The Spanish gaming market is undergoing transformation, as David Snook, discovers...
The discomfort that casinos often exhibit over the ‘street market’ is sometimes unjustified. The traditional enmity which is exhibited in markets like Germany and South Africa is condemned as unnecessary on the grounds that they appeal to different clientele.
This antipathy is also exhibited in Spain where the 43 Spanish casinos face mounting competition from the streets and especially the arcades with their AWP machines.
The past two years has seen the 17 separate Spanish jurisdictions gradually relax controls over what the street market can - and cannot - do. More liberal stakes and prizes has seen evidence of a closing of the gap between the styles of machines. There has also been the growth of what some in Spain refer to as ‘mini casinos’ in the streets.
What they are actually referring to is an arcade without the traditional amusement machines, but consisting solely of gambling devices, tied of course to the AWP lower stakes and prizes. But the décor of the location is considerably more sophisticated and the contents will include - where permitted by regional variations on the law - AWP machines, automated multiplayer roulette games, sports betting and even high-prize AWP-style bingo games.
The term ‘mini casino’ is perhaps a misnomer, as the locations have no high-stake live table games, but the intention is to provide an adult limited gaming environment. It actually follows the trend in other countries for what are known as adult gaming centres, which differential the style of location from the traditional amusement arcade.
It has not gone unnoticed by the casinos. The Spanish Casino Association, dominated by the big locations in Madrid and Cataluña which do not have interests in the street market, have filed several legal actions against the regional governments which have permitted the use of multiplayer automated roulette games on AWP payouts. So far they have lost every time.
Depending upon the jurisdiction, an arcade - or adult gaming centre, whatever you choose to call them - can now offer an indeterminate number of amusement with prizes machines with a top payout of €1,000 - way higher than any other AWP market in Europe. It can also offer multiplayer roulette games, and depending on available space they may be 10- or 12-seaters. They may now offer simulated bingo games in upright cabinets played on video monitors, with a top prize of €6,000.
It is true that there are only a handful of jurisdictions where this is currently allowed, but major destinations like Madrid and Andalucia are increasingly permitting more variations which push up the boundaries of attraction to players and might seriously be argued to infringe on casino ‘territory.’ Andalucia has even gone one step further and is permitting a wide area progressive jackpot between locations.
Spain three years ago had around 3,000 traditional amusement arcades with a scattering of AWP machines and an eclectic offering of amusement and fun games. Today that number is only 900 - just over 2,000 more have become the upmarket adult gaming centres. They have expanded their floor space to accommodate the big multiplayers and they are now allowed - in the Basque Country and in Madrid, although more jurisdictions are expected to issue licences - sports betting facilities on-site. Big names like William Hill, Ladbrokes and Stan James are forging alliances with Spanish arcade companies to offer facilities. And the locations themselves are adopting the style, décor, ambience and service and facilities of casinos - and are getting much closer to casinos’ payout levels.
The casinos are well distributed across Spain, with five in Andalucia, seven in the Canary Islands, two in Aragon, three in the Balearic Islands, three in Castilla-Leon, three in Cataluña, two in Galicia, two in Madrid, two in Murcia, two in the Basque Country, five in Valencia and one each in Asturias, Castilla-La Mancha, Extremadura, Cantabria, Rioja and in each of the two North African enclaves of Ceuta and Melilla.
Some of the major manufacturers of slots are represented among the suppliers of equipment to the Spanish sector, even though with 17 autonomous regions separate testing and approval is needed in each. This ‘mini US’ situation may be regarded by many as a major barrier to entry. After all, to get a half-dozen machines into the only casino in Asturias, the Casino de Asturias in Gijon, for example, the machine has to be tested and homologated by the Asturias gaming authorities. Would it be worth it?
In fact, the differences are so marginal between many of the sets of regulations governing entry to the 17 regions, that it is really only a question of paperwork and patience. The overall numbers are not large, either. Spain has a grand total of only 2,452 slot machines (2006 figures), but for most of the big manufacturers, the kudos of including Spain among its destinations is worth the trouble. The indigenous Spanish manufacturers of slots, Unidesa and R Franco are there, plus WMS, which has its European headquarters in Barcelona, and IGT.
Probably the only sensitive subject for the Spanish casinos at present is taxation. It is true that Spanish casino tax is not as high as that in other countries - Germany, for example - but at 54 per cent of the table games and a flat rate on gaming machines which is double that of the limited payout machines in the street market, is regarded as high enough. In the midst of this, however, there comes the potential destabilising factor. American casino giant Harrah’s Entertainment is building a new casino at Ciudad Real, 120 miles to the south of Madrid. It will form part of a major gambling, entertainment, leisure and commercial development, the El Reino complex and the casino will be themed after the fictional character Don Quixote - from whom the casino will take its name.
An 850-room luxury hotel, 3,000-seat theatre, a conference centre, huge spa, shopping mall, many restaurants and bars will be included. The 28-acre site, with its 50,000sq.ft casino, is expected to be completed next year. Harrah’s will own 60 per cent of the US$1.3bn investment. The developers have negotiated a special tax rate for the casino, at just 10 per cent on all revenues for the first 10 years. It has raised a sore situation with the other Spanish casinos, who feel disadvantaged.
The big names among the street operators in Spain have their own stake in the market. Cirsa, the biggest operator of limited stakes and prizes machines, has 17 casinos of its own in Latin America and five in Spain. R Franco too has its involvement in the domestic market through its partial ownership of Orenes of Murcia, which has six locations plus another three in Croatia. Others in the ‘street market’ becoming involved include the Barcelona-based operators/distributors GiGames and MGA, who are part of a consortium which has just won the fourth licence in Cataluña, at Lloret de Mar. It is being constructed now, will be completed towards the end of next year and will be named Gran Casino Costa Brava.
There are challenges for the Spanish casino industry, and they are probably just as concerned with taxation difficulties and preserving their own status as they are with the growing competition from the streets. They would probably be better advised to work for their own concessions rather than being concerned about what others have.
