In Las Vegas, gross income from gambling gets taxed at six to eight percent. These rates are much lower than in Spain, where the highest tax bracket is 55 percent on average. In the Balearic Islands and Cantabria, it goes all the way up to 60 percent. Madrid has the lowest gambling tax, between 15 and 45 percent.
But Sheldon Adelson, the business mogul behind the EuroVegas project and a man who built the 14th largest fortune in the world by constructing casinos in Nevada, agreed to build in Madrid on condition that this tax be radically lowered. And the government of premier Ignacio González, of the Popular Party (PP), will do exactly that.
Under the new rules, Madrid casinos will only be taxed at 10 percent on their revenues from gambling, compared with the current ceiling of 45 percent. The reform will go into effect precisely when EuroVegas, a massive gaming and entertainment resort, opens its doors. Construction is set to begin in December 2013 with an initial investment of seven billion euros.
"Projects like EuroVegas are unique because of their huge investment and the volume of jobs they generate, and that's why they will have a set of advantages," said González this week.
"Adelson would never have come to Madrid with such a high tax rate," says José María Paredes, spokesman for the Torrelodones casino.
"We sure would have liked to have that 10 percent rate implemented immediately, with no conditions. We need enough muscle to be able to compete with such a robust project as EuroVegas."
Projects like EuroVegas are unique because of their huge investment and the volume of jobs they generate"
Madrid authorities will also reduce the red tape that might hinder EuroVegas and potential imitators by creating a new legal initiative known as Centros Integrados de Desarrollo or Integrated Development Centers (CID).
"EuroVegas is not about building a hotel, opening a store, creating a sports facility or launching a shopping mall. It is an integral project and we need a framework that addresses a project of this nature as a whole," said the Madrid premier. These types of centers could incorporate exhibitions, conventions, tourism events, entertainment, gambling and shows. The CIDs will also enjoy other fiscal breaks such as incentives for job creation.
And then there is the issue of smoking. Adelson had demanded that the smoking ban in public places be lifted in EuroVegas. Premier González admitted, however, that he lacks the legal power to do so. The Madrid government will, on the other hand, "expressly" prohibit minors from gambling.