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How to prepare for M&A activity in the Spanish online gaming market

By: Xavi Muñoz & Mònica Ferrer; Partner & Associate at ECIJA

The third licensing window for the Spanish iGaming market closed over a year ago, leaving the regulated Spanish online gaming market divided among 80 operators. Since a new licensing window is not expected any time soon and gaming licenses are non-transferable, online gambling licenses can only be acquired (or sold) within the framework of an M&A transaction. Therefore, any company wishing to enter the Spanish gaming market can only obtain a Spanish iGaming license by acquiring an already licensed operator. Conversely, any operator wishing to sell all or part of his business should prepare for dealing with prospective new market entrants.

In order to acquire a Spanish gaming license, the interested buyer needs to gain full ownership of the company holding the gaming license. By doing so, the change of ownership of the license shall not be subject to prior authorization by the Spanish gambling regulator. In such a case, the new owner will only need to file a notification with the regulator once the transaction has been completed (although we would always recommend to confirm the transaction with the regulator beforehand).

As part of the acquisition, all relevant business aspects will need to be brought in line with the new ownership situation. This includes the revision of the contracts with software suppliers, the bank guarantee, the policies in place regarding all compliance and reporting matters, and – if applicable – any ongoing enforcement procedure.

Licenses can only be transferred to another party through an M&A transaction at the company level. Thus, if an operator wishes to sell one of its licenses but keep another one (or sell it to a second buyer), the seller should restructure and place each license with a separate company.

Both buyer and seller should look for the right fit. The buyer should consider the reason for the acquisition of a specific operator – whether it is its licenses, its platform, its goodwill and customer database, or a combination of everything. Also, the seller should look for a buyer that values all of his assets in order to get the best price, while the buyer should look for a seller which fits his specific needs in order to pay a just price. To maximize the value of its assets, the seller could also consider selling part of his assets to different buyers by way of multiple agreements – although this should be considered and prepared for well in advance in order to be fully prepared when the time comes.

Due to the high level of compliance requirements, potential buyers should consider issues such as the track record of the seller’s compliance, potential liabilities, and other matters that could impact the requirements for the license to remain valid.

Each acquisition or sale will be different; and we consider it essential to obtain appropriate legal advice in advance in order to prepare for and manage your and your counterpart’s expectations. Additionally, there may be an added level of complexity as the selling company could be a gaming operator located in Malta, Gibraltar or Ceuta, making it essential that all corporate, regulatory and tax implications are mapped properly and incorporated into the design of the deal.

Learn more

On February 27, ECIJA will organize a one-day seminar in Madrid on “Comprehensive compliance and conducting M&A in Spain’s online gaming sector.”

Xavi Muñoz, Partner at ECIJA, Mikel López de Torre, President of trade association Jdigital, and Willem van Oort, founder of Gaming in Spain, will present their visions on the expected consolidation in the Spanish online gaming market and its implications for regulatory obligations and compliance.


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