A more detailed review of how regulation has impacted our business over the last twelve months is given in Regulatory Developments within the Corporate Governance section of this report.
We currently find ourselves in a transition period between the passing of the parliamentary bill in July and the award of licences before Christmas. During this period we continue to operate in Spain with the consent of the regulator, providing we pay 25% gross profit tax during this period. Failure to pay this tax would invalidate any licence application later in the year.
The Spanish regulator is taking an approach between that of France and Denmark with a 25% gross profit tax on fixed odds betting. Sports betting is allowed with an approved catalogue of markets. Poker, roulette, backgammon and baccarat are also all allowed. Slots, lottery and scratch cards are not allowed.
Whilst there is no certainty on the overall impact of regulation on Spanish profitability in the short-term, we are confident that the Sportingbet Group will be able to overcome the immediate increases in operating costs from both tax and increased marketing activities as we have proven in the Australian market.