Gaming Law 2022

Last Updated October 24, 2022

Spain

Law and Practice

Authors



Asensi Abogados is a boutique law firm specialising in the gaming and gambling sector. It represents and advises a large number of international gaming companies with interests across the Spanish and Latin American markets. The firm works for the largest online betting and casino operators, software providers, skill games operators, affiliates and payment solution providers, as well as land-based operators, slot-machine manufacturers and suppliers. Asensi Abogados has offices in Madrid, Mallorca and Bogotá, and is part of the Spanish Digital Gaming Association (Jdigital). A team of two partners and nine associates operates in Spain, while the Colombian office is composed of one partner and three associates. Recent work carried out by the firm includes licensing procedures at the online and land-based levels, providing detailed advice on the practical application of the new regulatory developments for online operators in Spain and assisting international operators in relocating to Ceuta and Melilla, the Spanish gambling business-friendly jurisdictions.

The regulatory regime for gambling in Spain is aimed at reinforcing:

  • the protection of players;
  • public order; and
  • the prevention of addictive behaviour, fraud and money laundering.

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 3 November, on commercial communications for gambling activities was completed during 2021, which entailed a major change and had a huge impact on the gambling industry; Spain previously had a quite flexible and permissive regulatory framework, but now has one of the most restrictive regimes on gambling advertising.

In terms of comparative data, the Spanish regulator for online gambling highlighted in its last quarterly report on the national online gambling market (related to Q2 2022) that the gross gaming revenue (GGR) for that quarter was EUR203.95 million, which implied a decrease of -0.29% compared to the previous quarter and -5.55% compared to the same quarter of 2021. These figures reflect the negative effects of the recent restrictive regulatory trend in Spain.

It should be noted that the land-based gambling industry has been one of the hardest hit by the COVID-19 pandemic. During 2022, the different regions have begun to see progressive improvements over previous years, although many of the measures implemented in the face of the impact of COVID-19 are still being maintained.

The figures for the last three years have been devastating for land-based gambling, which suffered losses of approximately EUR3.498 billion.

During 2022, many regions have focused their efforts on updating their obsolete regulations and have focused especially on:

  • establishing minimum distances between establishments and educational and health establishments;
  • the control of access to establishments;
  • gambling advertising regulations at regional level; and
  • responsible gambling.

In addition, due to political movements and social pressure, there is still a trend of prohibiting or suspending the granting of new authorisations to open gambling halls or betting shops, across a significant number of regions in Spain.

General Regulation

Gambling regulation in Spain is divided between online gambling that is offered at a federal level and land-based or online gambling that is offered within one region. Online games offered at a 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 a 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 a national level or only at a regional level in one or several autonomous regions in Spain.

Online gambling at a 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. A game is permitted if it is not regulated or does not fit in any of the regulations in force.

The following games have been regulated so far, and are therefore permitted to be offered at a federal level:

  • 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 a regional level are 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.

There are some minor differences between the regions, but the following gaming products are generally approved and permitted:

  • 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, at both the federal and regional levels (different forms of blackjack, roulette, poker, etc).

Sector-Specific Regulation

Betting, bingo and casino games are permitted and subject to licensing at a 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 a federal level. Only charitable organisations can organise lotteries, which are therefore a restricted product.

Fantasy sports can be offered at a 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 a regional level; in both cases, they are subject to licensing.

Social gaming is permitted, and these games are not subject to any licence, at a federal or regional level. Games of skill do not need a licence.

Poker is permitted and subject to licensing at a 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 a federal level, and only some regions allow lottery operators.

As explained in 2.1 Online, 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 approved and permitted games. There are certain differences among the regions, but the following gaming products are generally permitted:

  • 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.

Federal Legislation

The key legislation for online gambling at federal level is as follows:

  • the Spanish Gambling Act;
  • Royal Decree 958/2020, of 3 November, on commercial communications for gambling activities (Real Decreto 958/2020, de 3 de noviembre, de comunicaciones comerciales de las actividades de juego);
  • secondary regulation on licences, authorisations and gaming registries (Real Decreto 1614/2011, de 14 de noviembre, por el que se desarrolla la Ley 13/2011, de 27 de mayo, de regulación del juego, en lo relativo a licencias, autorizaciones y registros del juego);
  • secondary regulation approving the technical requirements (Real Decreto 1613/2011, de 14 de noviembre, por el que se desarrolla la Ley 13/2011, de 27 de mayo, regulación del juego, en lo relativo a los requisitos técnicos de las actividades de juego);
  • resolutions of the General Directorate for Gambling Regulation (Dirección General de Ordenación del Juego – DGOJ); and
  • ministerial orders approving each type of game subject to a single licence.

Regional Legislation

The key legislation for land-based and online gambling at a regional level is approved by each of the 17 autonomous regions in Spain and the autonomous cities of Ceuta and Melilla, so 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 or 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:

  • operating without the necessary licence or authorisation;
  • the organisation, commercialisation, exploitation or promotion of illegal games;
  • transferring an authorisation or licence without the previous consent of the relevant gaming authority;
  • the manipulation of technical systems or the use of systems or terminals not authorised by the relevant gaming authority;
  • the unjustified and repeated non-payment of the prizes that might correspond to gaming participants; and
  • the supply of technical support to unlicensed or unauthorised operators.

Serious infractions include:

  • the granting of loans to participants;
  • permitting access to gambling to individuals who are prohibited from taking part in it (minors and self-excluded);
  • carrying out unauthorised advertising;
  • non-processing of participants’ claims;
  • lack of collaboration with the gaming authority or inspection controls;
  • non-compliance with the requirements and obligations regarding responsible gaming and the protection of players established in the regulations and provisions in force; and
  • promoting or facilitating the participation from Spain in gambling activities through websites other than those legally authorised by gambling operators with a licence in Spain.

