INSIDE GAMING: Payouts from Spanish slots no threat to Megabucks By Howard Stutz, Las Vegas Review-Journal May 17, 2015 at 9:22 am MADRID — Hidden among the hundreds of retail shops, bars and tapas restaurants that surround La Puerta del Sol is the small Luckia slot machine parlor. Other than the store’s bright orange signs, the casino is unnoticed by the thousands of daily visitors to Madrid’s famous central square. Many come to the plaza to take in the festive atmosphere of Spain’s largest city. Tourists snap photos in front of the historic Casa de Correos building and the El Oso y El Madroño (The Bear and the Strawberry Tree) statue, and gaze at the Tio Pepe billboard that has hung over the square for decades. Spanish gamblers however, know the Luckia. The tiny casino — with its more than two dozen slot machines, electronic roulette games and sports wagering terminals — makes a grind joint look like Bellagio. Some of the slots are so old that they classify as antiques. They wouldn’t find a place in the D Las Vegas’ vintage games section. One gambling game lets a customer flip a euro coin into the machine in the hopes it will land where a lever will push dozens of euros into the payout area. The device resembles arcade coin amusement games found on Coney Island or the Santa Monica Pier. At the other side of the plaza, slot machines are inside Sportium, a small sports betting parlor a few doors from a gelato shop ironically named Palazzo. Cristina Romero de Alba, one of Spain’s leading gaming attorneys, said slot parlor operators have no reason to spend money to improve their gaming products. Spanish gamblers aren’t asking for upgrades. Spain has more than 200,000 slot machines countrywide. The majority are inside gambling salons, such as Luckia and Sportium. Bars and restaurants might have one or two slot machines. The payouts are not life-changing for the customers, and the gaming revenue doesn’t move the needle for operators. A few years ago, however, Spain nearly became the center of Europe’s gaming universe. Las Vegas Sands Corp. spent millions of dollars developing the concept for EuroVegas, a $30 billion complex that would have created 12 integrated resorts with six casinos on a site a 21-minute drive south of Madrid. The casino operator scrapped the plan in December 2013. “We do not see a path that would allow us to reach necessary criteria to move forward,” Las Vegas Sands Chairman Sheldon Adelson said then. Romero de Alba, a partner in the Madrid-based Loyra Abogados law firm, said Spain’s gaming industry backed EuroVegas. Some of the proposals batted about during discussions included reducing the gaming tax rate paid by all of Spain’s casino operators. Also, the owners of the only two large casinos outside of Madrid were promised the opportunity to open similar facilities within Madrid’s city limits. When Las Vegas Sands bailed, the tax cut and expansion plans disappeared. “It would have lowered everybody’s tax rate,” Romero de Alba said. “It would have rebranded the casino industry in Spain. It would have changed how people view gaming in Spain.” EuroVegas attracted bitter opposition from different groups because it was believed Las Vegas Sands wanted too many political concessions and tax breaks from Spain and the European Union, including an exemption from Spain’s ban on indoor smoking in public buildings. Spain’s slot machine parlors are nonsmoking. Romero de Alba said the project had flaws because it was too big. Madrid, she said, would benefit from one or two integrated resorts that combine casinos with hotels, restaurants, shopping, entertainment and convention space. She hopes another developer will bring a “better sized” project to the area because it would add “an entertainment offering” that Madrid lacks. Romero de Alba saw the beginnings of Spain’s gaming industry. After the death of Spanish dictator Francisco Franco in 1975, gambling — which was outlawed under his rule — began to surface. Romero de Alba’s father, attorney Jose Ramon Romero Rodriguez, opened the firm and began representing clients as laws and regulations changed. He became secretary of Spain’s first gaming association in the late 1970s. “My father used to joke that back in days when people asked what he was doing, he would whisper ‘gaming law,’ ” she said. Romero de Alba, a lawyer since 2006, spent in year in London as a financial analyst with Credit Suisse before returning to Madrid to work in an international law firm’s finance department. She joined her father at Loyra in 2011. EuroVegas was seen as a game changer in Spain. Madrid and Barcelona both bid on the project, with the capital city winning out. The competition between the cities for the development was heated, but Romero de Alba thought it might have been “artificially created.” With four different regulatory jurisdictions able to weigh in on EuroVegas — the European Union, Spain, Madrid and the region housing Madrid — the proposal had numerous outside influences. “The communications strategy wasn’t good,” Romero de Alba said. “There were too many leaks and false expectations. And the project was too big. The Spanish state can’t guarantee success, not under European Union regulations.” Spain’s slot machine parlor operators continue with the status quo. Server-based slot machine gaming — a staple in the U.S. casino market — has never been introduced to the country. Nevertheless, Spain’s gaming industry is growing. Online gaming was approved a few years ago and is starting to thrive. Romero de Alba said the market is still trying to rid itself of the illegal online operators. Legalized sports wagering has created a booming industry. More on this topic in next Sunday’s Inside Gaming. Howard Stutz’s Inside Gaming column appears Wednesdays and Sundays. He can be reached at firstname.lastname@example.org or 702-477-3871. Find him on Twitter: @howardstutz.