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Regulatory Framework Relating to Remote Gambling – Spain
- 1. Legislative Background
Main Acts governing Gaming in Spain are:
- Organic Law 7/1982, of July 13 and Law 46/1985, of December 27:
Defines games and bets as a type of ‘smuggling’ (even if they are operated from abroad) when done without the obligatory authorisation of the administrative competent body.
Organic Law 12/1995 of December 12:
‘The sale, import, traffic and production of tickets, stamps or any other support of lotteries, bets and other games organised or emitted by foreign persons or entities is forbidden on Spanish territory.’
Organic Law 42/2006 of Dec. 28, 2006:
Considers ‘the circulation, trade, possession or production of notes, coupons, stamps, cards, receipts, machines or any other item, even technical or I.T. material, constituting a support in the practice of games of chance, draws, lotteries, betting and football pools’ to be a contraband offence.
Case-Law:
Catalan authorities say that the activities Miapuesta (Spanish arm of Sportingbet) carries out are illegal, mainly because of the fact that Miapuesta is mostly operated physically from Spain without any authorisation.
- 2. Sections within the legislation pertaining to ‘Advertising’:
Annual budget of the year 2007, in its Final Disposition 19:
In line with the above prohibition, the advertising of any type of these kind of online activities is clearly forbidden, when those games lack the obligatory administrative authorisation.
Operators have to suspend the above mentioned publishing in the period of 6 months counted from the notification by which the unlawfulness of the above mentioned activities is indicated.
Once that period of time is up and the activity has not ceased, operators will be subject to the penalties under Law 34/1987.
Case-Law
September 5, 2007, Acencas sued Real Madrid, Seville and MiApuesta in the Courts of Barcelona:
The claim highlighted the advertising of betting houses and online casinos on the clubs’ shirts and the permanent non-compliance with laws relating to the protection of minors, as replica shirts with gaming advertisements are being sold to children.
Conclusion Under Present Law
In order to advertise without committing an offence, the client must obtain a regional licence. Licences are valid for five years and will be renewable for a further five years, pending the success of the licencing agreement.
Victor Chandler (who is based in Gibraltar), in August 2009 was the first British bookmaker to obtain such a licence. The licence relates to the Madrid Region.
Experts have commented that the legislative technique used to define these actions as a contraband offence is unusual and deficient. However, as a result of this legislation, only operators with authorisations granted by the different autonomous communities governing the sector who comply with locally-binding regulations can be considered exempt from prosecution for contraband offences.
In reality a number of large gambling companies based outside of Spain currently operate within Spain without prosecution[1].
Further Analysis:
- 3. Proposals for Future Law and Developments
Article 149.1 of the Spanish Constitution:
Does not grant the Spanish State jurisdiction over the activities of casinos, gambling and betting. I.e. gambling jurisdiction is left to the 17 autonomous regions.
However,
Provision number 20 of Law 24/2001, dated December 27:
Related to tax, administrative and social rights, must also be considered in relation to betting. It stipulates that the Spanish State will be competent for any betting that exceeds the territory of an autonomous region, including bets which are made via electronic means;
And;
Law 56/2007 dated December:
The Central Spanish Government will have to regulate all online gaming and betting activities in Spain. This law sets out a list of principles which will need to be followed in the drafting of such new regulations.
Does not establish a deadline for the new regulations to be introduced and it is not clear if the directions now approved will necessarily be followed.
According to Gonzalo Fernandez Rodriguez, director general of the Lotteries and Betting Estado (LAE), the rates of gambling taxes and distribution terms are not expected to be formulated conclusively in the immediate future but expects the regulation to be in place before 2012.
Case-Law - Spanish Constitutional Court in its rulings 204/2002 of 31 October and 171/1998 of 23 July:
- State jurisdiction may overrule the regional jurisdiction for any type of gambling or betting activities that exceed the territory of the region.
Madrid, Castilla y León and La Rioja have already signaled their intent to issue local licences for online gaming. Ceuta also submitted a formal gaming decree to the European Commission in January 2010.
January 2010 Update:
In January 2010, the government met with representatives of the 17 autonomous communities in order to provide them with a broad scope of the regulation and policies that will be incorporated in the future online regulation. The document that was provided in that meeting has not been made public. However, according to the Spanish newspaper El Mundo, the government is looking to have a first draft of the online bill ready for the summer of 2010.
According to El Mundo, the documentation provided by government officials explained that the future bill will contain the following policies and measures:
Licencing and advertisement: Following the principles established by the LISI, online operators will need to be licenced in Spain and unlicenced operators will be prosecuted. Only licenced operators will be able to advertise. Licences will be granted by a new regulatory body that will be created by the federal government. Operators will also need to request further authorisations from the autonomous communities where they operate. Operators will need to request a licence for each game they operate.
Licence requirements: Operators will need to be incorporated in Spain or in the EU and they will need a permanent establishment in Spain. They will also need to provide financial guarantees. The server that controls the games will need to be connected to the regulatory body for its supervision.
Sanctions: The organisation and promotion of illegal gaming activities will be considered a major infraction. The manipulation of the game results and the advertisement of illegal gambling activities will also be considered a major offense.
According to El Mundo, the report does not mention anything related to the taxation of the games and the distribution of the tax revenues between the federal government and the autonomous communities. Obtaining a consensus in such politically-sensitive issues could prove essential for the survival of the future bill.
General principle:
It is not clear which entity is in charge of supervising and controlling online gambling at a national level as there is no regulation dealing with such matter. Until the Central Government decides to regulate under the directions of Law 56/2007, regional legislation within the 17 autonomous regions shall apply to online gambling[2].
4. Gambling Tax
The Madrid regional government recently enacted regulations to set remote gaming tax at 10 percent of gross gaming revenues. The tax level for other regions is unclear.
- 5. Potential Obstacles
It is conceivable whereby all 17 Spanish regions enact their own unique set of remote gaming rules. This would represent a huge headache for operators, creating the possibility of companies requiring 17 licencees on top of a raft of overlapping regulatory and tax obligations.
Alexandre Rotenberg & Simon Dehaney LLB, LPC
[1] The name of ‘Bwin.com’ appears each week on the shirts of Real Madrid’s ‘Galácticos’.
[2] Unlike the communities of Madrid and the Basque Country, Andalusia has not regulated the possibility of offering gaming through the internet. However, recently the Consejo de Gobernacion has enacted a new Game Catalogue including some interactive forms of gaming such as electronic sport betting within the list of permitted games. However, before this activity can be operated legally, it will need to be regulated specifically by the Consejo de Gobernacion.
Alexandre Rotenberg & Simon Dehaney LLB LPC