Minor infractions include:

  • non-compliance with the obligations contained in the applicable regulations, provided that they are not explicitly typified as serious or very serious infractions;
  • not properly informing the public about the prohibition on participation or access for minors and persons included in the General Game Access Interdiction Register;
  • a lack of mandatory information being provided from the operator to players; and
  • the participation from Spain, through the use of Spanish territorial IP address masking techniques, in gambling activities offered through websites other than those legally authorised by gambling operators with a licence in Spain.

Unlawful gambling is classified as a very serious infraction at a federal and regional level.

Unlawful gambling is sanctioned under the Gambling Act with a fine of between EUR1 million and EUR50 million. In addition to the fine, the regulator is entitled to revoke the licence, impose a temporary removal of the licence for a maximum period of four years or 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 recent 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.

There are also other regulations that are currently being processed in the Spanish Parliament, including the draft law regulating customer services (whose scope of application some online gambling operators are likely to fall) and the draft law that will slightly amend the Spanish Gambling Act, whose purpose is to reinforce the DGOJ’s activity in the area of responsible gambling and to regulate the exchange of information between members subscribed to the Sports Betting Alert System (SIGMA).

At the regional level, the most relevant pending legislation in most autonomous regions is still the regulation on advertising and responsible gambling.

The regulatory authority for online gambling at the 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 the federal level, to:

  • issue federal licences;
  • draft regulation;
  • supervise games; and
  • supervise the enforcement and sanctioning of gambling activities.

The regulatory authority for regional gambling – both online and land-based – depends on each autonomous region. These authorities 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:

  • regulation at a federal level, which only refers to online gambling; and
  • regulation at a regional level, which includes both online and land-based gambling.

Online Gambling

Online gambling can be offered at a 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 a regional level.

The aim of the Gambling Act is to regulate all those modalities of games that take place at a federal level in order to protect public order, combat fraud, prevent addictive behaviour, protect minors and safeguard players’ rights, without affecting what is established in the regional regulations.

To offer online gambling in Spain at a federal level, entities must obtain a general licence for each category of game (betting, contest or other games) and a single licence for each type of game included in its general licence category.

Land-Based Gambling

The regulatory approach to 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.

There have been no significant changes to the licensing and regulatory framework in Spain over the past year.

Federal Level

At a federal level, the available licences are classified as follows.

  • General licence for betting, which covers the following single licences:
    1. pools on sports betting;
    2. pools on horse racing;
    3. fixed-odds sports betting;
    4. fixed-odds horse racing;
    5. other fixed-odds betting; and
    6. exchange betting.
  • General licence for contests, which also covers a single licence for contests.
  • General licence for other games, which covers the following single licences:
    1. poker;
    2. blackjack;
    3. bingo;
    4. slots;
    5. roulette;
    6. baccarat; and
    7. complementary games.

For example, an entity that wishes to commercialise bingo, baccarat and poker 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 they have already been granted and still hold the relevant general licence.

Regional Level

Each region has competence to establish its own licences and its own licensing procedure and regime.

There have been three public calls for general licences for online gambling at the federal level since the approval of the Spanish Gambling Act 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.

The processes for regional land-based licences 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 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 of the single licence as well.

Regional Level

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 operators (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.

  • It must be a corporate vehicle with minimum share capital and an exclusive corporate purpose.
  • There must be corporate documentation in order to accredit compliance with all the requirements – among these documents, both the regional and federal regulator requests the submission of an official public deed identifying the ultimate beneficial owner.
  • If the entity is not based in Spain, it must have a permanent representative in Spain.
  • It must be up to date with the Tax Agency and social security authorities.
  • To prove economic solvency, notwithstanding the submission of other documentation, the applicant must deposit an economic guarantee and provide annual accounts or other declarations in this regard.
  • Other documentation must also be submitted, such as an anti-money laundering (AML) policy, a business plan, agreements with providers and a fraud prevention manual.
  • Certain declarations must be signed by the directors and shareholders of the applicant entity (ie, that they have not been convicted of a criminal offence).

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 a federal level was opened for one year, with interested parties being 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 the licences.

Initially, the licences are granted with a provisional nature. To obtain definitive licences, operators must submit the definitive certification report of the technical systems to 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 the granting of the definitive licences within a maximum term of two months. Operators can start operating with the provisional licence.

The duration of regional licences depends on each regional regulation and, if applicable, on the conditions of the public tender process. Customarily, it takes between three and six months from the submission of the application for the regulator to review and proceed with the granting of the relevant licence.

For online gambling licence applications at a federal level, entities must pay the following administrative fees:

  • EUR10,615.20 for each general and single licence that the entity is applying for;
  • EUR2,653.81 for each general and single licence for the inscription in the General Registry of Gaming Licences; and
  • a one-off fee of EUR40,337.76 for the homologation of the licences by the DGOJ.

For regional licence applications, the cost depends on the region and the type of licence applied for.

For online gambling licences at a federal level, there is an annual fee of 0.075% of turnover, which operators need to pay by 31 January 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 in 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, in others it is 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.

