GAMING & GAMBLING: An Introduction to Global Market Leaders

2024 has been a year marked by significant developments. Alongside regulatory changes and forthcoming updates, we will analyse recent trends in the Spanish online gambling market.

Hot Topics 2024

As anticipated, several recent and upcoming developments in Spain are noteworthy, with the most impactful outlined here.

Significant news on gambling advertising

In April 2024, the Spanish Supreme Court issued its ruling 527/2024, partially granting the appeal filed by the Spanish Association on Online Gambling (“Jdigital”) against the Royal Decree on commercial communications for gambling activities. To cut a long story short, this judicial body declared void key restrictions foreseen by this regulation, basing its decision on the lack of legal coverage and on proportionality with the free enterprise right.

As a result, the gambling advertising framework has been relaxed, resulting in several key implications:

• Welcome bonuses are allowed.
• There are no specific requirements governing the offering of promotions to customers.
• The restrictions on the advertising of promotional activities have been lifted.
• The prohibition of advertising with famous individuals is voided.
• The general prohibition on the display of commercial communications on the internet has been annulled.
• The requirements for advertising gambling on social networks and video-sharing platforms have been removed. However, despite lifting these restrictions, the General Audiovisual Communication Act still regulates gambling-related audiovisual commercial communications on video-sharing platforms ‒ meaning this requirement effectively remains in place.
• The targeting rules for aiming the advertising at specific individuals on social media has been annulled.

In summary, despite the fact that there are still restrictions on sponsorships and still limited advertising hours for TV, radio, and certain advertisements on video-sharing platforms (1am to 5am), the Supreme Court’s ruling has been welcomed by the industry as a positive step towards improving the gambling sector’s visibility in Spain.

It was not all good news, however. By the end of September 2024, Left-wing parties proposed to reinstate the provisions that were nullified, by incorporating them into the Spanish Gambling Act through the Draft Law that seeks to modify the General Law on Public Health ‒ which has absolutely nothing to do with gambling nor advertising.

Positively, the proposed amendments do not include an absolute ban on welcome bonuses. Anyhow, in our view, this remedy is legally insufficient ‒ given that many of the annulled provisions were invalidated owing to their disproportionate impact on the free enterprise right. Therefore, although this does not seem to be the legislator’s intention, the content of such limitations would need to be reconsidered and redrafted.

Notwithstanding the foregoing, given the complexity of the legislative process for amending a law, further developments are unlikely in the short term.

Upcoming joint deposit limits regime

One of this 2024’s hot topics has been the system of joint deposit limits that is going to be incorporated in Spain and is scheduled for publication in the Spanish Official Gazette in 2025, with a one-year adaptation period for operators.

By way of background, the Directorate General for the Regulation of Gambling (Dirección General de Ordenación del Juego, or DGOJ) has proposed a framework that introduces an aggregate deposit limit for individual users across multiple operators’ accounts, designed to work independently yet complement existing deposit controls by each operator.

From our perspective and experience, applying such interventionist measures to control users’ gambling behaviour may lead to players becoming disenchanted with regulated gambling options, driving them towards less restrictive alternatives offered by unlicensed or illegal operators.

Current Dynamics and Trends in the Spanish Online Gambling Market

As is widely known, the Spanish online gambling market remains closed, with no imminent plans for public tenders to apply for the mandatory general licences required to operate.

In this regard, even though the transfer of licences is prohibited in Spain (unless such assignment results from a corporate restructuring of the operator’s entity), it has become common practice to effectively transfer licences by purchasing the shares of a company that already holds a gambling licence. This approach is permissible under Spanish law, as it is considered a change in the company’s ownership structure rather than a transfer of the licence. Indeed, this practice has received endorsement from the Spanish regulator. Thus, licences can be obtained if a licensed company is available for sale.

Challenges and opportunities in the Spanish market

After more than 13 years on the road, it goes without saying that the regulated online gambling sector in Spain has become a stable, professional market with strong growth potential. We have witnessed how licensed operators have successfully adapted to numerous regulatory restrictions during recent years, supported by skilled teams to ensure compliance. Operators must deal with a multitude of requirements on a daily basis, ranging from adapting procedures and policies to meeting reporting obligations, certifying products, updating economic guarantees, and handling taxes and levies.

In our opinion, the foregoing ‒ together with the restrictive tendency adopted by the regulator in recent years ‒ must be compensated in some way. In other words, being a duly licensed operator in Spain should have more advantages than disadvantages.

As if the above were not enough, technological advancements have outpaced Spain’s 13-year-old online gambling regulations, which are now partially outdated. This widening gap has led to significant regulatory shortcomings, causing frustration within the industry.

In this line, it is a reality that the gambling sector is thirsty for novelties and new products so as to expand and improve its offer to customers. From our point of view, we are at a time when the Spanish regulator should focus on energising the current market and supporting licensed operators in making their offerings more attractive and competitive. By way of example, this could involve expanding Spain’s current gambling offer to include new live products, such as live blackjack.

Operators are also aiming to improve business efficiency. In this vein, both international online operators operating in Spain from companies based in other countries and operators already based in Spain are relocating to the Spanish regions of Ceuta and Melilla to benefit from their favourable tax rate of 10% on gross gaming revenue (GGR), compared to the standard 20%. We have therefore witnessed a massive relocation of operators to these cities through international domicile transfers or specific corporate moves.

Last but not least, as anticipated previously, the recent Supreme Court ruling on gambling advertising has brought a breath of fresh air to the sector. The previous restrictive legal framework governing advertising made the gambling sector a less attractive market. Therefore, as a result of such change on the game rules when it comes to advertising, we are also witnessing a growing interest from operators in marketing-related activities ‒ resulting in the revitalisation of advertising campaigns and proposals.

In summary, we can conclude that it is essential that both the regulations and the DGOJ ensure that the gambling sector is regulated and treated in a manner that meets its needs and expectations. This will promote innovation and competitiveness for the continued growth and vitality of the Spanish online gambling market.