Spanish government introduces tax reduction for online gambling operators

The long-delayed 2018 budget was passed last Thursday, after several months of hiatus waiting to garner allies against Catalonia's attempts to boicot the budget. Now, with the budget approved, this year’s socialist government, led by Pedro Sanchez, can begin work.

As part of the budget, tax cuts for online gambling operators were confirmed. The European nation is cutting gross gaming revenue from 25% to 20%. The cut will apply to a variety of online gaming avenues, such as sports betting, fixed-odds betting, fixed-odds horse racing, online casino games, bingo and poker, and betting exchanges.

In addition, the tax rate on gross gaming revenue from pari-mutuel sports betting was cut from 22% to 20%. However, the tax on pari-mutuel horse racing and pool betting gross gaming revenues was increased from 15% to 20%. The changes became effective July 1 and reportedly come at a vital point for Spain’s gambling industry.

According to the report, Spain’s gambling market is expected to grow its licensing program this year, welcoming new operators to the industry. With new vendors coming to the market, it’s projected that the Spanish gambling industry could soon be worth USD 1.16 bn a year.

An April report from The Local quoted Christian Tirabassi, senior partner at consultancy firm Ficom Leisure, as saying that Spain is “on the radar of the international market.”

Tirabassi added: “I definitely see the market growing both in online and retail betting and think this market will easily hit USD 1.2 billion to USD 1.7 billion in the next three to five years.”

He went on to say that the market had grown at a significant rate over the past 30 years and that it had reached a level of maturity. The first betting shop opened in 2008.

The proposed tax cuts on gross gaming revenue were first announced in April.

Cristobal Montoro, the Minister of Finance and Public Function, is reported to have first proposed the idea to the lower house of the Spanish Parliament during the draft budget presentation.

According to the European Organization for Gaming Law (EOGL), the tax cut is intended to attract more licensed operators to Spain’s gambling market. It’s also hoped that it will boost activities within the legal framework of the country’s gambling market as it stamps out illegal gambling.

In the opinion of the Spanish gambling regulator, Directorate General for the Regulation of Gambling (DGOJ): “The proper functioning of the regulated online gaming market is fundamental to ensure that gaming activity is sustainable and compatible with social welfare, making it possible to channel it into an adequate legal framework and with all the guarantees that regulation establishes for consumers.”

The introduction of the tax cuts will help to boost Spain’s tax revenue and could aid the country’s employment figures. Figures from Trading Economics suggest that unemployment rates in Spain rose to 16.74% in the first three months of 2018, up from 16.55% in the previous quarter.