  • Corporate form – some regions request a specific form for the corporate vehicle; the region of Madrid, for instance, requests the corporate form of an "SA" (equivalent to a standard plc) for casino licence applications, while in Catalonia there is no specification regarding the corporate form for casinos or gaming halls.
  • Minimum share capital – most of the regions require a minimum share capital for betting shops and casinos; for example, in Aragon or the Basque Country, the minimum share capital for a betting shop is EUR1 million.
  • Economic guarantees – these also vary by region and type of premises licence; for example, the bank guarantee for a casino in Catalonia is EUR601,012.10 and EUR60,000.00 for a gaming hall; in the Balearic Islands, the guarantee is EUR30,000 for a gaming hall and EUR1 million for betting shops; and in Madrid, the guarantee for a betting shop or a casino is EUR12 million.
  • Certification reports proving compliance with technical requirements.
  • Certificates and documents proving legal solvency (for instance, articles of association and deeds of incorporation of the company).
  • Certificates and documents proving economic solvency (for instance, annual accounts and certificates that prove the entity is up to date with the Tax Agency and the social security authorities).

The land-based gambling sector is still implementing certain changes, with the aim of reinforcing the protection of vulnerable individuals and tightening the regulation of gambling advertising. The main changes in this regard are as follows.

Gaming Establishment Entrance Controls

In recent years, a significant number of regions have implemented additional controls for access to betting shops and gaming halls (eg, Andalusia, the Balearic Islands, Cantabria, Extremadura, La Rioja and Madrid). This trend has been followed by numerous other regions during 2022, which have modified previous regulations in order to reinforce the measures for reception or admission to these establishments (eg, Navarra and Basque Country).

Distances Between Gambling Premises and Educational Centres

Most of the regions in Spain have already completed their regulations on approving minimum distances between gambling premises and educational centres. In this regard, in the region of Valencia, there must be 500 m between gaming halls, and 850 m between these and educational centres. In Andalusia, the distance between gaming halls and educational centres is 150 m, while the city of Barcelona has approved a minimum distance of 800 m between gaming establishments and educational centres.

The Galician draft law, which received the green light in September 2022, also includes updates in this sense, extending the minimum distance allowed between the premises themselves, as well as between them and educational centres and official rehabilitation centres for pathological gamblers from 150 m to 300 m. For its part, through the adoption of Decree 19/2022 of 20 April (which modified Law 6/2001, of 3 July), Madrid has also implemented measures in relation to premises located in the vicinity of educational establishments by establishing a minimum distance of 100 m, and a minimum distance of 300 m between the premises themselves.

In 2022, the distance has also been extended in other regions, such as Navarra, which has gone from the initial 100 m to a minimum radius of 400 m, and Basque Country and Cantabria, which have established a minimum distance of 500 m between establishments.

Currently, most of the regions have implemented legislative measures prohibiting or suspending the granting of new authorisations to open gambling halls or betting shops, including Madrid, Cantabria, Galicia, Castilla y Leon and Catalonia. Additionally, some regions have developed their regulations to approve procedures for authorisation to install physical accessory terminals that allow participation in online games licensed at a federal level in land-based premises.

Advertising

As a consequence of the approval of the Royal Decree on commercial communications for online gambling activities at a federal level, most of the regions in Spain announced their intent to proceed with the adaptation of their regulations to such Royal Decree. By way of example:

  • in the Basque Country, Decree 120/2016 has been amended through Decree 19/2022 of 8 February. Among the incorporated amendments, it should be noted that advertising and promotion via audiovisual media services can only be broadcast between midnight and 6am; and
  • in Galicia, the draft law that amends Law 14/1985 prohibits all advertising of gambling on Galician public radio and television; until the approval of the regulatory development, only advertising in the written press and of the basic aspects of the games will be allowed.

Notwithstanding the above, Valencia is still the region with the most restrictive regulation on gambling advertising and, as a result, any type of gambling advertising or promotional activities has 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 "gaming operator" states that an operator needs to obtain a licence in Spain if it:

  • wholly or partly runs a gambling activity and its income is linked to gross or net revenue, commissions and any other amounts related to gaming services; and
  • at the same time, performs any commercialising gambling activity, such as:
    1. determining the prizes for tournaments;
    2. managing players' rules, transactions and payment settlements; and
    3. managing the gaming platform or the registration of users.

Entities that meet the above requirements and 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 of "gaming operator". If a B2B operator meets the requirements established by the regulation, it is subject to licensing and, technically speaking, 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, such as 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 that are not owned by said operator or by the business group to which such operator belongs, to identify and differentiate itself from other operators.

Apart from this, and depending on the activity developed by the white-label operator (the one providing the look and feel), an entity may also fall under the definition of "gaming operator" and therefore also be subject to licensing.

The most relevant recent milestone is in relation to the Royal Decree on commercial communications for gambling activities approved in Spain on 4 November 2020 and the Spanish Supreme Court’s decision to raise the question of unconstitutionality before the Constitutional Court as it considers that the decree could possibly be contrary to the principle of legal reserve.

To be precise, although the new regulation entered into force the day after its approval in November 2020, it provided for a specific transition period for the entry into force of certain requirements, which finally entered into force in 2021. This regulation and the established requirements and restrictions are still 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 audiovisual media services (TV/radio) and some audiovisual commercial communications 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 the DGOJ has announced its intention to pass the expected Royal Decree regulating the development of safer gambling environments at the beginning of 2023.

So far, there have been three draft versions of this regulation. Its definitive version, which is experiencing a significant delay, is expected to be approved at the beginning of 2023, providing a specific transition period for the entry into force of certain new requirements that imply technical developments from the operator’s side.

Draft Law Regulating Customer Services

The Spanish Council of Ministers has approved the draft law regulating customer services, which is currently being processed in the Spanish Congress of Deputies. According to the current status of the legislative process of this draft law, it may be approved at the beginning of 2023, and enter into force six months after.

