Spain, Online Gambling Firms Reach Tax Deals

Several leading European online gambling operators have reached agreements with the Spanish government in the past week to pay millions in back taxes, as the cash-strapped nation seeks extra revenue ahead of the next license round.

Gibraltar-based 888 Holdings and bwin.party Digital Entertainment and London-headquartered Sportingbet all signed deals with the Spanish government to pay several million euros in back tax payments this week. All did so in the hope that it would help them obtain a license to offer their services to Spanish online gamblers.

888 said in a statement following its own €7.4 million payment that it had concluded discussions with Spanish authorities regarding gaming duty for the priod of January 2009 to May of last year. It said the figure was based on the company's own tax self-assessment, and paved the way for it to receive a Spanish iGaming licence from the beginning of June.

Bwin.party digital paid a staggering 33 million euros after carrying out its own tax self-assessment. Sportingbet Plc was set to fork out a tax bill of somewhere around the 20 million euro mark as well.

Foreign operators have known for some time now that Spain would be issuing its first online gambling licenses in June. But it was only last month that the government - which is carrying out large spending cuts in order to deal with a stagnating economy - contacted them to say that it would apply two existing laws which previously were considered irrelevant.

These two laws required foreign operators to pay retrospective taxes for the period of January 2009 to May 2011, a time during which they operated in the Spanish market but outside a clearly regulated legal framework. Although they did not specifically tie the awarding of licenses to the back payments, most major companies have understood the message.

Larger operators have been able to deal swiftly with the Spanish government's move, but many of the smaller companies who have also been operating in the not-so-regulated environment are leaving the country out of fear that they too will be forced to make millions in back payments.

Omni Casino wrote in a letter received by Online Casino Reports last week that it would no longer accept accounts from Spain once May ends. It said all of its Spanish players would be cashed out upon request and that it would help with any queries. It is believed other similarly sized operators will make similar moves.