entry and a very competitive market which meant that consumers were offered a huge range of products, there were incentives for innovation and those products were offered on good terms. So what’s changed since then? Gambling taxes have gone up and regulation has become much more complex and burdensome, and therefore much more costly. The greater cost of operating a gambling business has meant lower profits and it’s meant some smaller operators have gone out of business. There has been consolidation because it’s only the biggest operators who can afford the cost of increased regulation and increased tax. That’s meant less competition and ultimately a less attractive offer to consumers. Therefore, in real terms it makes the black market more attractive. But there’s something which is potentially going to make it much worse. You’ll be aware that gambling legislation in the UK is currently being reviewed and that’s only going to lead to yet further regulation. But one of the things which will almost certainly be introduced is affordability checks. A large number of customers will have to provide information about their income, assets or expenditure and operators will then have to take a view on whether their customers can afford to gamble what they’re gambling. Now, some customers, possibly many customers, will refuse to provide that information, and as a result, their accounts will be closed. For some customers who do provide the information, operators will conclude that they’re spending too much, and their accounts might be closed as well. Some of those people may decide to stop gambling, but it’s much more likely that many of them will want to continue to gamble. So where will they go? They’ll go to the black market. The Gambling Commission thinks that all of the operator claims about people moving to the black market are overstated, crying wolf, and black markets not really a big issue. In itself, that wouldn’t necessarily be a problem, provided the regulator has good powers of enforcement and actually uses those to take enforcement action. But whereas the introduction of affordability tests is something that won’t require further legislation because it’s within the gambling Commission’s existing powers, the White Paper says that to protect against the black market, it proposes to introduce legislation to stop payment providers providing payment services for unlicensed operators, and likewise to stop ISPs, from carrying those operators. But the introduction of those enforcement powers will require new legislation, and gambling is not going to be the highest priority for the government. That new legislation may never happen or at least take some years to happen. The only other thing I should mention is advertising. That’s actually the one area where the White Paper isn’t going to impose any material changes. But obviously, it’s another factor in the black market, because if you have a regime where only licensed operators can advertise, then the unlicensed operators are stopped. But if you’ve got a regime where gambling advertising is unlawful, then unlicensed operators are on a level playing field and again, the black market becomes more open and more attractive. QM: Now let’s move to Spain, which has also been a regulated market for several years. Santi, can you can tell us what the DGOJ got right, what it got completely wrong and what’s in the middle. SA: I think I could almost copy paste what David said. I mean, Spain started well then brought in amendments to the regulation. But at the end of the day, I think this is becoming standard. In most jurisdictions, we are seeing a movie that started years ago when we talk about mature markets and what started as a comedy, now starts to look like a tragedy. What Spain did very well at the beginning was that the main avenues of online gaming were duly implanted. There were sensible requirements over server locations, a lot of marketing opportunities, a full of portfolio of games to attract people away from black markets and a great transitional period for operators to migrate from the gray market to the white one. That was at the very beginning and this is probably the end of the comedy, or the end of the good days. We also had something that I don’t think any other jurisdiction had, which was to lower our gambling tax from 25% on GGR, to 20% on GGR. And moreover, if you move to Ceuta, one of our autonomous cities then you have 50%, less on your gaming tax if your company is based there, so you move from 20% to a 10%. The tragedy started with the Decree on Advertising, which was really a ban on advertising because the opportunities now to advertise and to do some marketing promotions are now so limited they are not worth it. For regulators in
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