The purpose of this draft law is to regulate the minimum levels of quality and the evaluation of the customer services of companies that provide certain basic services of general interest and of large companies. In this regard, depending on the annual revenue and turnover generated, some online gambling operators would fall under its scope of application.

Draft Law to Amend the Spanish Gambling Act

There is a draft law currently under the parliamentary process that intends to amend the Spanish Gambling Act, with the aim of reinforcing the DGOJ’s activity in the area of responsible gambling and the protection of at-risk groups of players by evaluating the effectiveness of the responsible gambling measures developed by operators. It contains certain provisions concerning the exchange of information between members subscribed to SIGMA, which is responsible for preventing and combating fraud in the sports betting market and match fixing in these types of competitions.

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.

Somewhat related to the above, the last modification of the Spanish Gambling Act incorporated the following new types of infractions:

  • a minor infraction consisting of the participation from Spain, through the use of Spanish territorial IP address masking techniques, in gambling activities offered through websites other than those legally authorised by gambling operators with a licence in Spain; and
  • a serious infraction consisting of promoting or facilitating the participation from Spain in gambling activities through websites other than those legally authorised by gambling operators with a licence in Spain.

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, and some land-based operators apply additional responsible gambling measures in their businesses, at their own initiative.

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:

  • the information provided to players must be clear, precise and accurate;
  • customer service must be accessible for the claims of players;
  • online operators at the federal level shall facilitate a customer service hotline to provide specific mandatory information and assistance on responsible gambling;
  • operators need to provide information about the General Register of Gambling Access Bans (Registro General de Interdicciones de Acceso al Juego – RGIAJ) and, in the case of online gambling operators, need to offer the possibility for temporary self-exclusion from the gaming account;
  • operators must make a test of responsible gambling to evaluate potential issues with the gambling offering to players; and
  • operators need to provide information on organisations that provide assistance on gambling disorders and offer support in this regard throughout the national territory.

Gambling activity must be controlled. Examples of these requirements include the following.

  • Identification of participants – it is the responsibility of the operators to establish the systems and mechanisms that facilitate and allow the identification of the participants in the games. This is a measure applicable to online and land-based operators.
  • Deposit amount limits by default – limits on players’ deposits is a preventative measure for responsible gambling and a mandatory requirement for online operators licensed at the federal level, and is also applied in land-based businesses such as casinos. Despite these requirements, "by default limits" can be reduced by the participant at any time and be directly applicable; they can also be increased or removed (fulfilling certain conditions). The limits by default in online gambling are EUR600 daily, EUR1,500 weekly and EUR3,000 monthly.
  • Particular requirements for slot games – there is, for example, a minimum duration approved for the slot spin on land-based terminals (eg, five seconds in Madrid but three in the Basque Country and online).
  • The regulation applicable to online gambling at federal level establishes specific responsible gambling requirements for slots (players must set up the game at the beginning of each slot session, including a limit for the time and money to be spent) and in-play betting products (a special rule regarding the amounts to bet).
  • The regulation applicable to online gambling at the federal level also sets forth the obligation for operators to establish mechanisms and protocols that make it possible to detect risky behaviours in registered players.

As explained in 6.5 Recent or Forthcoming Changes, the definitive version of the Royal Decree on responsible gambling applicable to online gambling at the federal level is expected to be approved at the beginning of 2023.

The most significant proposed changes include a requirement of setting up the gaming session with spending and time limits. 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 – for example, 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.

Despite the upcoming new regulation on responsible gambling, the authorities have created different tools for operators and citizens in order to promote responsible gambling.

RGIAJ

Through an inscription in the RGIAJ, an individual is fully prohibited from accessing gambling activity (applicable to online and land-based gambling). The register is formed of the data of citizens that voluntarily do not wish to exercise their rights to gamble and of 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. 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.

Phishing Alert

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 who is registered with this service.

No specific AML guidance relevant to the gambling sector is available in Spain, nor has anything been published in this regard 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 28 April, on the prevention of money laundering and terrorist financing, and Federal Royal Decree 304/2014, of 5 May, developing the regulation of the Spanish AML Act.

The most recent change with regards to AML in Spain was the transposition into Spanish law of the Fifth AML Directive provisions (EU Directive 2018/843) through Royal Decree Law 7/2021, of 27 April, amending Law 10/2010, of 28 April, on the prevention of money laundering and terrorist financing, among other provisions, which was published in the Official Spanish Gazette on 28 April 2021 and entered into force the following day.

The main purpose of this Royal Decree Law is to adjust the national regulations to the Directive regulations. The modifications of Law 10/2010, of 28 April, 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 the instructions, proceedings and duties that online and land-based gambling operators need to apply for the prevention of money laundering.

