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Directorate General for Gambling Regulation Letter from Carlos Hernández Rivera Director General for Gambling Regulation The Gambling Market in Spain The Gambling Market around the World The DGOJ in the year 2012 Economic climate Introduction Legal foundation of the DGOJ The Gambling Market Size in Spain Europe Organisational structure of the DGOJ: Competence DGOJ gambling licenses and authorisations Offer: Operators in the Gambling Market Germany France The Netherlands Austria Greece United Kingdom LAE (National Lottery and Betting Organisation) Regulation development Casinos Machines Belgium Italy Sweden ONCE Gambling Policies Council Bingo halls Online Denmark Norway Switzerland Offer evolution Finland Advertising for Gambling Gambling Demand DGOJ Inspections America The Gambling Sector's contribution to society USA Argentina Chile Sanctions Tax Revenue Canada Brazil Costa Rica Queries and Claims Macroeconomic impact Mexico Asia and the Pacific Responsible Gambling Statistical Appendices New Zealand Australia China Various Letter from Carlos Hernández Rivera Director General for Gambling Regulation 1 of 4 At the Directorate General for the Regulation of Gambling, we believe that to understand the analysis of the gambling market, the objectives of the regulation and the true extent of the responsibilities entrusted to us, as well as the resources needed to develop them properly, requires knowledge and awareness of the sector's activity. This is why we have been developing and presenting our Report since 2011 in order to inform the public on how we understand and execute our Carlos Hernández Rivera mission. Therefore, I am pleased to introduce the second Director General for Gambling Regulation edition. In presenting the 2012 Gambling Report, the DGOJ strengthens its commitment and willingness to be a socially responsible regulator. In the report, in addition to presenting economic data from the sector, we report our activity from last year, new activities launched and new commitments we have made, as well as new challenges we face. This report, although prepared, edited and published by the DGOJ, comes from many sources (regional regulators, public and private market operators, Associations, etc.). So, I would like to extend my special thanks to all these institutions, without whose cooperation its development would not possible. I Letter from the Director General for Gambling Regulation 2 of 4 The year 2012 was decisive for the gambling sector in Spain. On 1 June, following Law 13/2011 being passed on 27 May on gambling regulation, the procedure for granting the first online gambling licenses on a national scale was completed, with the market effectively beginning its operation on 5 June under the umbrella of our regulation. This market, as it is presented in the report, has been growing steadily since then. However, this growth is not being shared by the rest of the sector which, generally speaking, has presented a clear downward trend. There are multiple factors behind the trend which are not easily identifiable. The economic crisis that took over the Spanish economy in 2012 and the popularity loss of some of the most traditional games are just some of them. The gambling sector in Spain is basically an on-site sector, representing approximately 84% of the sector's amounts played. The evolution of the on-site gambling industry marks the evolution of the sector as a whole. New habits among the younger population and the emergence of new technologies have led to significant changes in the sector, announcing a trend that moves gambling demand to new online channels. The main concerns of the DGOJ is to guarantee user protection, keep minors out of the sector, avoid fostering addictions, provide legal security to operators and players, prevent illegal activity and ensure compliance with the regulation. In 2012, the DGOJ guidelines were aimed at establishing the necessary mechanisms to ensure compliance with these objectives. From a regulatory standpoint, laws and resolutions have been passed to implement a state-regulated market, and existing regulations have been completed, clarified and developed. A total of seven resolutions addressing various issues have been published, some with a technical nature relating to the approval procedure for technical gambling systems, others with more of a legal nature regarding the identification of participants in gambling II Letter from the Director General for Gambling Regulation 3 of 4 and the control of subjective participation bans, and others that are of a procedural nature like the approval of regulatory models for communicating data to the Registry of Individuals Involved with Gambling Operators. It has also undertaken a process to become more flexible for certain types of games, including bingo and gambling activities to stimulate the market. Also, the possible regulation of new online gambling games was considered in late 2012, and more specifically, cross