The regulatory regime for gambling in Spain is aimed at reinforcing:
In this sense, the trend for protecting public health, minors, consumers and society as a whole has been clearly expressed and strengthened in the most recent and relevant developments in the sector, which are explained in the following sections.
The entry into force of Royal Decree 958/2020, of November 3rd, on commercial communications for gambling activities has been completed during 2021, which entails a major change with a huge impact on the gambling industry, since even though the country previously had a quite flexible and permissive regulatory framework, Spain is now under one of the most restrictive regimes on gambling advertising.
This restrictive regulation is triggering a tightening of the gambling advertising regulations at regional level as well. Many regions in Spain are currently adapting their regulations to this new restrictive approach.
Focusing on the land-based gambling industry, it should be noted that, although a rebound effect is expected in the economy in general, the damage caused by COVID-19 to the productive fabric of the hospitality industry and leisure sector means that gambling will not return to its 2019 figures until late 2022 or even 2023. By way of example, according to official sources, in Catalonia the forecast for 2021 is of a slight improvement compared to 2020, but turnover would still be 34.3% below the pre-crisis level (2019). Similarly, almost half of companies’ workforces in Catalonia will be reduced in 2021 (11.3% on average) and 40% of companies plan to increase bank debt to be able to maintain activity. In terms of recovery, 37% of companies expect it will take two to three years to recover to the pre-COVID-19 turnover level of 2019.
In addition, due to political movements and social pressure, there is currently a trend of prohibiting or suspending the granting of new authorisations to open gambling halls or betting shops. This trend is being followed and applied by a significant number of regions in Spain.
Gambling regulation in Spain is divided between online gambling that is offered at federal level and land-based or online gambling that is offered within one region. Online games offered at federal level require a federal licence or authorisation and entitle the holder to operate online in the whole territory. However, land-based gambling or online games offered at regional level (in one or several regions) require the relevant licence or authorisation from the relevant autonomous region.
Therefore, online gambling in Spain is regulated at federal and regional level, and the applicable regulation, and which gambling products will be legally approved, depends on whether these are commercialised at national level or only at regional level in one or several autonomous regions in Spain.
Online gambling at national level is regulated by the Spanish Gambling Act (Ley 13/2011, de 27 de mayo, de regulación del Juego) and each gambling product has its own regulation approved by a ministerial order. If a game is not regulated or does not fit in any of the regulations in force, that game is not permitted.
The games that have been regulated so far, and that are therefore permitted to be offered at federal level, are pools on sports betting, fixed-odds sports betting, pools on horse racing, fixed-odds horse racing, other fixed-odds betting, exchange sports betting, exchange horse racing, other exchange betting games, contests, poker, bingo, roulette, complementary games, blackjack, baccarat and slots.
Land-based gambling and online gambling at regional level is regulated by each of the 17 autonomous regions in Spain and the autonomous cities of Ceuta and Melilla. Instead of a specific regulation per type of game, each autonomous region approves a catalogue of games that are permitted and can be offered.
Notwithstanding that there are some minor differences between the regions, the gaming products approved and permitted are generally the following: roulette, blackjack, boule, trente et quarante, craps, baccarat, poker, slots and other machine gaming, bingo, raffles, tombola or charity raffles, betting, sports betting, horse racing and Wheel of Fortune.
It is important to highlight that the various formats of gambling products approved and listed above might be permitted in different forms, both at federal and regional level (different forms of blackjack, roulette, poker, etc).
Betting, bingo and casino games are permitted and subject to licensing at federal and regional level.
Loterías y Apuestas del Estado (LAE) and the National Organisation of the Blind in Spain (ONCE) maintain the monopoly on lotteries offered at federal level. Only charitable organisations can organise lotteries. This is therefore a restricted product.
Fantasy sports can be offered at federal level if they fit under any of the single licences approved by the regulation. Depending on the autonomous region, they can also be offered at regional level and – in both cases – they are subject to licensing.
Social gaming is permitted, and these games are not subject to any licence, at federal or regional level. Games of skill do not need a licence.
Poker is permitted and subject to licensing at federal and regional level.
Betting, poker, bingo, casinos and gaming machines are permitted and subject to licensing.
LAE and ONCE maintain the monopoly on lotteries offered at federal level and only some regions allow lottery operators.
As previously explained, land-based gambling (and online gambling at regional level) is regulated by each of the 17 autonomous regions in Spain and the autonomous cities of Ceuta and Melilla, and therefore each autonomous region has its own catalogue of games approved and permitted. There are certain differences among the regions; however, the gaming products permitted are generally the following: roulette, blackjack, boule, trente et quarante, craps, baccarat, poker, slots and other machine gaming, bingo, raffles, tombola or charity raffles, betting, sports betting, horse racing and Wheel of Fortune.
The key legislation for online gambling at federal level is:
The key legislation for land-based and online gambling at regional level is approved by each of the 17 autonomous regions in Spain and the autonomous cities of Ceuta and Melilla, and therefore each autonomous region has its own Gambling Act and secondary regulations developing the Gambling Act.
The Gambling Act defines gambling as an activity in which amounts of money or economically measurable objects are put at risk on uncertain and future events, dependent at least to some extent on chance, and that allows these sums to be transferred between the participants, regardless of whether the level of skill of the players is decisive in the results or whether they depend wholly or fundamentally on luck or chance. The prizes can be in cash or in kind, depending on the type of game.