The main requirements and obligations are as follows:

  • to approve a suitable manual for the prevention of money laundering and to keep it at the disposal of SEPBLAC;
  • to apply due diligence measures – according to the Spanish AML Act, when a customer is found to carry out transactions that amount to EUR2,000 or more, whether the transaction is carried out in a single operation or in several operations that appear to be linked, either when upon the collection of winnings, the wagering of a stake or both (for online gambling operators), or at the time of receiving gains or purchase or sale of gaming chips (for land-based operators), the operator should implement the corresponding due diligence measures (and not only ID verification of the customer), such as ongoing monitoring and investigation of the purpose and nature of the business relationship;
  • land-based casinos in particular must identify and verify documentarily the identity of the persons who intend to enter the establishment and keep records of the documentation gathered in this regard; casinos must also identify all persons who intend to perform the following transactions:
    1. the delivery of cheques to customers as a result of the exchange of chips;
    2. transfers of funds made by casinos at the request of customers; and
    3. the issue of certificates by casinos about the gains obtained by customers;
  • to keep records of the documentation gathered for compliance under the obligations under the Spanish AML Act for a period of ten years, after which the records should be eliminated; five years after the end of the business relationship with the customer, the documentation should only be accessible by the internal control bodies of the operator, including its technical prevention units and the individuals in charge of its legal defence;
  • to appoint a representative on behalf of the operator before SEPBLAC;
  • to establish an adequate internal compliance unit responsible for implementing the AML policies and procedures;
  • to report suspicious transactions and collaborate with SEPBLAC;
  • to approve an annual plan of training activities for employees, which must be approved by the internal control body; and
  • to submit to an 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 the federal level, the DGOJ supervises compliance with the applicable advertising rules by the gambling operators and sanctions them if they breach those regulations. For audiovisual 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).

Article 2 of General Advertising Law 34/1988 defines advertising 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".

Royal Decree 958/2020, of 3 November, on commercial communications for gambling activities defines commercial communications 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 into the following groups.

Operator Licensing

Gambling operators have to be duly licensed by the regulator in order to advertise their products. According to Article 7.1 of the Gambling Act, in order to carry out gaming activities on audiovisual programmes, news media or websites, gaming operators must have an authorisation (ie, the corresponding gambling licence). The same is true at regional level.

Advertising Providers' Requirement to Check Licensing

Any advertising third-party provider must confirm that its client (gambling operator) is duly licensed. According to Article 7.3 of the Gambling Act, any advertising entity or agency, audiovisual 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:

  • the promotion, sponsoring and advertising of games subject to this law, or intermediation actions, when the persons doing so do not have an authorisation or when these are distributed in breach of the conditions and limits set in the permit or in breach of the current rules in this regard, regardless of the medium used; and
  • the failure to fulfil requirements for information or cutting off the provision of services as required by the DGOJ and directed towards payment service providers, audiovisual communication service providers, information society services or electronic communication providers and social media.

Both infractions are qualified as serious infractions and are therefore subject to fines of between EUR100,000 and EUR1 million and to the suspension of activity in Spain for a maximum period of six months.

For land-based and online gambling at a regional level, the applicable sanctions are approved by each autonomous region.

Key Legislation

The current legislation applicable to the advertising of gambling operators – and their products – is as follows:

  • General Advertising Act 34/1988, dated 11 November;
  • Royal Decree 958/2020, dated 3 November, on commercial communications for gambling activities;
  • Unfair Competition Act 3/1991, dated 10 January;
  • Legislative Royal Decree 1/2007, dated 16 November, approving the recast text of the General Act for the Defence of the Consumers and Users and other complementary laws;
  • Information Society Services and Electronic Commerce Act 34/2002, dated 11 July;
  • General Audiovisual Communications Act 13/2022, dated 7 July;
  • Gambling Act 13/2011, dated 27 May;
  • regional gambling regulations for land-based and online gambling at a regional level; and
  • the Code of Conduct Regarding Commercial Communications of Gambling Activities issued by Autocontrol (the Association for Advertising Self-regulation), although this is only binding for companies that adhere to it.

Restrictions

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 seeking 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 4 November 2020, Royal Decree 958/2020, of 3 November, 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 for some relevant provisions, certain of the obligations and requirements entered into force in 2021.

The most relevant restrictions implemented by this Decree that shall be applied in the online gambling industry are:

  • the prohibition of sponsorship on shirts or sports equipment;
  • the limiting of commercial communications on audiovisual media services to the hours between 1am and 5am;
  • a prohibition on the advertising of gambling on the internet, except on websites dedicated to providing information on gambling activities or in a specific section on websites dedicated to providing information on sports events;
  • specific requirements for advertising on social media and affiliate platforms;
  • the prohibition of commercial communications with relevant or well-known public figures;
  • prohibitions on offering welcome bonuses and promotions to attract new customers;
  • specific conditions on offering promotions to existing customers (promotions can only be offered to customers who are registered with the operator for at least 30 days and who are documentarily verified);
  • restrictions on the commercial communications of promotional activities, which can only be addressed to existing customers, or appear in a separate section on the website or application from which the operator offers gambling activities, or be disseminated in the establishments accessible to the public of the operators designated for the commercialisation of lottery games; and
  • a requirement that free-to-play demo games must be linked to the operator’s platform and that operators will only be allowed to offer them to players who are previously registered and documentarily verified.

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 the federal level, Articles 40 d) and e) of the Gambling Act state the relevant applicable infractions, which are subject to the same sanctions:

  • a fine of EUR100,000 to EUR1 million; and
  • the suspension of activity in Spain for a maximum period of six months.

As expected, following its entry into force, the Royal Decree on commercial communications for gambling activities was challenged before the Spanish Supreme Court by high-presence stakeholders in Spain, particularly the Spanish Association on Online Gambling (Jdigital), the Information Media Association and the Football League. On 20 July 2022, the Spanish Supreme Court notified its decision to raise the question of unconstitutionality before the Constitutional Court, which consists on determining whether Article 7.2 of the Spanish Gambling Act (which states that the conditions and limits of gambling advertising activity shall be established by secondary regulations) would go against the principle of legal reserve set forth by Article 53.1 of the Spanish Constitution (under which the Spanish Constitution specifies that certain areas of the law may only be regulated by primary legislation in the Spanish Parliament), in conjunction with Article 38 of the Spanish Constitution about the free enterprise right.

