Spain Seeks Larger Share Of Online Gambling Tax Revenue, by Ulrika Lomas, Tax-News.com, Brussels
Thursday, January 14, 2010

The various provincial and federal gaming authorities of Spain that together participate in the Sectoral Gaming Commission have met at the Ministry of the Interior in Madrid to discuss regulation of the Spanish online gaming sector.

Many of the regions are urging the government to press ahead with regulatory measures to open up the markets to competition whilst improving consumer protection, creating more effective sanctions against money-laundering and fraud, protecting minors, and guarding against problem gambling.

The Catalonian authority, Esquerra Republicana de Catalunya (ERC), claims that lack of regulation is leading to "mistrust, lack of transparency and legal uncertainty, and facilitates illegal gambling." The ERC points to a clear loss of tax revenue, since many of the companies involved in this fast expanding activity are not based in Spain and pay taxes in other countries.

Law 56/2007, passed two years ago on December 28, 2007, to "promote the Information Society," provided the basis for regulation of internet gambling and betting activities, but the government has still not published concrete proposals, and some regions – notably the Canary Islands – are threatening to formulate their own regulation measures.

Unfortunately, expectations have been raised in the regions that may make it difficult to reach agreement on the equitable distribution of tax revenues and lead to further delay.

The rates of gambling taxes and distribution terms are not expected to be formulated conclusively in the immediate future, and Gonzalo Fernandez Rodriguez, director general of the Lotteries and Betting Estado (LAE), has told Europa Press that he expects the regulation to be in place before 2012.

The Spanish online gambling market was estimated to be worth EUR350m in turnover in 2009, of which the state "monopoly" LAE currently generates less than EUR15m, the remainder being unregulated and generated largely in offshore centers such as Gibraltar, Malta or the Channel Islands.

The Spanish Association of Internet Gamblers (Aedapi), founded in 2006 to promote the development and consolidation of the Spanish gambling sector, hopes that regulation will give Spanish operators a larger share of the EUR800m market forecast for the year 2012 and thus divert more tax revenue towards Spanish coffers.