Regulators in Spain passed legislation to authorize online poker in 2011, but the way in which they scripted the laws dealt a mountain of adversity for operators. Ring-fencing the market and enforcing exorbitant taxes upon both operators and players, very few sites have been able to survive the impoverished market. This week, the nation’s third largest operator, Casino Gran Madrid, withdrew itself from the race.
Spain caters to only five authorized online poker networks. According to PokerScout, PokerStars.es is the most dominant leader, attracting an average of 900 cash game players over a 7 day period. 888Poker.es comes in second with about 300 players on average. Those two operators combined account for approximately 90% of the regulated online poker traffic in Spain.
The region’s other networks are iPoker.es, which averages 40 players, Partypoker.es, averaging 20, and International.es, which averages just 12 players at any given time.
Prior to the casino’s voluntary cessation of online poker services, Casino Gran Madrid was a skin on iPoker Spain. But the fateful decision to terminate the online side of their business was justifiably made.
Regulatory Deterrents in Spain
The Spanish online poker market is controlled by the Directorate General for the Regulation of Gambling, which oversees all wagering matters in the country. According to the guidelines set forth by the commission in 2011, both operators and players are required to pay taxes on their gaming revenue, and competition may only occur between players physically located within Spain’s borders.
Although Casino Gran Madrid was a part of the region’s third largest online poker network, having a piece of only 3.15% of the Spanish market share made it beyond difficult to make any form of profit while turning over 25% of gross gaming revenue to the state.
To make up for the exorbitant tax rate, operators were forced to pass on the lack-of-savings to customers by way of minimal promotions and higher rake rates. In fact, international operators have been collecting anywhere from 20% to 40% more in rake from Spanish players that they do from players in other countries on equivalent .COM sites.
That alone is a huge deterrent for players in the Spanish online poker community. And the icing on the cake is yet another superfluous tax of 20% on all players’ net winnings from poker.
Just as we’ve witnessed in other ring-fenced markets like the US state of New Jersey, attracting players to regulated sites is incredibly difficult when there are so many more appealing options available in other parts of the world.
It’s been estimated that approximately 43% of all internet gamblers in Spain are placing their wagers with illegal websites located outside of the country. Those winnings aren’t reported, therefore players and operators aren’t obligated to pay taxes to the Spanish government. That combined with a lower rake and multifarious range of promotions is unequivocally more appealing to players.
Casino Gran Madrid Down but Not Out
Casino Gran Madrid called the Spanish online poker market a “hostile environment”, but vowed to bring internet gaming back to their players the moment it can provide “a more attractive offering” for members.
“Poker at the Casino Gran Madrid does not stop,” said a spokesperson for the land-based casino. “You will continue to have the best tournaments and live cash games in Casino Gran Madrid, Torrelodones. Furthermore, when online poker returns to our catalogue of games, something we do not doubt will occur, our players will be the first to know.”