The Constitutional Court will analyse and decide on the legality of Article 7.2 of the Spanish Gambling Act and, consequently, of the Royal Decree on commercial communications for gambling activities itself. It should be noted that the Constitutional Court is not likely to release its decision within the next two years, and the Supreme Court will not issue its final ruling about the Royal Decree on commercial communications for gambling activities until it does so.

In the meantime, the decree is fully applicable in Spain.

In addition, General Audiovisual Communications Act 7/2010, dated 31 March, has been derogated, and replaced by General Audiovisual Communications Act 13/2022, dated 7 July. Among other measures and restrictions, this regulation includes the limiting of commercial communications on audiovisual media services to the hours between 1am and 5am (which is one of the most relevant restrictions contemplated by the Royal Decree on commercial communications for gambling activities).

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 not only have to notify the regulator of 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, which 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 legally allowed not only 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 through 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. If these guarantees are not enough to cover a certain liability, the sanctions imposed by the regulator could be enforced through common civil remedies (the seizure of assets, goods, shares, deposits, etc).

Other types of sanctions, such as the suspension of 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.

In this regard, since Q2 2022, the DGOJ publishes 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.

There are no personal sanctions contained in the Spanish gambling regulations.

In July 2022, the Ministry of Consumer Affairs published the preliminary draft law regulating the random reward mechanisms (loot boxes product) associated with interactive entertainment software products. The most important provisions of this draft legislation are as follows.

  • It is forbidden for minors to access or activate loot boxes, and entities offering this product should implement a system of documentary verification of the identity of participants.
  • A specific legal regime is applicable to the advertising of loot boxes:
    1. commercial communications can only be placed on the websites and accounts of online social networks or video-sharing platforms and consist of offering information about the games regulated by the Spanish Gambling Act, or about this type of mechanism;
    2. commercial communications on audiovisual media services can only be broadcast between 1am and 5am; and
    3. commercial communications through face-to-face means are prohibited.
  • The entities offering loot boxes should implement:
    1. self-exclusion mechanisms;
    2. the possibility to limit the spending on these; and
    3. a requirement for setting up the session.
  • A specific sanctioning regime applies, with fines of up to EUR million.

This regulation is expected to enter into force in January 2024.

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 the federal level, subject to the Gambling Act, is 20% on GGR 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 the federal level is domiciled in Ceuta or Melilla.

The tax rate for online gambling at a 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:

  • 20% on GGR general tax rate;
  • 15% on GGR for bingo, and 30% on GGR for electronic bingo;
  • 10% on GGR for online games developed in the Madrid region; and
  • 13% on GGR for betting games and 10% on GGR for sports betting, horse racing and other betting games.

The tax rate applicable to land-based casinos depends on the tax base:

  • 22% if the tax base is less than EUR2 million;
  • 30% if the tax base is between EUR2 million and EUR8 million;
  • 35% if the tax base is between EUR8 million and EUR15 million; and
  • 40% if the tax base is more than EUR15 million.

In Andalusia, for instance, the applicable tax rates are as follows:

  • 15% if the tax base is less than EUR2 million;
  • 35% if the tax base is between EUR2 million and EUR3.5 million;
  • 48% if the tax base is between EUR3.5 million and EUR5 million; and
  • 58% if the tax base is more than EUR5 million.

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 depends on the applicable regulation, but the fee generally ranges from EUR3,000 to EUR4,000 per year for terminal type B/AWP and from EUR4,000 to EUR5,500 per year for terminal type C/casino machines.

In November 2019, the left-wing political parties won the general elections in Spain, and the DGOJ has come under the umbrella of the Ministry of Consumer Affairs since January 2020 (prior to this, it was under the Ministry of Finance). These facts together have led to a restrictive and interventionist trend in the gambling sector, and to high protection of consumers through the imposition of new rules and restrictions on licensed operators.

Taking into account that the government’s ideology has a significant impact on the gambling sector, the results of the next general elections, which will take place at the end of 2023, will definitely influence the upcoming interpretative approach and regulatory trend in Spain.

Asensi Abogados

Avenida Jaime III, 1
Primera Planta
07012
Palma de Mallorca
Islas Baleares
Spain

+34 971 90 92 19

+34 871 95 43 47

info@asensi.es www.asensi.es
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Trends and Developments


Authors



Asensi Abogados is a boutique law firm specialising in the gaming and gambling sector. It represents and advises a large number of international gaming companies with interests across the Spanish and Latin American markets. The firm works for the largest online betting and casino operators, software providers, skill games operators, affiliates and payment solution providers, as well as land-based operators, slot-machine manufacturers and suppliers. Asensi Abogados has offices in Madrid, Mallorca and Bogotá, and is part of the Spanish Digital Gaming Association (Jdigital). A team of two partners and nine associates operates in Spain, while the Colombian office is composed of one partner and three associates. Recent work carried out by the firm includes licensing procedures at the online and land-based levels, providing detailed advice on the practical application of the new regulatory developments for online operators in Spain and assisting international operators in relocating to Ceuta and Melilla, the Spanish gambling business-friendly jurisdictions.

Gaming Law in Spain: an Introduction

Over the past two years, certain developments have resulted in an evident change in the legislative and regulatory trends in the gaming sector. The legal framework applicable to the gambling sector has moved away from being attractive and competitive towards being restrictive, spurred by 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. This regulatory trend is crystallising restrictive policies and rules imposed on licensed gambling operators, and imposing limitations on lawful gambling activity in order to protect players.

