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Spain Online Gaming Losses Due to High Tax Rate

It has been well-documented that Spain’s online gaming market has not been doing so well in recent times.

Just last month, it was revealed that gross gaming revenues for licenced Spanish online gaming sites decreased by 10 percent in the second quarter of this year to total €55.4 million (around $73.6 million).

The dwindling fortunes of the Spanish market led to an investigation and subsequent report by professional services firm Deloitte. The firm found that the country’s gross gaming levy of 25 per cent has led to losses of €72.5 million (around US $99 million) per year in the industry.

The levy is among the highest of its kind in Europe and has led to a highly uncompetitive market in the southern European country, especially when it comes to poker. While the largest poker and gaming companies have been able to afford the tax while gaining a significant clientele in Spain, a number of companies have pulled out of the country due to the lack of an ability to make a profit.

One of those companies was Ongame, which pulled out of Spain back in June. The company is owned by gaming company Amaya, which certainly does not have a shortage as far as money is concerned. However, liquidity levels were unprofitable for Ongame in Spain, which was likely the reason the company chose to leave the country rather than throw more money at it to keep it afloat.

Another online poker company, Paf, also announced that it would temporarily close its Spanish operations in February, and they remain closed almost eight months later. The country also continues to experience economic hardships, with the unemployment rate sitting at 26 percent, the second highest in the Eurozone.

The effects on the industry as a result of the 25 percent levy can perhaps be seen the most in the state of Spain’s online poker market. PokerStars is by far the leader in online poker in the country; its Spanish site currently has a seven-day average of 1,480 players, according to PokerScout.

888poker’s Spanish service, on the other hand, has a seven-day average of 375 players, putting it significantly below PokerStars. Despite that, it is one of the major Spanish poker sites in operation. PartyPoker’s Spanish service is the country’s third largest, with a seven-day average of 101 players.

Other Spanish sites, like iPoker.es, International.es and Microgaming.es, all have seven-day averages of less than 100 cash game players, which helps show the major disparity of poker operators in Spain. While lowering the levy may have a positive effect on the market, the continuing economic problems in Spain could mean that the industry may still experience declines in the future.

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