For clarification purposes, the definition contains three essential components, which are “chance”, “pay-to-play” and “prize”. If any of these elements is absent, the game will be outside the scope of gambling and the gambling regulation will not apply (for example, pure skill games will be excluded or prizes in virtual currency with no monetary value).
There is no specific nor separate definition for land-based gambling.
The Gambling Act defines online gambling as games performed through electronic channels, IT and interactive systems, when any device, equipment or system is employed to produce, store or transfer documents, data or information, including through any public or private communication network. The communication network can include television, the internet, landlines, mobile phones or any other interactive communication system, in real time or recorded.
Given the regulatory distinction regarding the gambling sector in Spain, infractions and the related sanctioning regime are approved by the Spanish Gambling Act and by each autonomous region with respect to its territory and competence.
In both cases, administrative infractions are divided into three groups: very serious, serious and minor. Compiling the different regulations, the key offences can be summarised as indicated below.
Very serious infractions include:
Serious infractions include:
Minor infractions include:
Unlawful gambling is classified as a very serious infraction at federal and regional level.
Unlawful gambling is sanctioned with a fine of EUR1–50 million under the Gambling Act. In addition to the fine, the regulator is entitled to revoke the licence, to impose a temporary removal of the licence for a maximum period of four years or to close the media through which information society services are delivered and that support the gambling activities.
Each regional gaming regulation approves its own sanctioning regime; however, in most of them, unlawful gaming is sanctioned with a fine of up to EUR600,000. In addition to the fine, regulators are entitled to revoke the licence or to impose a temporary removal of the licence for a maximum period of five years.
With the complete entering into force of the regulation on online gambling advertising and the forthcoming regulation on online responsible gambling, the legal regime for online gambling at federal level will be completed, without prejudice to any additional regulations that may be developed.
Notwithstanding the above, the most relevant pending legislation in most of the autonomous regions is the regulation on advertising and responsible gambling.
The regulatory authority for online gambling at federal level is the DGOJ. Since January 2020, this authority has been under the umbrella of the Ministry of Consumer Affairs (prior to this, it was under the umbrella of the Ministry of Finance) and is competent, at federal level, to:
The regulatory authority for regional gambling – both online and land-based – depends on each autonomous region and these are usually under the umbrella of the relevant regional departments of finance or the interior.
Before discussing the approach to gambling regulation in Spain, a differentiation should be made between:
Online gambling can be offered at federal or regional level. Customarily, entities apply for federal licences, since this way they can offer online gambling in the whole territory, without having to apply for licences at regional level.
The aim of the Gambling Act is to regulate all those modalities of games that take place at federal level in order to protect the public order, combat fraud, prevent addictive behaviours, protect minors and safeguard the players’ rights, without affecting what is established in the regional regulations.
To offer online gambling in Spain at federal level, entities must obtain a general licence per each category of game (betting, contest or other games) and also a single licence for each type of game included in its general licence category.
The regulatory approach for land-based gambling is based on the licensing or authorisation regime approved by each autonomous region. The requirements and conditions vary depending on the region and type of licence that an entity is interested in applying for.
At federal level, the available licences are classified as follows.
For example, should an entity wish to commercialise bingo, baccarat and poker, it will need one general licence (other games) and three single licences (bingo, baccarat and poker). In other words, general licences per se are not valid to offer games. To do so, the entity will also need to obtain a single licence for each type of game within its category. General licences can only be obtained through a public tender process announced by the DGOJ. Entities can apply for single licences together with the general licence or at any other time, provided that the entity has already been granted with and holds the relevant general licence.
At regional level, each region has competence to establish its own licences and its own licensing procedure and regime.
Regarding general licences for online gambling at federal level, there have been three public calls since the approval of the Spanish Gambling Act in Spain in 2011: in 2011, 2014 and 2017. The latest window announced in December 2017 was opened up for one year and entities could apply for licences until December 2018. General licences are currently not available and can only be applied for during a public call announced for such purpose. Single licences can be applied for at any time by entities holding the corresponding general licence.
None of the three public tenders limited the number of operators that could be granted a licence, nor the number of licences to be granted. In other words, all those operators that met the requirements established within the tender obtained the licence.
Any interested party may request a new call for gambling licences at least 18 months after the previous call.
For regional land-based licences, the processes are approved by each autonomous region and, depending on the type of licence and region, there can be limits on the number of licences available (for example, licences for betting shops in the Canary Islands) or the licences can be limited to one and subject to a public tender process (as is the case, for example, for the licences for land-based casinos).
Online Gambling at Federal Level
General licences are valid for ten years, extendable by another ten. Single licences have a minimum duration of one year and a maximum duration of five, depending on the type of gambling product, and these are also extendable by successive periods of the same duration. The expiry of the general licence that the single licence is linked to implies the expiry thereof.
The duration of licences depends on each region and type of licence. Customarily, licences are valid for ten years, extendable by another ten.
Although there are differences between the application requirements for land-based (with slight differences among the regions) and online operators subject to the Gambling Act, the requirements are always divided into three sections to prove legal, economic and technical solvency.
The main application requirements are as follows.
The Spanish Gambling Act also requires the directors and shareholders of the applicant entity to disclose information about their relatives (ascendants, and descendants older than 18) in order to inscribe them in the registry of individuals linked to the operator since these individuals cannot gamble on the relevant operator’s website.