betting and slot machines. The decision was finally taken, after a thorough process of reflection and consultation with those involved, to address this issue in 2013, where we now currently find ourselves engaged in the task. Moreover, in the second half of 2012 the DGOJ, subject to preliminary assessment and certification of operator technical systems in the context of the procedure for granting gambling licenses, launched the definitive approval process in October which was successfully completed in March of this year. Over the past year, it began to lay the foundation for a Responsible Gambling strategy for the sector as a whole. Gambling addiction problems occur in almost all games, and the solution to this problem, in the opinion of the DGOJ, is to consider using a common approach and lines of action aimed at the entire sector. The regulation of the gambling sector, its full integration in society and the realisation of its full potential and dynamism without doubt demand the establishment of the appropriate mechanisms to allow us to prevent and, if necessary, alleviate the inherent public health risks it carries. The hard work that we at the DGOJ have done in this regard, with the necessary and close cooperation of other Administrations, operators, users and the scientific community, has culminated in establishing the Responsible Gambling Advisory Council earlier this year, where we are developing III. Letter from the Director General for Gambling Regulation 4 of 4 the Responsible Gambling Strategy that will hopefully allow us to achieve our regulation's major objectives. We expect and hope that once these tasks are completed, the gambling industry can develop in the right direction for the benefit of the Administrations, operators and especially the public. The Directorate General for the Regulation of Gambling, with the help of all of you, will continue to work in achieving these ends. Carlos Hernández Rivera Director General for Gambling Regulation IV Letter from the Director The Online Gambling The Gambling Market in Spain of Gambling in Spain Economic climate Economic climate 1 of 2 Market Size of Gambling in Spain By amounts played By net revenue In 2012, the Spanish economy experienced a slowdown in terms by 2.2% in 2012, accelerating its decline compared growth, activity and demand, starting in the second half of to the previous year (-0.8%) due to high unemployment, Offer: Operators of the Gambling Market last year. This decline in activity is attributable to a reduction accelerating public and private sector de-leveraging, and the LAE (National Lottery and Betting Organisation) in all components of domestic demand: residential and non- fall of household disposable income, which fell by 3.8% in ONCE residential investment, private consumption and public real terms in 2012. Similarly, retail sales fell by -8.1% in real Casinos spending, which was not offset by export growth or a positive terms (-6.1% in 2011), representing an accelerated decline Bingo halls contribution to growth from external demand. and a decrease for the fifth consecutive year. Slot machines Online games Therefore, 2012 has shown a weakness in domestic demand, Therefore, macro variables determining income availability Offer evolution caused by the high leverage of the private sector, high and private purchasing power, which directly affect the size Gambling Demand unemployment and the decline in credit, combined with fiscal of the Spanish gambling market, intensified the negative The gambling sector's consolidation and new instances of instability in the financial trend in 2012 from the previous year. of the Gambling Sector and capital markets of the Eurozone during 2012. Thus, the Tax Revenue Macroeconomic impact Spanish economy contracted by -1.4% in 2012, compared of the Gambling Sector on employ- ment with a 0.4% rebound in 2011 and a decline in GDP of -0.3% Statistical Appendices in 2010. Meanwhile, private consumption declined in real Chart The Online Gambling of Gambling around the world The DGOJ in the year 2012 1 Letter from the Director The Gambling Market in Spain The Online Gambling of Gambling in Spain Economic climate 2 of 2 Economic climate Market Size of Gambling in Spain By amounts played Spain: private consumption and GDP By net revenue Offer: Operators of the Gambling Market GDP LAE (National Lottery and Betting Private consumption Organisation) Retail sales ONCE Casinos Year-on-year growth % Source: developed from INE (National Statistics Institute) data Bingo halls Slot machines 6 6 Online games 4 4 Offer evolution Gambling Demand 2 2 The gambling sector's of the Gambling Sector 0 0 Tax Revenue -2 -2 Macroeconomic impact of the Gambling Sector on employ- ment -4 -4 Statistical Appendices -6 -6 The Online Gambling -8 -8 of Gambling around the world The DGOJ in the year Jun. 12 Jun. 11 Jun. 10 Jun. 09 Jun. 08 Jun. 07 Sep. 12 Sep. 11 Sep. 10 Sep. 09 Sep. 08 Sep. 07 Dec. 12 Dec. 11 Dec. 10 Dec. 09 Dec. 08 Dec. 07 Dec. 06 Mar. 12 Mar. Mar. 11 Mar. Mar. 10 Mar.