of GGR.

In addition, there is another gambling-specific tax for the IAE (municipal taxes) the annual payment of which is between €18,000 and €27,000 for every game table. However, there is no annual license fee. There are not any other fees except legal ones. It is only mandatory, however, to turn in lost or forgotten chips, to the municipal government.

The hotel and restaurant services form part of the services that casinos are obligated to have. Municipal projects and infrastructures are not carried out by the casinos.

Concession lengths vary according to region but are typically ten years with some extending to fifteen. Foreign companies are permitted to own up to 25% of a Spanish casino.

Casinos in Spain generate most of their revenues from table games.

In addition to paying taxes on table games, Spanish casinos also pay taxes on slots.

Machine Gambling Outside Casinos

Spain has the second largest number of gaming machines in Europe (after the UK) Spain has two main coin-op associations covering 80% of the industry, which are COFAR and FACOMARE. Both of them are members of Euromat. Other associations much smaller in comparison to FACOMARE and COFAR are FAMAR and FEMARA.

In 2004 the Sectorial Gaming Commission recommended the establishment of criteria for the standardisation of new video machines across Spain. As a result, various administrative and tax regulations which affect the Spanish gaming industry were published during 2004. Some significant innovations have been introduced in 2005 especially in the regulation of the AWP. These changes are the consequence of the lobbying activity of the past years. It is anticipated that new rules will be approved in different Autonomous regions with the same changes.

The main changes in the regulation of AWP are the following:

  1. A reduction from 75% to 70% in the prize percentage.
    2. Price of the game up to 0,20 x 3.
    3. Prize up to 400 times the price of the game
    4. 360 games in 30 minutes
    5. No return of change.
    6. Acceptance of any technological support for the manufacture of the machines (VIDEO)
    7. To allow advertising
    8. Possibility of testing machines before the homologation.

Non-smoking regulations are thought to have had a negative effect on GGRs, especially in Arcades and Casinos.

Over the past three years the taxes per gaming device paid to each municipally did not change significantly.

There are approximately 35,000 people employed in the gaming machine sector in Spain. This amount includes employees in operating companies and employees in other companies related to this sector, for example manufactures, exporters, importers, distributors and repair specialists.

Betting

Loterías y Apuestas del Estado will operate all betting operations, using its more than 11,000 outlets throughout Spain. Loterías y Apuestas del Estado has been attempting to have horseracing considered as a legal sport, thus excluding it from the scope of the gambling industry. This would enable Loterías y Apuestas del Estado to offer horserace betting nationally whereas if it is considered as part of the gambling industry it comes under the jurisdiction of the municipalities.

Bingo

Bingo has been traditionally very popular in Spain. However, between 2000 and 2002 there was a dramatic fall in profits and a significant reduction in the number of bingo halls operating across the country.

Media Gambling Services

In 2003 ONCE announced that it had reached an agreement with the telecommunications company Sogecable regarding the establishment of an interactive channel via digital television. The new channel, called Canal ONCE, will sell the ONCE lottery product via the Internet, as well as other specific lotteries and games that may be developed. (Source: GBGC Report)

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