The timing of the application process depends on the applicable regulation, type of licence and conditions approved by the corresponding public tender, if applicable. For instance, the last window to apply for general licences for online gambling at federal level was opened for one year and interested parties were entitled to apply for their licences between December 2017 and December 2018. The DGOJ had a term of six months from the submission of the relevant applications to issue or refuse them. Initially, the licences are granted with a provisional nature. To obtain definitive licences, operators must submit the definitive certifications report of the technical systems before the DGOJ within a maximum term of four months from the provisional granting. Once the certification documentation is submitted, the DGOJ proceeds with the review and granting of the definitive licences within a maximum term of two months. Operators can start operating with the provisional licence.
With regard to regional licences, the duration depends on each regional regulation and, if applicable, on the conditions of the public tender process. Customarily, the timing for the regulator to review and proceed with the granting of the relevant licence takes between three and six months from the submission of the application.
For online gambling licence applications at federal level, entities must satisfy the following administrative fees:
For regional licence applications, the cost depends on the region and the type of licence applied for.
For online gambling licences at federal level, there is an annual fee of 0.75‰ (per mille) on turnover that operators need to pay by January 31st each year.
For regional licences, the ongoing annual fee depends on the region and type of licence.
Each region has its own regulation for each type of premises licensing: casinos, gaming halls, bingos and betting shops. Therefore, the requirements for licensing depend on the premises and the autonomous region in question.
While the approach from some regions – regarding requirements such as the number of slots/betting terminals, establishments or installations, or the minimum size (in square metres) – is more restrictive, others are more flexible. Also, in some cases, as is the case for casino premises, licensing is subject to a public tender process.
Notwithstanding the above-mentioned regional variation, in general terms, the requested documentation aims to prove the legal, technical and economic solvency of the applicant. The main requirements and differences that can be identified are as follows.
The land-based gambling sector is implementing certain changes with the aim of reinforcing the protection of vulnerable individuals, such as minors or people registered in the General Game Access Interdiction Register, and intended to tighten the regulation of gambling advertising. The main changes in this regard are as follows.
Gaming Establishments Entrance Controls
The regions of Madrid and Extremadura, among others, modified this area of regulation during 2019 and the measures entered into force in 2020. They require the implementation of additional controls for access to betting shops and gaming halls. This trend for the approval of requirements for the entrance controls has been followed by numerous other regions during 2020 and 2021 (eg, Andalusia, the Balearic Islands, La Rioja and Cantabria).
Distances between Gambling Premises and Educational Centres
In 2019, the region of Valencia prohibited the opening of gaming halls closer than 700 metres to another. During 2020, Valencia approved even more restrictive measures modifying this distance to a minimum of 500 metres between gaming premises and 850 metres between these and education centres. Most of the regions are currently working on the same line. In this sense and just by way of example, in 2021, the region of Andalusia approved a new minimum distance of 150 metres for gaming halls from education centres, while the city of Barcelona has approved a new minimum distance of 800 metres for gaming establishments from educational centres. Also in this line, the region of the Balearic Islands has prohibited the opening of gaming halls closer than 500 metres from educational centres and other premises, such as rehabilitation centres, hospitals and children's playgrounds.
In addition, during 2019, some cities, such as Madrid, implemented legislative measures to prohibit or suspend the granting of new authorisations to open gambling halls or betting shops. This trend has been actively followed by other regions in 2020 and this measure has been adopted in 2021, for instance, in Cantabria, Galicia and Castilla y Leon. Additionally, some regions have developed their regulations to approve procedures for authorisation to install physical accessory terminals, which allow participation in online games licensed at federal level in land-based premises.
As a consequence of the approval of the Royal Decree on commercial communications for gambling activities, most of the regions in Spain have expressed their approval of the general tightening of the regulation of gambling advertising and announced their intent to proceed with the adaptation of their regulations to the Royal Decree. By way of example:
Notwithstanding the above, as of today, Valencia is the region that has the most restrictive regulation on gambling advertising and, as a result, any type of gambling advertising or promotional activities have been prohibited.
Spanish gambling regulation does not distinguish between B2C and B2B licences, nor between the law applicable to the operations of one operator and another.
The definition of the concept "gaming operator" states that an operator needs to obtain a licence in Spain if it:
In addition, those meeting the above requirements that also manage gaming platforms, in which they are members, or that other gaming operators join and where they put in common stakes coming from their respective users will be considered as gaming operators and gaming co-organisers.
Spanish gambling regulation does not make any distinction between B2B and B2C operators.
The regulation provides a definition for the concept of “gaming operator” and if a B2B operator meets the requirements established by the regulation, it is subject to licensing and, technically speaking, it will be considered as a gaming operator.
Therefore, the inclusion of a B2B operator in the concept of a gaming operator, and the need for it to be licensed, depends on the services that the operator is interested in rendering in Spain and the conditions related to that service.
In practical terms, experience has shown that the Spanish regulator understands that a B2B company falls under the definition of “gaming operator” only in exceptional circumstances; for example, when offering network jackpots, offering share liquidity or providing all gaming services to a white-label company that only provides the "look and feel".
Affiliates do not need to hold a licence in Spain as long as they do not register clients, or maintain an agreement or gaming account with them.
White-label arrangements in a B2B scenario are permitted as long as the provider that is behind the website is duly licensed, since the B2B operator in this case falls under the definition of “gaming operator”. The new regulation on advertising establishes a new requirement by which an operator is prohibited from using brands or trade names, which are not owned by the same or by the business group to which such operator belongs, to identify and differentiate itself from other operators. This new requirement, to be essentially considered for white-label arrangements, entered into force on 5 May 2020.
