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Entering the Spanish online gambling market Madrid, October 4 th, 2013 Strictly Confidential Ed die Morales.

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Presentation on theme: "Entering the Spanish online gambling market Madrid, October 4 th, 2013 Strictly Confidential Ed die Morales."— Presentation transcript:

1 Entering the Spanish online gambling market Madrid, October 4 th, 2013 Strictly Confidential Ed die Morales

2 2 Online gambling in Spain is based on two levels licenses’ system : licencias generales allowing operators to apply for one or more licencia singular within a specific game category ( Apuestas, Rifas, Concursos e Otros Juegos ), and lasting for 10 years; licencias singulares allowing operators to exploit specific games related to each licencia general, lasting for 3 or 5 years depending on each license. The operators’ selection procedure requires all operators agreed with a licencia general to obtain at least one licencia singular related (article 10, paragraph 4 of the Ley 13/2011). Otherwise the licencia general will decay. Potential applicant will only be companies: with a minimum capital; with a specific corporate purpose (“ games’ organization and exploitation ”); fulfilling requirements set in the Convocatoria. If the operator is not based in Spain, it will have to provide a permanent representative. All applicants wishing to sell their gambling products by internet, will have to provide domain. A two level guarantees’ system is established (one related to the licencia general and the other to the singular ones) in order to cover winning payment and other duties. Regulatory Framework (1/2)

3 3 All games can be carried on by Internet, mobile, TV, iTV, etc..... Apuestas deportivas de contrapartida Licencias Generales ApuestasConcursosOtros Juegos Apuestas deportivas mutuas Apuestas hípicas de contrapartida Apuestas hípicas mutuas BingoPoker Black Jack Roulette Punto y Banca CashTournament Rifas Limited application period Taxes Otras apuestas Juegos sociales Regulatory Framework (2/2) - Licenses’ system 25% of GGR15% of GGT25% of GGR22% of GGT25% of GGR Rifas and Concursos tax-rate is: 20% of GGT

4 ?? ?? BC B to C BB B to B BC BB B to C and B to B ?? ?? ALONE Strategic choices (1/1) - Main choices before start-up Which entry strategy? Which positioning? 4 JV

5 5 Start up Company Format/Website dvlp IT Legal&Adm Marketing Acquisition Retention Branding Operations Platform providing Other IT services Periodic IT Audits Application Licenses costs Guarantees Cost identification (1/3) - Main categories Other Costs Overhead Annual fee Financial charges Other costs Gambling tax

6 6 Entry€Note IT Test 38.000 Una tantum Enrollement into the Registro General de Licencias de Juego 2.500 Una tantum Licence Application 10.000 For each licencia general and singular Mandatory inspections 5.000 Una tantum Annual Fee 0,1% of GGT For each licencia general and singular To be paid once operative Costs connected to the application procedure are settled by the article 49 of the Ley de Regulacion del Juego. They are called “administrative taxes”. Apart from the annual fee, those costs are paid before the application is submitted. Hypothesis Una tantum ApplicationsTotal 1 GL + 1 SL 45.500 € 20.000 € 65.500 € 2 GL + 5 SL 70.000 € 115.500 € 3 GL + 12 SL 150.000 € 195.500 € License CostsEstimations Estimations do not include costs associated with pre guarantees’ provision, which by the way must be submitted together with the application. See next slide Cost identification (2/3) - Licenses’ cost

7 7 License1° yearFollowing years * Apuestas2.000.0001.200.000 Apuestas deportivas mutuas40.0001,5% of GGT Apuestas deportivas de contrapartida40.0001,5% of GGT Apuestas hípicas mutuas40.0006,5% of GGR Apuestas hípicas de contrapartida40.0006,5% of GGR Otras apuestas de contrapartida40.0006,5% of GGR Otros Juegos2.500.0001.500.000 * Poker50.0009% of GGR Ruleta50.0008% of GGR BlackJack50.0008% of GGR Punto y Banca50.0008% of GGR Bingo50.0006,5% of GGR Juegos sociales50.0006,5% of GGR Concursos500.000300.000 * Concursos10.0002% of GGR * If (Reduced amounts for General License + Guarantees for Singular License (as a %) ≤ Full amount of previous year → Full amount of previous year is due Cost identification (3/3) - Guarantees’ cost Guarantees can be provided in different ways: cash; mortgage; banking guarantee; insurance. The cost of guarantees mainly depends on the interest rate.

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