The legal aspects of the new Spanish online gaming market
THE Spanish Gaming Regulator granted 277 gaming licences on June 1, 2012, distributed among 54 companies. Some of these companies started providing their services on the next day after receiving their licences. Some others started later and the rest are still working on their platforms in order to start their operations. In any case, we can already see a considerable amount of publicity of gaming operators on TV, radio, newspaper and the internet.
The strategy for each one of these companies differs, some offering all products, other focusing on betting, some on casino games and a few others on competitions (a particular type of licence for the organisation of “call TV” contests and similar games).
These companies include international online gaming groups such as Bwin, Betfair, 888, Ladbrokes; Spanish terrestrial gaming companies such as Cirsa, Codere, Comar, Casino Barcelona and some Spanish media groups; and new entrants such as Antena 3, Unidad Editorial, Suertia Interactiva, Winga and others. It also includes the Spanish state company Loterías y Apuestas del Estado.
At the moment, all these companies are undertaking the final steps for the technical homologation of their gaming platforms, which needs to be finalised by the end of September. Failure to complete such homologation would suppose a revocation of the licence.
Some issues are still pending in the Spanish gaming market, such as additional regulations and a close monitoring and guidance by the SGR; however, operators have a reasonably clear framework to start their business. From a commercial point of view, they should put their efforts in rapidly understanding and making the best out of this framework. In this article we would like to provide and in-depth overview of such a Spanish gaming legal framework. SPANISH LICENSING SYSTEM
The law foresees three main categories of licences: general licence, singular licence and authorisation.
• General licences: The deadline for filing the application for these licences expired last December 14. A new licensing procedure could be opened at any time by the government; however, this is currently not expected. Operators could also request for a new licensing procedure to be opened; however, this process would take around two years.
These licences can authorise operators to offer those games classified within the categories of lotteries, bets, raffles, contests and other games. The general licences just granted are for the activities of bets, contests and other games. The licences for lotteries are reserved to the national lottery operators (SELAE and ONCE). Those for raffles were excluded from this first licensing process.
• Singular licences: These can only be obtained by those operators who have previously obtained the corresponding general licence above. Therefore, those operators who missed the opportunity of applying for the general licences above will now not be able to apply for any singular licence either. On the other hand, operators holding a general licence will be able to apply for singular licences at any time in the future (the deadline of December 14, 2011 was only in relation to general licences).
Each singular licence must be granted under the umbrella of a general licence.
There are 12 types of singular licences and each one corresponds to a particular game. The government passed one specific order regulating each type of game. Such orders regulate where and how these games can be offered, maximum amounts to be deposited and/or waged, customer rights, publicity allowed, etc.
It is important to note that fixed odds sports betting exchanges and slots have not been allowed in Spain; however, these may be approved in the near future.
• Authorisations: These are for occasional and sporadic gambling activities; however, the regulations do not yet describe which type of games will be included in this category. These could be applied for at any time and by any company. No authorisations have yet been granted and, as far as we know, no applications have yet been filed for these authorisations.
TAX REGIME
The gaming tax varies depending on each type of game.
Operators who organise and develop gaming activities are subject to the payment of the gambling taxes. The law states that other entities may be held jointly responsible for the payment of taxes in case they have not duly checked that the gaming operator with whom they work holds the relevant licence. These jointly responsible entities can be the owners of the infrastructures, information service providers, those who offer gambling activities to Spanish residents and those who obtain profits from the gambling activities.
This shows that not only the operator will be held accountable and that any other company contracting with the operator must ensure that the operator holds the appropriate gaming licence.
It shall also be noted that an annual tax of 0.001 per cent on the gross income of the operator will have to be paid by all operators in the market.
ADVERTISING AND SPONSORING
Gambling licences granted in other countries are not valid to offer, advertise or promote games in Spain. The advertisement, promotion and sponsorship concerning gambling activities shall be permitted, but only when these refer to gambling activities duly licensed in Spain. Advertising gambling or betting activities from operators which do not hold the corresponding licence is an illegal activity in Spain, subject to heavy fines which may be imposed by the SGR.
Media channels, advertising agencies, or internet website editors are made responsible for ensuring and checking, before publishing any advertisement or promotion, that the operator/advertiser is duly licensed and that such particular advertising is allowed in the frame of the operator’s licence. Such prior check shall be done by means of the registry of licensed operators maintained by the SGR. In any case, if these media entities would take publicity from non-licensed operators they would also be responsible.
Additionally, these media entities may be formally requested by the SGR to stop the insertion of an illegal ad with two days’ prior notice. If such a deadline is not complied with, again, the media entity could be fined.
The new law provides a wide definition of the persons or entities that could be liable, which comprises “any person or entity that performs any of the breaches provided by the law, as well as any other that gives them support, advertise or promote them, or in any way obtain profit from them.”
The following are examples of gross breaches in the law, punishable with fines from €100,000 to €1m and suspension of the activity for up to six months:
- To promote, sponsor or advertise games, or provide any intermediation service, when those offering the games lack the corresponding licence, or when the games are advertised breaching the conditions and restrictions set out in the licence or in the regulations, whatever media or channel is used for the advertising. - Failure to comply with information or termination requirements issued by the SGR.
A media owner and/or the advertising agency could be liable for these type of infringements, jointly with the gambling operator.
In my opinion, the SGR and other Spanish authorities will be very strict in chasing any illegal gaming activity and any illegal advertising. The Spanish government cannot afford that gaming and betting continues as in the past years with foreign operators offering their games to Spanish residents without holding any licence in Spain and without paying any taxes in the country.
PUNISHING REGIME
First of all, it is important to note that the punishing regime set out in the law has already entered into force. The law foresees gaming operators, as well as any other company which offers them support, publicity, promotion or which obtains profits from the illegal gaming activities, to be responsible for any breach of the law. This is a very wide definition, which may include any company which directly or indirectly participates in any way in the illegal gaming activity.
The SGR has powers to start the relevant punishing procedures and impose the corresponding fines. Other public bodies, such as the media and TV regulator and bodies from the autonomous regions, may also be competent depending on the type of breach.
Those infringements classified as light infringements may be punished with a fine of up to €100,000. Those classified as gross infringements may be punished with a fine going from €100,000 to €1m and/or the suspension of the gaming activity for a six-month period. Finally, those considered as very gross infringements may be punished with fines going from €1m to €50m and/or the loss of the licence and the closure of any gaming activity.
It is expected that the SGR will act with forcefulness against any operator, media company or intermediary who benefits from its participation in any type of illegal game. It should be noted that any type of gambling activity not under the umbrella of a Spanish licence shall be illegal in Spain.
The author can be contacted at [email protected]
This feature can be read in the Autumn issue of European Gaming Lawyer magazine.