Apart from this, and depending on the activity developed by the white-label operator (the one providing the look and feel), it may also fall under the definition of “gaming operator” and therefore also be subject to licensing.
The most relevant recent milestone in online gambling is the approval of the regulation on online gambling advertising. The DGOJ has been working on this regulation since 2015 and during this time there have been several very different draft versions of this legal text. In May 2020, Mr Mikel Arana was appointed as the new general director at the DGOJ and announced the imminent approval of the new regulation proclaiming a significantly more restrictive approach than the versions of the document that had circulated thus far. The Royal Decree on commercial communications for gambling activities was approved and published in the Official Spanish Gazette on 4 November 2020, entering into force the day after.
Although the new regulation entered into force in November 2020, it provided for a specific transition period for the entry into force of certain requirements that have finally entered into force in 2021. This new regulation and the new requirements and restrictions established are having a significant and negative impact on the sector, since – among other restrictions – welcome bonuses and sponsorship on shirts or sports equipment are not admissible and commercial communications on audio-visual media services (TV/radio) and through video-sharing platforms (such as YouTube) are limited to the hours between 1am and 5am.
Royal Decree to Regulate the Development of Safer Gambling Environments
Regarding the most relevant forthcoming changes, it should be noted that on 15 July 2021, the Ministry of Consumer Affairs published its first draft of the expected Royal Decree regulating the development of safer gambling environments with the purpose of subjecting the same to a public consultation period ending on 9 August 2021. On 15 October 2021, the Ministry of Consumer Affairs issued a new version of the draft regulation that was sent to the European Commission (TRIS) for its assessment of the upcoming Royal Decree, the status quo period of which will end on 17 January 2022. The definitive version of this Royal Decree is expected to enter into force on 1 July 2022, with the entering into force of some provisions postponed until 1 July 2023.
Among others, the requirement of setting up the gaming session (spending and time limits) is one of the most significant proposed changes. This requirement is, in fact, already in place and applicable for slots games. However, the draft regulation intends to approve this requirement for all gambling products under the general licence for other games, except for tournament poker due to its special structural characteristics. This means players will need to set up their session before playing all types of casino games.
The draft regulation also includes new concepts, such as players with “intensive gambling behaviour” (participants who have incurred weekly net losses equal to or greater than EUR600, for three consecutive weeks) or “young participants” (participants aged 25 years or less). There are specific and additional requirements that will become applicable to this type of customer, such as the use of credit cards for deposits by players with intensive gambling behaviour will be prohibited and young participants must be excluded from receiving the specialised attention services aimed at an operator's privileged clientele and cannot receive any kind of promotional activity whose purpose is unrelated to the gambling activity carried out on the operator's platform.
This draft regulation also intends to reinforce the measures to be applied to players who show risky behaviour, including the obligation for operators to establish internal procedures to verify whether the current income of players who exhibit risky behaviour is compatible with the level of expenditure maintained in their relationship with the operator.
There is also a significant new requirement in the draft regulation that states that in those cases when the difference between the participation and the prize obtained by a player is higher than EUR5,000, and it is the first prize with these characteristics, the operator will have to transfer the amount of the prize obtained directly to the player. In this sense, the player will not be able to use the amount of the prize to have new participation in the game as long as the transfer has not been made effective.
Amendment of the Spanish Gambling Act
The Spanish Gambling Act has been amended through Article 17 of Law 11/2021, of July 9th, on measures to prevent and combat tax fraud, transposing Council Directive (EU) 2016/1164 of 12 July 2016 laying down rules against tax avoidance practices that directly affect the functioning of the internal market, amending various tax rules and on the regulation of gambling. This Law was published in the Official Spanish Gazette on 10 July 2021 and entered into force the day after.
Firstly, several of the measures aim to put in place appropriate mechanisms to assist in preventing and combating match fixing in sporting competitions and to combat the fraud that can occur in sports betting.
Secondly, the list of entities to which the DGOJ can issue information requests is extended; furthermore, gambling operators are required to collaborate in the fight against fraud by drawing up a specific manual that includes specific procedures and measures.
Thirdly, another group of measures introduces new types of offences or modifies some of the existing ones, with the aim of sanctioning fraudulent practices by participants in the games, by the operators themselves or by suppliers or intermediaries; breaches of the provisions in force on responsible gambling and the protection of players; and non-compliance with information requirements set by the DGOJ.
This regulation also sets forth that the DGOJ will publish on its website very serious and serious sanctions that are imposed on operators, information that has not been made public so far.
Likewise, this list of measures concludes with the publication, on the DGOJ’s website, of specific information associated with unauthorised gambling.
Preliminary Draft Law to Amend the Spanish Gambling Act
The Ministry of Consumer Affairs also published in September 2021 a preliminary draft law that will amend the Spanish Gambling Act, with the aim of reinforcing the DGOJ’s functions regarding the protection of players at risk in gambling activities, the exercise of data protection rights of users and collaboration in the fight against fraud and match fixing in sports competitions.
Among several modifications to be included, a new specific regime is provided for regarding data processing that may take place as a result of the exercise of control and monitoring functions of the DGOJ in relation to operators. The purpose of this amendment is the reinforcement of the exercise of data protection rights by the users, in accordance with the data protection regulation.
The reinforcement of the DGOJ’s activity in the area of responsible gambling is also provided for by introducing an express faculty of the DGOJ to protect at-risk groups of players by evaluating the effectiveness of the responsible gambling measures developed by operators.
