European Commission Directorate-General Enterprise and Industry Head of Unit C.3, Mr

European Gaming and Amusement Federation Europäischer Verband der Unterhaltungsautomatenwirtschaft Fédération Européenne des Jeux et d'Amusement

European Commission Directorate-General Enterprise and Industry Head of Unit C.3, Mr. Giuseppe Casella Avenue d'Auderghem 45 1049 Bruxelles

Brussels, 7 April 2014

Subject: OPPOSITION TO THE SPANISH DRAFT ORDER TO REGULATE ONLINE SLOT GAMES, NOTIFIED TO THE TRIS ON 18 MARCH 2014 (NOTIFICATION 2014/124/E)

Dear Mr. Casella,

On March 18, 2014, the Directorate General of Game Planning (“Dirección General de Ordenación del Juego”), from the Ministry of Finance and Public Administration of the Government of Spain, notified to the TRIS the HAP XX/2014 DRAFT ORDER establishing the BASIC REGULATIONS FOR ONLINE SLOT MACHINE GAMBLING (Notification 2014/124/E). On behalf of EUROMAT I provide here our position with regard to the proposed Draft Order.

EUROMAT was established in 1979 to represent the European amusement and gambling industry at EU level and consists of 20 member National Associations from 15 European countries, including the Spanish Asociación Española De Empresarios De Máquinas Recreativas (FACOMARE) and the Confederación De Associaciones y Federaciones De Empresarios Del Recreativo (COFAR). The overall mission of EUROMAT is to contribute to the creation of a healthy business and legal environment in the European Union for the gambling sector. The EUROMAT members range from operators, manufacturers and distributors to owners of amusement equipment.

EUROMAT believes that all Member States should be doing more to effectively prevent or minimize illegal gambling providers from offering their services online and believes that while doing so, national governments have a duty to ensure that all regulatory and fiscal rules regarding the provision of gambling, apply equally and without discrimination to all providers, regardless of the form of distribution. We hereby express our opposition to the draft Order, considering it contrary to EU law, as it sets serious limits to the free exercise of

Rue du Trône 60 – Brussels 1050 · Phone +32 2 626 1993 · Fax +32 2 626 9501 URL www.euromat.org · Email [email protected] · Twitter @euromat_eu European Gaming and Amusement Federation Europäischer Verband der Unterhaltungsautomatenwirtschaft Fédération Européenne des Jeux et d'Amusement competition between two gaming channels – land based and online – used to bring slot machine games to the citizens.

Our opposition is based on the following reasoned arguments:

1. Increasing the inequalities between land-based and online channels. The draft Order submitted is a development of Law 13/2011 of 27 May, regulating online gaming, among other matters. It is very important to note that this Law, in Article 35, acknowledged the existence of inequalities between land-based channels and online gaming channels, establishing the need for actions "...that made it possible to harmonize the applicable legal regimes, including the taxation, between the games conducted through electronic, computerized and interactive channels and land-based gaming, as well as the advertising and promotion of such activities." Far from advancing the harmonization of the two channels, the submitted draft Order enhances the inequality acknowledged in that article, in several aspects:

ADVERTISING AND PROMOTION While on the land-based channel advertising and promotions are mostly forbidden, the online channel can have access to unrestricted advertising and promotions, limited only by self-control by the operators. Furthermore, in addition to advertising and promotions, the almost unlimited offer of cash bonuses, which is totally forbidden in the land-based activity, has become the main tool for online operators to recruit additional players.

TAXATION In the land based gaming channel, bingos and casinos are subject to gaming taxes above 50% of their gross revenues, while all online games regulated by Law 13/2011 (including casino games) tax rates are between 10% and 25%. We refer here to specific gaming taxes only, which are paid in addition to all other taxes applicable to any private business.

GAME RULES While the land-based games are subject to strong restrictions on all parameters (especially on stakes, maximum prizes, and pay-out percentages), in the online channel no limits are established, leaving to the operator total freedom to set the game parameters. Based on the all the above, the draft order does not improve free competition, but rather limits it even more for the land-based operators.

2. Barriers to the free exercise of competition in the Spanish online gaming market. Of particular importance, in accordance with Article 10 of the draft Order, is the possibility to play online slot games - regulated by Law 13/2011 and the developing Order referred herein to - by means of physical terminals (“totems”) installed in public locations. No other European regulation allows online gaming terminals in public sites, as they breach the competition rules for channels subject to different regulations, taxations and controls. The existence of such “totems” would also mean a substantial advantage for the state monopoly SELAE, which enjoys exclusivity in the marketing of lottery games nationwide and has, at the same time, the possibility to obtain licenses to offer online gambling in Spain, in unfair competition with the private operators. SELAE could install these terminals in over 10,000 lottery outlets, funding the investment with public resources.

Given all the above, we express our firm opposition to a regulation that we deem contrary to the EU laws, as it creates new barriers to the free exercise of competition between different segments of the gaming industry in Spain.

Sincerely yours,

Annette Kok President, EUROMAT

Rue du Trône 60 – Brussels 1050 · Phone +32 2 626 1993 · Fax +32 2 626 9501 URL www.euromat.org · Email [email protected] · Twitter @euromat_eu