Spanish autonomous city Melilla builds iGaming strategy
Melilla is a Spanish autonomous city on the North African coast, bordered on land by Morocco and facing the Mediterranean Sea. Separated from mainland Spain but still part of the European Union, the city has long lived from its position as a frontier economy. Trade, movement and proximity to Morocco have shaped its business life for decades. Now, as that model comes under pressure, Melilla is looking to build new sources of growth through digital services, skilled employment and technology-led industries. As part of that effort, Melilla is now betting on iGaming.
According to Jesús Martínez García, Director of Innovation of the Autonomous City of Melilla, the city’s appeal to betting and gaming operators should not be understood only through its fiscal advantages, even though tax remains a central part of the offer.
“The tax framework is undoubtedly one of the foundations of the model that has attracted gaming companies to Melilla,” Martínez García told SiGMA News. “However, these incentives were never designed exclusively for the online gambling sector.”
Instead, he framed iGaming as one strand of a broader effort to bring digital businesses, skilled jobs and long-term investment to a city whose economy has historically been shaped by its position on the border with Morocco.
From registrations to real operations
Ceuta and Melilla have attracted attention from Spanish gambling operators since 2018, when companies based in the two autonomous cities became eligible for a 10 per cent tax rate on gross gaming revenue, compared with 20 per cent on the Spanish mainland.
But Martínez García said Melilla’s current policy is less about attracting legal domiciles than about convincing operators to build teams and activity in the city.
“Our objective is not merely to attract companies that register an address in Melilla, but businesses that establish real operations, create employment, develop local talent and make the city part of their long-term growth strategy,” he said.
In a sector where licensing, tax efficiency and corporate structuring often play a large role in decisions about where companies place parts of their business, Melilla is trying to avoid becoming a mailbox location, and Martínez García says the city expects operators to contribute to the local labour market.
“A company can establish a legal presence almost anywhere,” he explained. “What matters to us is whether it develops real economic activity in the city.”
The city says the early results are already visible. According to Martínez García, the sector now supports “around 500 direct jobs and approximately 1,000 indirect jobs” in Melilla.
For a small economy, those numbers are presented as evidence that the sector is already producing tangible local benefits. The city’s pitch is that iGaming can provide roles in compliance, technology, fraud prevention, finance, customer operations and data, rather than simply bringing in a narrow set of gambling companies with limited local links.
“Beyond employment, the industry makes a substantial contribution to the local economy through investment, tax revenues and business activity. Its impact on GDP is increasingly relevant, but perhaps the most important contribution goes beyond purely economic indicators,” Martínez García said.
“These companies are bringing talent, training opportunities, professional development and career prospects to Melilla. They are helping to retain local talent while attracting new skills and expertise.”
A new growth model for a changing economy
The timing of Melilla’s iGaming push has invited comparisons with the decline of cross-border commerce, a model that once supported large parts of the local economy. Martínez García acknowledged that connection, while rejecting the idea that the city sees gambling as a simple replacement industry.
“There is certainly a temporal connection between both developments,” he said. “The growth of the online gaming industry accelerated during a period in which some traditional economic activities were becoming less viable, particularly those linked to cross-border trade.”
He added: “However, we do not see iGaming simply as a replacement for a previous activity. Rather, it is part of a broader strategy of economic diversification.”
Melilla’s side of the bargain
That is the line Melilla is trying to draw between presence and contribution. For Martínez García, the test is not how many companies list Melilla as an address, but whether those companies leave something behind: jobs, training, institutional know-how and career paths that outlast the first wave of relocations.
But if Melilla wants operators to commit to the city, it also has to keep its side of the bargain. A favourable business environment may attract attention, but retention depends on whether companies find the conditions to operate, hire and grow.
According to Martínez García, operators and suppliers in the industry are looking for more than savings. “Companies are looking for legal certainty, institutional stability, quality of life, efficient administration and a government that is accessible and responsive to business needs,” he explained. “Tax savings alone are rarely enough for a company to choose a location and build a long-term presence there.”
Melilla’s answer is to present itself as a regulated European location with institutional access, competitive operating costs and a growing digital ecosystem. “Melilla offers a high quality of life, competitive operating costs, close institutional cooperation and a growing ecosystem of digital and technology-based businesses. We are also investing in training, skills development and initiatives that connect local talent with the needs of the sector,” argued Martínez García.
Managing the politics of gambling
The strategy, however, can be politically loaded. Online gambling remains a sensitive industry in Spain, where advertising rules, bonuses and player-protection measures have been the subject of regulatory and legal battles.
Martínez García said the city does not dismiss concerns around addiction or social harm, but argued that public institutions can support a legal industry without promoting irresponsible gambling.
“Gambling is a unique industry with legitimate ethical and social considerations,” he said. “Those concerns should never be dismissed.”
He said Melilla’s position is based on support for regulated operators subject to Spanish and European rules covering responsible gambling, anti-money laundering controls, age verification and player protection.
“Public institutions are not promoting irresponsible gambling; they are supporting a regulated industry that operates within one of the most demanding compliance environments in the digital economy,” he said.
For the city, the bet is that a regulated gambling cluster can act as an anchor for a wider digital economy. Martínez García pointed to future opportunities in “software development, engineering, cybersecurity, fraud prevention, finance, data analysis and biometrics”.
Lessons from Ceuta and Malta
Melilla is also looking at what other small jurisdictions have done right.
Ceuta, Spain’s other autonomous city in North Africa, moved earlier and more consistently in developing its position as an iGaming hub, Martínez García said, giving it an advantage in the first years after Spain’s regulatory changes. Melilla sees that experience as a useful lesson: fiscal incentives may open the door, but operators also need a supportive environment, accessible administration and public institutions that understand the needs of a fast-growing industry.
Malta offers a different lesson. Martínez García said the recent visit to Valletta was “particularly inspiring” and described Malta as an example of “what can happen when a territory commits to this sector with confidence, consistency and a long-term vision.” For Melilla, he said, Malta is “a valuable benchmark”, though the city hopes to adapt that example to its own strengths and circumstances.
The test for Melilla will be whether operators treat the city as a place to build real operations, not simply as a place to register a company. Martínez García said failure would mean “attracting company registrations without generating real economic activity, employment, knowledge transfer or opportunities for local residents.”
For Melilla, tax incentives may have opened the door, but jobs, skills and a sustainable digital cluster are now the measure of whether the strategy works.
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