Finally, this preliminary draft law sets forth the faculty of the DGOJ to exchange information between the members of the Sports Betting Alert System (SIGMA), according to their functions, without the need to inform the relevant users under investigation about the categories of personal data processed or the sources of such data. The provision also expressly excludes the exercise of the rights of access, rectification, erasure and opposition of personal data before SIGMA. Therefore, this change extends the DGOJ's functions aimed at overseeing and ensuring the integrity, security, reliability and transparency of gambling operations. The purpose is that all parties interested in eradicating sports manipulation and match fixing in the betting markets share information.
The regulation does not contain specific technical measures to protect consumers from unlicensed operators. However, the DGOJ is entitled to request that internet service providers and financial entities adopt blocking measures within sanctioning procedures initiated against illegal operators. In this sense, blocking access from Spanish IP addresses and payment blocking are the most common measures. Indeed, the DGOJ has committed to continue intensifying the existing policy of domain name system (DNS) blocking and monitoring payment traffic to identify the main black-market operators targeting the Spanish market.
The gambling sector is fully committed to the detection of participation in gambling activities by minors and vulnerable groups. The aim of the responsible gambling requirements is to prevent and correct the negative effects of gambling through the application of different measures.
Most of the responsible gaming requirements are compulsory for online operators. The requirements for land-based operators vary by region and premises, despite the fact that some land-based operators, at their own initiative, apply additional responsible gambling measures in their businesses.
The main responsible gambling requirements are discussed below.
It is prohibited to grant loans to players.
A minimum standard of information given, and attention paid, to participants must be observed by the operators to communicate with and assist players. For example:
Gambling activity must be controlled. The list below establishes relevant examples of these requirements.
The authorities have created different tools for operators and citizens in order to promote responsible gambling.
Through an inscription in the RGIAJ, an individual is fully prohibited from accessing gambling activity (which is applicable to online and land-based gambling). The register is formed by the data of citizens that voluntarily do not wish to exercise their rights to gamble and by those that are declared incapacitated by a legal ruling.
Player Verification Service
The DGOJ offers online operators a tool to proceed with the ID verification of their customers resident in Spain. In addition, operators can also check whether the customer is registered with the RGIAJ with this tool, and whether the data provided by the customer corresponds to a minor or to individuals included in the Civil Registry as deceased.
The DGOJ has launched a service addressed to all citizens in order for the operator to detect and communicate an attempt of activation of a user registration, when the identity data provided matches the data of an individual registered with this service.
There is no specific AML guidance relevant to the gambling sector available in Spain. Nothing has been published in this regard, either, by the DGOJ or the Executive Service of the Commission for the Prevention of Money Laundering and Monetary Offences (SEPBLAC).
Given that the central state has competence over AML regulation, the main applicable AML regulation is composed of Federal Law 10/2010, of April 28th, on the prevention of money laundering and terrorist financing, and Federal Royal Decree 304/2014, of May 5th, developing the regulation of the Spanish AML Act.
The Spanish AML Act was amended to transpose the EU's Fourth AML Directive. The amendments to the AML Act were included in Royal Decree-Law 11/2018, of August 31st, that was published in the Spanish State Official Gazette on 4 September 2018. The main changes incorporated were related to the obliged subject including online operators, the application of due diligence measures for online operators, record-keeping and the representative before SEPBLAC.
Spain transposed into Spanish law the Fifth AML Directive provisions (EU Directive 2018/843) through Royal Decree-Law 7/2021, of April 27th, amending Law 10/2010, of April 28th, on the prevention of money laundering and terrorist financing, among other provisions. This Royal Decree-Law 7/2021 was published in the Official Spanish Gazette on 28 April 2021, entering into force the day after its publication.
The main purpose of this Royal Decree-Law is to adjust the national regulations to the Directive regulations, and the modifications of Law 10/2010, of April 28th, on the prevention of money laundering and terrorist financing do not include any additional specific amendments related or addressed to gambling operators.
The Spanish AML regulation establishes for online and land-based gambling operators the instructions, proceedings and duties that need to be applied by these obliged entities for the prevention of money laundering.
The main requirements and obligations are the following.
Annual examination by an external expert of the operator’s manual for the prevention of money laundering.
Contrary to what happens, for instance, in the UK, in Spain there is no specific regulatory or supervisory agency for advertising.
In spite of that, in the case of online gambling at federal level, it is the same DGOJ that supervises compliance with the applicable advertising rules by the gambling operators and sanctions them if they breach those regulations. And regarding audio-visual communication service providers rendering services to gambling operators, the authority to launch proceedings and sanction lies not only with the DGOJ but also with the National Commission of Markets and Competence (CNMC).
According to Article 2 of the General Advertising Law 34/1988, advertising is defined as “any form of communication made by a natural or legal person, public or private, in the exercise of a commercial, industrial, craft or professional activity, in order to directly or indirectly promote the hiring of movable or immovable property, services, rights and obligations”.
According to Royal Decree 958/2020, of November 3rd, on commercial communications for gambling activities, commercial communications are defined as “any form of advertising carried out by a natural or legal person, public or private, disseminated through any media or format, meant to promote, either directly or indirectly, the gambling activities defined within the scope of application of Law 13/2011, of 27th May, or the entities that carry out such communications. Broadcasting of game draws or the purely informative dissemination of their results shall not be considered commercial communications”.
The key legal provisions can be divided within the following groups.
