Spain’s online gaming and betting market has been active since the early 2000s, but only opened up to online regulation and licensing in 2012.
At the time the country started with just poker and sports betting as regulated verticals, but soon added casino products: online slots first, followed by table games such as roulette, baccarat and blackjack.
Operators of course applied for these as soon as they could, because specific licences for each new product must be held (and paid for) by gambling companies if they want to be able to market those new games.
The ability to offer online casino products to Spanish players has been a key driver of the growth of the online gaming sector in the country.
For the online casino vertical this represented a 5.7% drop on the last quarter of 2017, but on an annual basis it meant casino revenues had jumped 51% to €56.6m, more than half of which was attributable to slot games (53%) and with live roulette revenues jumping a huge 50% on the same period in 2017.
Meanwhile, sports betting revenues rose 15.9% year-on-year to €81.7m, representing just over half of all online revenues for the period.
The most surprising figure though was for online poker, which grew 42% during the period. This was due to the launch of PokerStars’ and PartyPoker’s shared liquidity networks between the players of Spain, France and Portugal. The move by those companies added some €6m in revenues to the vertical in the quarter.
The idea of shared player pools between those countries may be perplexing for UK-based players, but when the authorities in Spain, France, Portugal or Italy regulated their online gambling sector they decided to only allow players based in their respective countries to play on locally-licensed sites.
The significant downside of that regulatory measure was that poker sites very quickly ran out of players to recruit as liquidity stagnated and then dropped; and kept dropping.
For the cash game variant of the game, as opposed to tournaments, which players continued to play to optimise the use of their funds, this combination of factors has proved deadly.
This is because poker operators make their money through the rake they pick up from cash games every time a round is played. But with constantly falling player numbers they were unable to offer big jackpots to make it attractive to sign up or recruit enough players to make their businesses profitable; and with taxes starting at 25% of gross profits, the model soon proved unsustainable.
The rise generated by these merged player pools is unlikely to last once the early enthusiasm has faded, nonetheless it is refreshing to see a jaded product find a new lease of life.
Local operators include Codere, Egasa, R Franco and the state operator Loterias y Apuestas del Estato (LAE) but the bulk of Spanish online players congregate to bet on the international sites mentioned above.
It is one of the surprising trends of the regulated European online gambling sector that the newer, international and for some, online-only, brands fare better than many of the national incumbents, who tend to be slower to get to market or make best use of the tools at their disposal.
The result is that currently Bet365, William Hill or PokerStars have recruited most of Spain’s online gamblers. Interestingly, Bet365 dominates there much as it does in the UK: by plastering its name just about everywhere, stadiums, TV, or online.
The Stoke-based company is market leader despite entering the market after bwin, which was one of the first major bookmakers to advertise heavily in the country and have a major presence thanks to its multi-year short sponsorship with Real Madrid.
Having said that, Spanish operators have not started to truly spend their marketing budgets or attempt to attract bricks-and-mortar casino players to their online offerings. If they can successfully do this, they may well be able to compete strongly with the likes of Bet365 or PokerStars.
Spain’s licensing conditions are also quite restrictive and less flexible than in other markets, so the number of operators competing for players is still relatively low. Even more so if one compares Spain with the UK, where hundreds of sites, some completely unknown to the wider public, compete very hard to attract players.
This means that despite regulating its online gaming and betting market six years ago, Spain hasn’t got the momentum many in the industry were expecting.
By way of comparison, annualized quarterly revenues of €163m would mean a Spanish market generating around €500m in revenues, while the UK market was valued at around £4bn in 2017.
Of course, this will change as competition intensifies in Spain and operators will have to ensure they are ready when that moment comes.