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Julian Harris, Partner, Harris Hagan harris@harrishagan. com
Spain has recently passed a new piece of legislation dealing with the regulation of online gambling at national level. Previously, online gambling was under the jurisdiction of the autonomous regions which had the powers to issue regional online gambling licences. Licence applications are anticipated to open in November 2011, with the first licences issued by the end of the year. Licences will be available for fixed odds and pool betting, horse race betting, bingo, roulette, poker, and blackjack. Notable by their absence are slots games, which may be included later on after further study of their impact. Betting exchanges and in-run betting are also not licensable at present, but may be in the future.
The tax rates are set out in the new legislation and vary from 15% of turnover to 25% of gross gambling yield. The rates are slightly higher than the 20% of gross gambling yield rate in Italy, where licences have been taken up. Operators who wish to remain in the market face a choice between obtaining a licence and incurring these high taxes or risking the very high potential fines for contravening the law – ‘gross infringements’ can be fined up to ¤50m.
At the same time, the autonomous region of Madrid has also opened up a licensing regime, creating a double system whereby those intending to operate in Madrid have the choice of obtaining either a local or national licence. Madrid imposes an online gaming duty rate of 10% on gross gambling yield which is significantly lower than the national rates, so operators targeting this region may well prefer to use a local licence. It will certainly be interesting to see how online gaming regulation in Spain develops and to see whether the other 16 autonomous communities will follow Madrid’s lead and undercut the national gaming duty rates.
sites offer a maximum of 100 ‘big blinds’ (€200), and sometimes even ‘deep stacked’ tables that allow up to 200 ‘big blinds’ where more skilled players tend to have a bigger edge (€400). Further, players would only be permitted to lose up to 75 per cent of their account balance on a given day. The above restrictions, if implemented without amendments, would mean that few medium and high stakes games would take place, thus likely driving many serious players to the black market where there are fewer limitations.
• After 1 January 2012, plans to allow ‘second round’ licensees to offer further ‘authorised games’ including, online slot machines, betting exchanges and the popular ‘in-play live’ sports betting. Although there will likely be restrictions on the times when live betting may be offered, to cut down on underage gambling as well as a €200 daily loss limit.
• Loterias y Apuestas del Estado (LAE) and Organizacion Nacional de Ciegos Espanoles (ONCE), will continue to have the exclusive right to offer (online) lottery games and need not apply for a licence. This restriction on competition is in place because according to legislation, “the great volume of gaming associated with lottery games, as well as the possibility that lottery tickets could be used
stRict limits on GamBlinG
adveRtisinG will Be imposed as in the uk.
as a money laundering instrument due to [their] bearer document nature…[and to prevent] the risk of fraud and criminality and avoid... the harmful effects of gaming on consumers”.
• Autonomous communities will have their own administration facilities and regulators to issue licences and implement policies / procedures within their territory, and would collect revenue from gambling that takes place within the community (except for pool betting on sports and state horse racing, which would go to the national treasury).
• Double licensing system: Operators would need to apply for two licences through a public tender process if they want to combine betting with other games: (1) General licence: Costs €10,000, and would be valid for a maximum of 10 years (renewable). (2) Singular licence: For each additional game, licence will cost €100 for each type of game. Licences would be valid
for a maximum of 5 years for mutual bets and bingo and 3 years for horse racing, poker, roulette and blackjack. Other categories of games may be approved within a maximum term of 6 months. Ancillary fees will be extra, such as the admin fee of 0.1 per cent of revenue to cover costs of provision of services by Spanish operators.
• Financial / establishment requirements (still to be fully determined): Financial guarantees for general licence of between €1.2 million and €2.5 million depending on type of game(s) offered to ensure payment of prizes, ‘cash outs’ and overall liquidity. For singular licences it will be a percentage on profits obtained. Minimum capital requirement of €100,000. Companies must be based in the EU and be a public limited company registered as a ‘Sociedad Anomina’. A Spanish bank account is required.
• Strict limits on gambling advertising with likely restrictions similar to the UK system – TV and radio ads can only be shown at certain times and in certain formats (e.g. bonus promotions must be ‘transparent’ and ‘fair’). Further restrictions on sponsorship activities; however, a ‘transitional period’ for current operators has been included in the draft. This period would suspend sanctions against current unlicensed operators for advertising, sponsorship deals and offering
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