Gambling operators have to be duly licensed by the regulator to be able to advertise their products. According to Article 7.1 of the Gambling Act, in order to carry out gaming activities on audio-visual programmes, news media or websites, gaming operators must have an authorisation (ie, the corresponding gambling licence). The same happens at regional level.
Advertising Providers' Requirement to Check Licensing
There is a need for any advertising third-party provider to confirm that its client (gambling operator) is duly licensed. According to Article 7.3 of the Gambling Act, any advertising entity or agency, audio-visual or electronic communication service provider, media or information society service that broadcasts or disseminates the direct or indirect advertisement or promotion of games or operators shall confirm that whoever has requested those advertisements or advertising slogans holds the corresponding licences issued by the DGOJ.
There are mainly two infractions in the Gambling Law related to advertising:
Both infractions are qualified as serious infractions and are therefore subject to fines of EUR100,000 to EUR1 million and to the suspension of activity in Spain for a maximum period of six months.
Regarding land-based and online gambling at regional level, the applicable sanctions are approved by each autonomous region.
The current legislation applicable to advertising of gambling operators – and their products – is the following:
The most important restriction is that gambling products can only be advertised by licensed operators.
Apart from that, the main current restrictions on advertising are those addressed to protect users through certain principles (legality, loyalty, identification, truth, social responsibility, responsible gaming, protection of minors, etc) and, more precisely, with regard to the protection of minors, throughout watershed times.
On November 4th, Royal Decree 958/2020, of November 3rd, on commercial communications for gambling activities was published in the Official Spanish Gazette and entered into force the day after. Given that the Royal Decree included transitory and different entry-into-force periods of some relevant provisions, some of the obligations and requirements have entered into force in 2021.
The most relevant restrictions that have been implemented by this Decree and that shall be applied in the online gambling industry are:
Please note that social gaming products can generally be advertised without the restrictions applicable to gambling products.
In terms of advertising for online gambling regulated at federal level, Articles 40 d) and e) of the Gambling Act state the relevant applicable infractions, which are both subject to the same sanctions:
Acquisitions and changes of control are not subject to the prior approval of the regulator. However, it should always be taken into account that if, as a result of said acquisition, any of the conditions of the operator company that were disclosed to the regulator at the time of applying for the relevant licences were affected or changed (for instance, the solvency of the group, the intercompany agreements for the provision of services or the directors of the operator company), then the operator company will have to notify to the regulator not only the change of control (within one month from its completion) but also file the documents evidencing any of those material changes that have taken place as a result of the acquisition.
Despite the fact that a change of control does not require the prior approval of the regulator, it is always advisable to contact the regulator before completing the change of control to ascertain any possible concerns it might have regarding the transaction.
The relevant threshold is set around the concept of the “significant” shareholder. This concept should be taken as it is defined by the corresponding domestic law of the operator company. For instance, in Spain, a “significant shareholding” of a listed company would be 3% or more of the shares, and for a non-listed company it is a percentage with which the relevant shareholder could effectively, even directly or indirectly, control the company.
Any “significant” change of control shall be notified to the regulator within one month of its completion.
There is no distinction made for passive investors.
Regulatory bodies are not only legally allowed to impose economic sanctions but also to revoke or suspend licences. Regulators could even suspend gambling licences or seize any assets or documents related to, and needed for, the licensed activity as a precautionary measure.
Economic sanctions may be enforced throughout the exercise of the relevant guarantees submitted by the operators before the regulator to cover their liabilities and potential consequences that arise as a result of a breach of their obligations as operators. In the event that these guarantees are not enough to cover a certain liability, the sanctions imposed by the regulator could be enforced throughout common civil remedies (ie, the seizure of assets, goods, shares, deposits, etc).
The other types of sanctions, which are the suspension of the activity and the removal of the ability to apply for a new licence during a certain period, are enforced directly by the same regulator or by the Ministry of Tax (in the event of very serious infractions), so their enforcement does not require any further ancillary measure apart from the resolution stating the sanction.
Some sanctioning proceedings can be found in certain databases (depending on the nature of the proceeding) and they can also be particularly requested and obtained by interested individuals.
In this regard, as previously explained, as per the last modification of the Spanish Gambling Act, the DGOJ will publish on its website any very serious and serious sanctions that are imposed on online operators.
As mentioned in 11.2 Sanctions, financial penalties are normally first enforced by the execution of the guarantees deposited by the operator before the regulator, and by the seizure of assets of the sanctioned operator company if the guarantees are not sufficient to cover the relevant liability.
In February 2021, the DGOJ initiated a public consultation period for a potential regulation about the loot boxes product, defined as “virtual objects or processes of any kind integrated into the dynamics of certain video games whose activation offers the player the opportunity to obtain randomly, virtual rewards or prizes that can be used in the video game”.
The main aim of this public consultation period was to gather the comments and suggestions of interested parties regarding the appropriateness of regulating this kind of product and, if so, under which regulation – within a new specific regulation or the Spanish Gambling Act – and how.
There have been no further developments in this regard so far.
There have been no recent trends in Spain regarding this topic.
There have been no recent trends in Spain regarding this topic.
There have been no recent trends in Spain regarding this topic.
There have been no recent trends in Spain regarding this topic.
There have been no recent trends in Spain regarding this topic.
The tax rate for online gambling at federal level, subject to the Gambling Act, is 20% on GGR (gross gaming revenue, or the total amount of money wagered minus the amount won) for all gambling products. This tax rate is 10% on GGR if the licensed operator at federal level is domiciled in Ceuta or Melilla.
