Spain and the UK – A Gaming Market Comparison

Posted by Harry Kane on Wednesday, January 24, 2018

While we know that the UK’s online gambling sector has enjoyed tremendous growth during the last decade, the same can be said of numerous European markets.

In fact, emerging markets such as Spain have managed to achieve incredible levels of growth in an even shorter space of time, having overcome several regulatory issues and challenges and finally legalised online gaming as recently as 2011.

In this article, we’ll compare the respective gaming markets in Spain and the UK, and ask how they’ll continue to evolve and grow in the years ahead.

How Do the Numbers Stack Up?

In terms of bottom line numbers, the UK continues to boast more impressive performance metrics than Spain. More specifically, the online gambling industry in Spain generation €900 million in the year ending September 2016, while the market retains a decidedly international focus and has welcomed established operators from across the globe.

In contrast, the UK’s online sector generated a gross yield of £4.5 billion during the same period, while accounting for one third of the gambling industry as a whole. This saw slot games enjoy exponentially high levels of growth, while table games and sports betting also benefited from noticeably higher levels of activity. In fact, the only discipline to record a marginal decline was video poker, which arguably struggled due to a lack of diversity and genuinely immersive gameplay.

There’s also an innate difference in terms of the structure of these two markets, with the UK boasting a strong domestic focus and a number of established operators. The highly-regulated nature of the UK market ensures that it appeals to licensed operators as a potential base, despite the introduction of consumption tax at the point of sale and proposed changes to the maximum wager threshold for fixed-odds betting terminals (FOBT). These firms have driven significant growth in the UK market, while new, independent operators continue to emerge on an annual basis.

Conversely, the Spanish market has built its rapid growth on the principles of exportation. More than 50% of its revenue is generated outside of the national borders, with Spain-based developers such as Jokoga Interactive, Iron Bet and Plunge Interactive having successfully sold their technology into Asia, Latin America and the U.S. These operators have also become successful across Europe, while gradually securing incremental increases in their domestic revenues.

This approach has paid dividends for Spain, enabling operators and developers to tap into a global market while minimising their own tax burdens. As a result, Spain ranks higher than the UK when it comes to sheer size and total betting revenues, while it’s online market has grown at a far quicker rate than the British equivalent since 2011.

Market Structures and Future Growth Potential

Of course, these diametrically opposed approaches were dictated by the respective evolution of the UK and Spanish markets, which have faced entirely different journeys on their way to legislation and regulation. In the case of the UK, for example, online gambling was officially legalised in the mid-90s, while punters had been able to place wagers remotely by telephone ever since the Betting Gaming and Lotteries Act 1960 was initially passed into law.

As a consequence, operators were able to scale their ventures as demand appreciated, creating a competitive and well-regulated market in time for the online gambling boom of 2007.

Spain have completed an alternative route to market, with tight regulations and fierce opposition throughout the gambling industry meaning that wagering real money on games of skill was not legalised until 1977. It was four years later that slots and other chance based games were officially legalised, with online gambling following suit in 2011. This late entry to the virtual marketplace has had a heavy influence on shaping Spain’s route to market, with more than 70 licensed gambling operators focused on cornering fully-established sectors across the globe.

This has provided a platform from which operators have been able to scale their domestic operations gradually, with online gaming in Spain now thought to attract one million regular players. Domestic growth has also been helped by the legalisation of exchange betting and online slots in the summer of 2014, which represented the final stage of evolution for the virtual market.

These alternative structures perfectly reflect different stages of growth and the respective outlooks of each market. While the self-reliant market in the UK has always had a relatively insular outlook, for example, Spain has been forced to adopt a collaborative approach that thrives on interaction with the global marketplace.

This point was borne out during the summer, when regulators from Spain and three other EU nations signed a ground-breaking poker liquidity sharing agreement. This progressive partnership, which also included Portugal, Italy and Spain, has laid a strong platform for future cooperation and will enable operators to share technologies, products and players data. As a result, it’s fair to surmise that Spain will increase its global market share and revenues during the next five years, while regulators may also look to seek out further liquidity pacts throughout Europe and beyond.

The UK may find it difficult to participate in such an arrangement with its European neighbours, of course, with the spectre of Brexit souring relations with the EU and its member states. This has only served to exacerbate the sense of isolation felt by the UK, even in a growth market that continues to expand and diversify at an incredible rate.

Despite this, the UK Gambling Commission (UKGC) is keen to pursue liquidity sharing agreements in the burgeoning U.S. market, particularly now that Pennsylvania has passed a bill to legalise online gambling. Not only this, but Nevada, New Jersey and Delaware have already entered into a lucrative liquidity sharing agreement this year, creating a template that can incorporate Pennsylvania and the UK in the near-term. The UKGC and its operators would be welcomed into such a partnership, particularly given their reputation for regulatory excellence and efficiency.

The Last Word

While the UK may boast a stronger domestic sector, Spain has managed to capture a larger share of the global market and continues to evolve on the back of liquidity sharing arrangements.

Spain has also grown at a quicker rate in the UK since online gambling was legalised in 2011, with its globally-focused strategy crucial to this expansion.

The UK’s regulatory excellence and potential interaction with the U.S. market underline the potential for huge growth in the future, however, as the demand for online gaming continues to peak domestically.