Wednesday October 2,2013 : JDIGITAL STUDY PAINTS A DISMAL PICTURE OF SPAIN'S ONLINE GAMBLING
Independent Deloittes study shows that online gambling sector lost Euro 72.5 million in its first year of regulation.
High taxation has been identified as the main reason for substantial overall losses that online gambling operators have suffered in the first year of Spain's regulated market regime.
The trade association JDigital commissioned an independent study by the Deloittes professional business services organisation, the results of which confirm that online casino operators in Spain sustained overall losses of Euro 72.5 million in the first year of regulation.
That was despite significant marketing investments that generated revenues of Euro 234 million over the period June 2012 to June 2013.
Deloitte concluded that the principal cause for the losses is high government taxation, which can rise to 25 percent of gross revenue in some cases.
In trying to make a profit in a competitive market, operators invested Euro 125 million in marketing and sports sponsorships.
Deloittes did not take into account the Euro 150 million that applicants for licenses were initially required to pay in a back-dated and very questionable tax demand from the government early in the licensing process , which would push the tax burden even higher if included.
Reporting on the study to an association of Spanish businessmen last week, JDigital president Sacha Michaud referenced similar overly high taxation problems that have plagued the French online gambling market, warning that over-taxing operators there has diminished the market significantly and driven operators away.
He offered suggestions on how Spain might avoid a similar flight of operators from the market, including a reduction in tax to 10 percent in line with that imposed by regional authorities; tax incentives to encourage operators to create more employment; tax breaks on technological investment; and measures to ease the burden of value added tax.
Michaud highlighted Deloittes calculations that show that, had the government adopted more lenient tax requirements like this from the start, the overall losses currently being experienced would be 10 percent rather than the current 30 percent.
Supporting Michaud in his presentation, Deloitte exec Marcos Rio opined that sensible taxation had the potential to create more wealth and more jobs if government adopted the suggestions offered.