The tax rate for online gambling at regional level, subject to each regional regulation, is 10% on GGR in most of the regions.
The tax rate applicable to the land-based sector is approved by each regional regulation and therefore varies depending on the region. As an example, in the region of Madrid, the applicable taxes are as follows.
In Andalusia, for instance, the applicable tax rate depending on the tax base is:
In addition, there are fixed rates that apply to operating betting terminals or automatic appliances that are suitable for the development of games. The amount is dependent on the applicable regulation, but the fee generally ranges from EUR3,000–4,000 per year for terminal type B/AWP and from EUR4,000–5,500 per year for terminal type C/casino machines.
Background – Where Do We Come From?
In May 2021, the Spanish Gambling Act reached its tenth anniversary; thus, Spain celebrated its first ten years of having a regulated online gambling market. This decade has been marked and punctuated by different milestones, numerous developments and diverse trends; three licensing processes and 80 licensed operators in total, an initial moment of adaptation to the new regulated regime, the consequent fight against illegal gambling, the approval of new gambling products and relevant regulatory developments aimed at the improvement of the sector (the tightening of the players ID verification regime, decrease of the gambling tax, approval of Ceuta and Melilla as new Spanish business-friendly jurisdictions, among others) and all this followed and accompanied by a stage of market consolidation.
Since the beginning of the regulated market, the General Directorate for Gambling Regulation (Dirección General de Ordenación del Juego, or DGOJ) has always been committed to the protection of the public order, combating fraud and money laundering, preventing addictive behaviour, protecting minors and safeguarding players’ rights. In this sense, the authors are proud to say that, for a long period, the different regulatory developments have been carried out applying a consistent approach:
Currently – Where We Are
However, during the past two years approximately, certain facts and developments have resulted in an evident change in the legislative and regulatory trends in the sector. The political changes in Spain, the movements of populist and left-wing political parties, strong social pressure and anti-gambling campaigns denigrating the public image of gambling have led the legal framework applicable to the gambling sector to move from an attractive and competitive legal regime to a restrictive framework that, unfortunately, in the authors' opinion, is not consistent or proportional with the alleged regulatory purpose. The regulatory trend is crystallising restrictive policies and rules on licensed gambling operators and limitations on their lawful gambling activity in order to protect players.
Change in the Interpretative Approach and Regulatory Trend
It is well known in the sector that this restrictive and interventionist trend has not only happened in Spain but in most of the regulated markets across Europe. It is indeed the current global trend. In this sense, while in some jurisdictions the interventionist activities are, for instance, more focused on the responsible gambling and AML areas, in Spain the clearest manifestation of this restrictive trend is the recent approval of the new regulation on gambling advertising that is one of the most restrictive regulations of those in the European jurisdictions.
Restrictive Regulation on Gambling Advertising
Despite this regulation having undergone a long regulatory process with different draft versions since 2015, the result is a restrictive regulation with almost no possibilities to develop an activity absolutely necessary for the online gambling business. Gambling operators in Spain used to spend approximately EUR350 million per year in marketing between advertising and sponsorships; sponsorship on shirts and sports equipment is not allowed any more, advertising on audio-visual media is only allowed from 1am to 5am and welcome bonuses or any type of promotional activity addressed to attract new customers are prohibited. These are just a few examples of the current legal regime applicable to gambling marketing.
It is interesting to point out that these developments and the restrictive trend come at a time when statistics show that (i) the illegal market percentage in Spain has significantly decreased and (ii) Spain has one of the lowest rates of gambling addiction players in Europe (0.3% of the Spanish population). However, statistics show that Spain has the highest rate of fraudulent players among the European countries. Fraudulent players have a great advantage: they gamble under a legal regime that is totally inclined towards player protection.
Negative Consequences and Impact for the Industry
The current restrictive regulation and approach will definitely have a huge negative impact not only on the gambling operators, but on the numerous stakeholders affected (ie, media providers and suppliers, football teams) and, specially, on the customers themselves. The fact that an operator is being advertised gives consumers confidence. With the current regime, costumers will hardly have any information about licensed and legal casinos. The drastic regulation will not only hinder the healthy growth of this already consolidated sector but will also lead to illegal gambling because the legal product – which, in addition, cannot be advertised – ends up being unattractive.
Illegal operators will not comply with this ban and will consequently attract a significant number of users by advertising illegally, mainly on the internet. Those unlicensed operators will ignore the numerous pieces of legislation on gambling (including laws on responsible gambling, fraud prevention, identity verification, self-exclusion, deposit limits, product restrictions), data protection, anti-money laundering, fraud and others.
In this sense, while the permissive and quite liberal regulation that existed in Spain, still with limits and restrictions in order to protect the public interest and especially minors, has produced positive results over time, the current legal framework is leading to a total distortion of the social perception of gambling. The government is sending a negative message of danger when statistics show that this is not the case. That is to say, the restrictive measures imposed on a specific economic activity must be weighed against the public interest; in this case, public health.
The statistics recently published by the Ministry of Health and the Gaming and Society report in Spain confirm that there is no public health problem. Instead, the percentages of problem gambling and gambling disorders are on the decline. There is no social alarm and no circumstances that justify the implementation of such excessive regulation and a regulatory approach that is not adequate to seek the intended objective and it is not a proportional solution to the actual problem that exists in Spain.
While the regulation on gambling advertising is the clearest example of this regulatory trend, there are other developments in the sector that highlight this change.
