GAMING & GAMBLING: An Introduction to Global Market Leaders

Significant News on Gambling Advertising 

In April 2024, a significant change took place in Spain regarding gambling advertising. As it is widely known, the Royal Decree on commercial communications for gambling activities, introduced in Spain in 2020, is one of the most restrictive regulatory frameworks among European jurisdictions regarding the advertisement of online licenced gambling operators.

Due to the impact of this Royal Decree, particularly its implications and its questionable validity from a legal point of view, it was challenged at the beginning of 2021 before the highest Spanish judicial authority (the Supreme Court) by several stakeholders, among them, the Spanish Association on Online Gambling (Jdigital).

After more than three, long years of waiting, the Supreme Court finally issued its ruling about this matter, partially granting the appeal filed by Jdigital and, to make the long story short, this judicial body declared void key restrictions foreseen by this regulation, basing its decision on the lack of legal coverage and proportionality with the free enterprise right of such limitations.

In light of the above, it is important for operators to take into account the practical consequences that this ruling will imply once it is published in the Spanish Official Gazette and, therefore, enters into force. Many of them can be found below:

• Welcome bonuses are allowed.

• There are no specific requirements for the offering of promotions to customers.

• The restrictions on the advertising of promotional activities are not in place anymore, which means that, for instance, operators are allowed to advertise bonuses on TV from 1am to 5am.

• The prohibition of advertising with famous or publicly notorious individuals is voided and, therefore, operators can advertise their products or their brand using well-known people/celebrities.

• The general prohibition on the display of commercial communications on the internet has been annulled, meaning that there are no regulatory limits on the specific channels where advertising is allowed. Therefore, advertising on internet is permitted, advertising bonuses on the internet is allowed or, for example, link building actions and SEO/SEM positioning are also allowed.

• Following this ruling, the requirements as to the advertising of gambling operators or products on the accounts or channels on social networks and video-sharing platforms do not apply anymore. However, it should be highlighted that, although such restrictions on video-sharing platforms are voided, the General Audiovisual Communication Act already refers to this restriction, since it foresees that audiovisual commercial communications on video-sharing platforms can only be included in accounts/channels whose main activity consists of offering information or content on gaming activities, so this requirement would remain in place.

• The targeting rules for addressing the advertising to specific individuals in social media has been annulled, meaning that there is no restriction in this sense.

To sum up, although there are significant restrictions that are still applicable, such as the restriction on the sponsorships activities, or the 1am to 5am time restriction for advertising on TV, radio and certain gambling advertisements on video sharing platforms, the Supreme Court’s ruling was hailed by the industry as a victory, providing a great opportunity to increase the visibility of the gambling sector in Spain.

Conversely, upon the reception of the ruling by the Ministry of Social Rights, Consumer Affairs and Agenda 2030 and, specifically, by the General Directorate for Gambling Regulation, all the alarms went off. Indeed, one week after the verdict, the Spanish regulator publicly stated that they were going to take further action to restore the legal validity of the limitations declared voided by incorporating them into the Spanish Gambling Act.

Basically, the purpose of the regulator is to elevate the advertising-related restrictions to a regulation with rank of law (previously foreseen in a secondary regulation) and, in this manner, to sort the issue of lack of legal coverage out highlighted by the Supreme Court. In this regard, it should be borne in mind that the legislative process for the modification of a law is a complex procedure, so we understand that in the short term there would be no new developments in this regard.

Anyhow, in our opinion, this remedy would not be enough from a legal perspective, since many of the annulled provisions were declared void due to their lack of proportionality with the free enterprise right, so we understand that the content of such limitations would also need to be reconsidered and redrafted.

Notwithstanding the above, we can say that the scales of justice have fallen in favour of the gambling sector, changing the rules of the game in Spain, since during the last few years the restrictive regime in our country, particularly, the applicable legal framework to advertising, made the gambling sector an unattractive market for potential investors and stakeholders.

Therefore, at least until the advertising-related restrictions are restored, gambling operators will be able to advertise their products and their brand much more freely than they have been able to do so far, which is very good news for the industry.

Within the law firm, we are witnessing a growing interest of our clients in marketing-related matters, resulting in the reactivation of advertising campaigns on which we are giving our legal advice and support.

Additionally, moving to other regulated markets that are under constrictive regulatory frameworks in terms of gambling-related advertising, we are optimistic that this Court’s ruling would be a trigger for more flexible and proportional regimes to be achieved.

Current Scenario of the Spanish Market 

Having explained the important new development in terms of advertising for the sector, we consider it important for potential clients to take into account the current situation in Spain with regard to obtaining online gambling licences at federal level.

Well, Spain follows a multi-licensing model, like the majority of European countries, and the general licences must be obtained through a public tender. By way of context, there have been three public calls in order to apply for these licences; in 2011, 2014 and 2017.

Although, according to the regulations, any interested party may request a new call for general licences, in practical terms, the opening of a public tender in the near future is not on the regulator’s agenda.

In addition, the Spanish regulations prohibit the transfer of licences, except if such transfer results from an intragroup corporate reorganization of the gambling operator’s company.

However, it is worth mentioning that it has become a common practice in Spain – and accepted by the regulator – to proceed with the purchase of licences through the sale of the licenced entity’s shares, since the transfer of the shares of a company holding gambling licences is allowed and this type of transaction does only imply a change in the ownership structure of the licenced operator.

According to the above and taking into consideration the recent good news on gambling advertising, in our opinion, the current ecosystem has become breeding grounds and a good opportunity for potential investors that are interested in going ahead with their projects to operate in Spain.