In this vein, there are several recent and forthcoming developments to be highlighted in Spain, as summarised below.

Reinforcement of responsible gambling measures

The Spanish market has numerous measures and requirements through the gambling regulations that are aimed at ensuring a safe environment in the gambling industry. Following the opening up of the Spanish gambling market back in 2011, the regulations now contain responsible gambling measures, such as:

  • systems and mechanisms to facilitate and allow the identification of the participants in games;
  • deposit amount limits by default;
  • the possibility for players to register with the General Register of Gambling Access Bans or request a self-exclusion from the gambling operator’s platform; and
  • specific responsible gambling requirements addressing in-play betting gambling products or slots games.

However, despite these measures and requirements being put in place, and despite the fact that statistics indicate that they have been diligently applied by operators, the Spanish regulator still deems it necessary to reinforce the current responsible gambling standards in order to complete the gambling legal framework. In this regard, a regulatory process for the approval of the Royal Decree regulating the development of safer gambling environments for online gambling operators has been ongoing since mid-2021.

Although this Royal Decree was expected to be approved in March 2022 and enter into force in July 2022, the process has been significantly delayed and nothing has yet been approved. According to the latest information and updates from the Spanish regulator, the upcoming regulation is expected to be approved at the beginning of 2023.

As was the case with the approval of the Royal Decree on commercial communications for gambling activities, the adoption of this new Royal Decree will also crystallise the current restrictive trend in Spanish regulation, especially since the General Directorate for Gambling Regulation (Dirección General de Ordenación del Juego – DGOJ) moved from the Ministry of Finance to the Ministry of Consumer Affairs.

Needless to say, the main purpose of this regulation is to protect players and prevent addictive behaviour. Due to the significantly restrictive nature of the forthcoming Royal Decree, it is likely that some of the measures envisaged therein may not have the expected effect and may be counterproductive or disproportionate to the aim of the Royal Decree. In this sense, some of the provisions contained in this regulation could lead to the overexposure of players to responsible gambling messages and the imposition of severe responsible gambling restrictions on them, making for a poor and unattractive gambling experience that could unfortunately result in players fleeing to the illegal market.

The Royal Decree contains new definitions, such as players with "intensive gambling behaviour" (ie, 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), which reflects its aim of categorising different types of players and attributing a set of specific measures to each category. For instance, 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.

The regulation also states that, during the gaming session, players shall receive periodic information messages at least once every 60 minutes, which they must read in order to be able to continue playing. The first draft of the Royal Decree envisaged that these messages would appear every 30 minutes and there are concerns that the extension to 60 minutes could be excessive, causing players not to pay due attention to the messages.

One of the most significant measures included in the upcoming Royal Decree is the application of a requirement to set up the gaming session with spending and time limits for all gambling products under the general licence for other games, except for tournament poker (the requirement is already in place for slots games). According to several studies, slots games are more likely to cause addiction than other types of games, justifying differing treatment of slots games and other gambling products such as roulette, bingo or blackjack. Therefore, the extension of the scope of application of this requirement to most gambling products could be harmful to the players’ gambling experience and could also reduce the competitiveness of the Spanish gambling market.

To cut a long story short, the reinforcement of the current responsible measures together with the recent gambling advertising-related restrictions applicable to online gambling operators, such as the prohibition of welcome bonuses, could result in a non-attractive journey for players, disincentivising their registration with Spanish licensed online gambling operators.

Restrictions and limits to protect minors and public interest are indeed necessary; however, these must be adequate, proportional to the actual problem and well-balanced in order to achieve the intended objective.

Reinforcement of the regulator’s supervisory faculties

In the same vein of reinforcing the current responsible gambling framework, the Spanish Parliament has been formulating another regulation since 2021, which will slightly modify the Spanish Gambling Act by intensifying the DGOJ’s supervisory powers – specifically providing a new power to assess the effectiveness of those responsible or safer gambling measures implemented by gambling operators aimed at protecting vulnerable groups of players.

Taking into account that this supervisory power is already outlined in the current regulations, at least implicitly, the fact that the Ministry of Consumer Affairs is interested in expressly including such specific provision in the Spanish Gambling Act, together with the recent incorporation of a new type of infraction in the sanctioning regime ("the breach of the responsible gambling requirements and player protection obligations provided for in the legislation in force"), again reflects the prevailing trend in Spain for an over-regulated market with excessive protection of consumers through the imposition of new rules and restrictions on licensed operators.

Moreover, in practical terms, the new measures and restrictions could have a direct impact on licensed operators in Spain, with concrete actions and sanctioning from the DGOJ focused especially on the legal market. This would be duly supported if the Spanish gambling market was considered an uncompliant market. However, according to the Spanish regulator himself, "the Spanish market has been very diligent in complying with the current regulations".

Forthcoming or potential legislative modifications

In addition to the upcoming Royal Decree regulating the development of safer gambling environments and the forthcoming slight modifications of the Spanish Gambling Act, there has been recent discussion in Spain of the regulation of the loot boxes product. In July 2022, the Ministry of Consumer Affairs published the preliminary draft law regulating the random reward mechanisms (loot boxes product) associated with interactive entertainment software products. This regulation is expected to enter into force in January 2024 (a transitory period of 12 months is expected in order to adapt the current random reward mechanisms).

