Dipo Olowookere
The Spanish gambling industry is on the rise. The most recent trend indicates a rebound in the third quarter of 2022, following a quarter-on-quarter stagnation in Gross Gambling Revenue (GGR) of less than 2.5% of turnover. According to a report by the Directorate General for the Regulation of Gambling (DGOJ), the industry experienced a significant upturn in the third quarter of 2022, bringing the GGR to a whopping €240.8 million. In this article, we will look at the events that led to the upturn and what the future holds for the Spanish gambling industry.
A Quick Overview of Spanish Gambling
The Spanish gambling industry is regarded as successful in terms of revenue generation and problem gambling prevention. The industry is governed by the Directorate General for the Regulation of Gambling, which issues licenses to operators.
The country legalized online gambling in 2011, and its regulations have since been revised to discourage risky gambling behavior. Over 50 licensed online gambling operators offer various games ranging from Spanish sports betting to poker to bingo. Land-based casinos are also prevalent and serve as tourist attractions. With close to $10 billion in annual revenues, the national lottery, Loterias y Apuestas del Estado, significantly contributes to the sector. 20% of the GGR gaming tax is contributed by just sports betting and online casinos.
Increasing Profits Despite All Odds
Despite increased regulations, gambling revenues in Spain have also increased. The gambling regulator, DGOJ, reported a 14.8% decrease in GGR in the first quarter of 2022, bringing it to €204.4 million (US$215.17 million) in comparison to the first quarter of 2021. This was, however, a 16.25% increase over the previous quarter.
In the third quarter of 2022, they reported an 18.1% increase quarter-on-quarter and a 31.3% increase from the same quarter in the previous year. The increase was primarily attributed to sports betting, which increased 46.2% from Q2 and 103.6% year-on-year. Betting margins increased from 2.2% in the previous quarter to 4.1% in the current quarter. Marketing expenditure is also on the rise despite tightening restrictions as sponsorship deals take an upturn of 373.7% quarter-on-quarter.
More Stringent Rules are being Implemented
Following the upward trend, the Spanish ministerial council approved over 30 new responsible gaming measures in its Royal Decree of Commercial Communication. The new measures, which went into effect on March 14, 2023, aim to identify risky consumer spending behavior among youth aged 18 to 25.
Users who incur a net loss of €600, or €200 for those under the age of 25, in a three-week period are classified as intensive gamblers under the new rules. Gaming operators are not permitted to send promotional messages to high-risk individuals or to include them in VIP programs. If harmful behavior is detected, gaming operators must notify risk gamblers and provide a monthly summary of their gambling activities. They are also prohibited from advertising to people between the ages of 18 and 25 prior to their willful interaction with the business.
How is the Industry Reacting to Tightening Regulations?
The Asociación de Medios e Información (AMI) and Jdigital have both petitioned the Supreme Court to overturn the restrictions that are crippling the gambling industry. JDigital, the Spanish online operator association, has criticized the developments in the 2023 Royal Decree, claiming that the move was unnecessary given that the industry is experiencing fewer cases of problem gambling. They also emphasized that the country already has some of the strictest regulations in Europe.
JDigital is urging officials to focus more on capitalizing on existing opportunities to improve the gambling market and encourage investment in the country. JDigital promotes safe gambling through initiatives such as the VII Edition of the Jdigital Awards, which saw various players awarded titles such as Best Marketing Campaign, Best Service Provider, Best Technology Provider, and Best Responsible Gaming Initiative.
The Spanish Gambling Industry’s Potential
In 2021, Spain’s population was estimated to be 47.42 million people and internet penetration was 94%, according to the World Bank. This presents a broad reach for the gambling industry and the potential for increased revenue with reasonable regulations in place. However, certain measures are hindering growth, such as taxing player winnings as taxable income and levying a 10% tax on the Gross Gaming Revenue (GGR) of operators who become tax residents in Ceuta and Melilla. Nevertheless, with organizations such as AMI and JDigital advocating for reasonable regulations, the Spanish gambling industry is likely to reach a positive arrangement with authorities and further bolster revenue generation.
Final Thoughts
The Spanish gambling industry is showing promising signs of growth and recovery despite the challenges posed by the Royal Decree of Commercial Communication. With the support of organizations such as JDigital, the gambling sector is likely to further capitalize on the potential of its vast consumer base, potentially leading to higher GGR.