Therefore, after reviewing in this brief way where we come from, where we are now and where the market is going, there is a clear sign that the regulator’s new challenge should focus not only on how to protect the player but also on how to protect the operator’s lawful business and, as previously indicated, on how to protect operators from fraudulent players in Spain.
The Soaring of Gambling-Related Litigiousness in Spain
Since 2017, sports betting operators licensed in Spain have experienced a surge in the number and complexity of court proceedings filed by their customers against them before the Spanish courts.
According to the authors' experience in courts, said increase in litigiousness has not appeared due to the unlawful or objectionable conduct of the sports betting operators, as is continuously alleged by plaintiffs when they sue sports betting operators after the closure of their accounts or the application of risk management measures on the same.
Instead, the increase in litigiousness is due to the rise of a new type of customer with sophisticated automated tools devoted – only – to obtaining huge benefits from bookmakers.
From 2017 to 2019, most customers of this kind made use of automated systems with which they entered the "sure betting" world; in other words, using arbitrage to derive an income from the slight difference in the odds of different operators offering the same event.
However, since 2019, the automated systems used by those customers went from mere arbitrage software to more sophisticated systems that aim to find mistakes (incorrect odds, mistakes on the description of markets, late bets, etc), to place stakes on them and to obtain notable profits.
In any other jurisdiction, when operators (or their feed providers) find out that there is a clear suspicion of this kind of conduct, they "stake factor" the relevant user to preserve the viability of the business, and there are no further consequences for the operator. However, Spain is a regulatory and legal heaven for this kind of cheating customer.
The Spanish legal system overprotects the customers with a clear pro-user regulation, and at the same time the Spanish courts every so often support their decisions on a legal principle by which, in case of doubt, Spanish courts rule out in favour of customers.
On top of that, when proceeding to court, the starting point is always unbalanced, as the gambling operator is always seen as the bad guy of the story, while the customer is the victim of the claws of the operator and thus needs the protection of the legal and judiciary systems. However, that is not the case.
On the one hand, gambling operators in Spain comply with some of the most comprehensive and extensive regulations in Europe and they just try to maintain the viability of their business, getting a considerable return to player (RTP), from which must be deducted all operating costs and the applicable taxes. In other words, given the vast amount of resources, work and time invested, effort and day-to-day complexity of the sector, the final net income barely represents 1% of their turnover figure.
Consequently, having many customers using these unlawful automated tools clearly jeopardises the viability of the sports betting sector in Spain.
On the other hand, those customers suing sports betting operators after the closure of their accounts or the application of risk management measures are not customers to whom operators denied paying their winnings or impeded from playing normally just because they had a winning pattern.
Instead, they are acting in bad faith, using contractually forbidden tools that aim to derive profit from – unavoidable – residual mistakes, normally organised by the same law firms that then represent them at court, and on top of that, these customers present themselves as poor users who have suffered the abusiveness and cruelty of gambling operators.
Someone could think that a court case in which the customer is claiming to freely bet against a bookie when they have been using a "bot" should not be upheld. However, setting apart the fact that the use of a bot – as such – is not clearly prohibited by the gambling regulation (although (i) it is normally forbidden in the terms and conditions of the operator, (ii) it entails a clear contractual bad-faith act from the customer, and therefore (iii) it shows a civil dolo, which is also prohibited), that is not always the case due to, mainly, the following reasons.
Unbalanced applicable legislation overprotecting customers
The first issue is a matter that operators and their legal advisers are already working on, but the last word would obviously be that of the regulator. It is obvious that the most persuasive effect of a prohibition on the use of bots would be achieved by an amendment of the wording of the fraud offence in the Criminal Code (as the commission of fraud in taking profit because of errors of the damaged party does not constitute a felony in Spain).
However, given the type of law the Criminal Code is and the fact that it would require an overall majority of the Parliament, its amendment would be an extremely tedious enterprise. However, the same persuasive effect would be much more easily achieved by introducing a new sanction in the Spanish Gambling Act by virtue of which the customers making use of bots – or the individuals (or companies) facilitating, commercialising, operating or distributing the same – could be sanctioned for a breach of a regulatory obligation.
It will also be necessary to amend some other pieces of the current applicable regulations for them to protect operators against this kind of dishonest conduct of their customers and thereby attain a more balanced legal framework for all stakeholders.
The difficulties in proving that customers were effectively using a bot aiming to derive profit from human/technical mistakes committed by the operators or their feed providers (a kind of probatio diabolica)
This second issue is a matter of getting into the guts of those organisations providing bots so as to obtain solid evidence proving their unlawful mechanisms and, therefore, their clear bad faith. And that is not always an easy task.
The bad public perception of gambling operators
And the third issue is a long path to be walked, but time will tell the tale.
Having said the above, it is important to note that none of these three measures will impede the immediate economic damage that this group of customers could cause to the operators on a daily basis, as they are aimed at a later stage; ie, at the court proceeding after the measures adopted by the operator.
Thus, the only measures that could potentially put an immediate stop to the economic damage produced by these cheating customers are technical and commercial changes.
However, unfortunately, those changes will have an impact on the revenue of the operators (and their providers) and on the recreational experience of the rest of the customers who make an honest and licit use of the services offered by bookmakers.
The good news is that the authors expect this litigiousness-related trend to be reversed in the medium term.
Bit by bit, the firm is seeing an increase in the number of rulings in favour of gambling operators, and this trend could even be enhanced if the necessary tweaks are achieved to the regulation, to public perception and to the means of evidence to be taken to courts.