Considering that this product, which is traditional in video games, does not fall under the concept of gambling in Spain and that the regulation even prevents online gambling operators from offering these random reward mechanisms, it is somewhat surprising that there is a specific legal regime applicable to the advertising of such random reward mechanisms, with severe restrictions quite similar to those applicable to online gambling operators, including:

  • commercial communications of random reward mechanisms can only be placed on websites and accounts or channels of online social networks or video-sharing platforms whose main activity consists of offering information or content about the games regulated by the Spanish Gambling Act, or about this type of mechanism;
  • commercial communications of random reward mechanisms on audiovisual media services can only be broadcast between 1am and 5am; and
  • commercial communications of random reward mechanisms through face-to-face means are prohibited.

On a separate note, the Regulatory Impact Analysis of the draft law that will slightly amend the Spanish Gambling Act anticipates that the Ministry of Consumer Affairs intends to make an in-depth modification of the Spanish Gambling Act in 2023. There are no further developments in this regard so far.

Gambling advertising: Royal Decree 958/2020, of 3 November, on commercial communications for gambling activities assessed by Supreme Court

The Royal Decree on commercial communications for gambling activities changed the rules of the game as far as gambling advertising is concerned, introducing a very restrictive regulatory framework for the advertisement of online licensed gambling operators in Spain.

Some months after the approval of this regulation, in January 2021, the Royal Decree was challenged before the Spanish Supreme Court by the Spanish Association on Online Gambling (Jdigital), the Information Media Association and the Football League, which argued that the restrictions contained in the regulation cannot be implemented by a Royal Decree (with no legal rank) but instead by a law.

At the end of May 2022, the Supreme Court issued a court order that suspended the term for the delivery of its judgment in relation to the Royal Decree, and granted a term of ten days to the parties and the Spanish Public Prosecutor to submit comments on the possible raising of a question of unconstitutionality before the Spanish Constitutional Court, which is a control mechanism used by a judge or court when it considers that a regulation with the rank of law on whose validity the ruling depends may be contrary to the Constitution.

In this particular case, the question of unconstitutionality would revolve around whether Article 7.2 of the Spanish Gambling Act (the conditions and limits of gambling advertising activity shall be established by secondary regulations, such as a Royal Decree) could go against the principle of legal reserve set forth by the Constitution (under which the Constitution specifies that certain areas of the law may only be regulated by primary legislation in the Spanish Parliament), in conjunction with the free enterprise constitutional right.

As expected, about two months later, by the end of July 2022, the Supreme Court notified its decision to raise such question of unconstitutionality before the Constitutional Court in order for it to analyse and decide on the legality of Article 7.2 of the Spanish Gambling Act and, consequently, of the Royal Decree. It should be noted that the Constitutional Court is not likely to release its decision within the next two years, and the Supreme Court will not issue its final ruling about the Royal Decree until it does so.

Even if the Constitutional Court declares Article 7.2 of the Spanish Gambling Act unconstitutional, thereby leading to the nullity of the Royal Decree, one of the most relevant restrictions contemplated by the Royal Decree (the limiting of commercial communications on audiovisual media services to the hours between 1am and 5am) would still be in place, since the recent General Audiovisual Communications Act 13/2022, dated 7 July, already contains this restriction; the potential nullity of the Royal Decree would have no impact on this requirement, but it may have a relevant impact on the remaining requirements and on the fines and sanctions that have been imposed on operators by the DGOJ.

In the meantime, the Royal Decree is fully effective and applicable in Spain, and the restrictive nature of its provisions, rather than contributing to the reduction of compulsive gambling as intended, is still leading to the emergence of illegal gambling operators, who are taking advantage of the current situation to enter the Spanish market.

Rise in fraudulent players

The trend of players using unlawful automated tools systems, such as boots, to cheat online gambling operators is increasing significantly. The gambling industry needs measures and actions to fix and reduce this big challenge for the sector. The gambling regulations need to be amended in order to protect gambling operators against fraudulent players and provide a more balanced legal framework for all parties.

Asensi Abogados

Avenida Jaime III, 1
Primera Planta
07012
Palma de Mallorca
Islas Baleares
Spain

+34 971 90 92 19

+34 871 95 43 47

info@asensi.es www.asensi.es
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Law and Practice

Authors



Asensi Abogados is a boutique law firm specialising in the gaming and gambling sector. It represents and advises a large number of international gaming companies with interests across the Spanish and Latin American markets. The firm works for the largest online betting and casino operators, software providers, skill games operators, affiliates and payment solution providers, as well as land-based operators, slot-machine manufacturers and suppliers. Asensi Abogados has offices in Madrid, Mallorca and Bogotá, and is part of the Spanish Digital Gaming Association (Jdigital). A team of two partners and nine associates operates in Spain, while the Colombian office is composed of one partner and three associates. Recent work carried out by the firm includes licensing procedures at the online and land-based levels, providing detailed advice on the practical application of the new regulatory developments for online operators in Spain and assisting international operators in relocating to Ceuta and Melilla, the Spanish gambling business-friendly jurisdictions.

Trends and Development

Authors



Asensi Abogados is a boutique law firm specialising in the gaming and gambling sector. It represents and advises a large number of international gaming companies with interests across the Spanish and Latin American markets. The firm works for the largest online betting and casino operators, software providers, skill games operators, affiliates and payment solution providers, as well as land-based operators, slot-machine manufacturers and suppliers. Asensi Abogados has offices in Madrid, Mallorca and Bogotá, and is part of the Spanish Digital Gaming Association (Jdigital). A team of two partners and nine associates operates in Spain, while the Colombian office is composed of one partner and three associates. Recent work carried out by the firm includes licensing procedures at the online and land-based levels, providing detailed advice on the practical application of the new regulatory developments for online operators in Spain and assisting international operators in relocating to Ceuta and Melilla, the Spanish gambling business-friendly jurisdictions.

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