Eduardo Morales Hermo, Gambling & Betting Consultant at iGamingCo
At long last, the Spanish government has approved the Royal Decree that establishes highly restrictive and, to a certain extent, prohibitive measures for advertising and commercial activities of online gambling businesses legally operating in Spain based on Law 13/2011.
As with other political decisions, the government of Spain approved the Royal Decree that will come into force with its publication in the Official State Gazette, taking advantage of a pandemic that has plunged the country into a deep health crisis and especially in a serious economic crisis that will last for many years.
Without justification and lacking any scientific and statistical support, the government, through the Ministry of Consumer Affairs, has implemented a series of absolutely unjustifiable measures that will favor the transfer of a significant volume of demand for online gambling and betting to offshore operators that lack licenses, guarantees for consumers and any regulatory oversight over compliance - both technological and fiscal and responsible gaming.
The resulting lack of a level playing field, combined with high direct taxation and far-reaching restrictions on advertising and other activities that are necessary and intrinsic to online gambling and betting for licensed operators, will cause a significant reduction in the number of players that will make use of the regulated offering and the transfer of market share to black-market competitors.
The justifications for the new measures lack truth and are unsupported by the data. The decisions by the Ministry of Consumer Affairs will have consequences contrary to what is intended: a classic example of shooting oneself in the foot.
With this Royal Decree, the government of Spain has become a de facto ally of unlicensed, offshore gambling operators, seriously damaging the competitiveness of the legally authorized operators with licenses in force based on Law 13/2011.
Below, we will summarize the main provisions established by the Royal Decree:
General restrictions and prohibitions
Broadcast advertising for online gambling and betting will only be allowed between 1AM and 5AM.
It is thus prohibited to broadcast gambling advertising during sporting events that take place outside these hours.
The offering of bonuses or similar promotions to attract new players is prohibited.
Operators may only target registered and verified customers and never people deemed to be at risk.
Sports clubs may not sign sponsorship contracts with online gambling or betting operators that would display advertising on shirts, equipment, or stadium billboards.
The sending of gambling advertising by postal mail is prohibited. Gambling advertising sent by email is only permitted with the explicit consent of the addressee and in no case may be targeted at people who are considered at risk.
Outdoor advertising must comply with the provisions of the Royal Decree and the regulations established by each Autonomous Community.
Advertising on the internet must be done through the web pages of the game operators.
For sponsorship contracts already signed and that are in force when the Royal Decree enters into force, a transitional period is established that ends coinciding with the end of the sports season in August 2021, without prejudice to the agreements between clubs and operators that extend beyod that date.
Both the measures that prohibit promotional bonuses and the new regulation of advertising on the internet will have a transitional period leading up to their final entry into force on May 1, 2021.
Advertising campaigns featuring famous or popular people may be broadcast until April 1, 2021, if a contract specifying such was already in force at the time the Royal Decree became law.
Other advertising contracts that were signed before the entry into force of the Royal Decree, may be fulfilled until August 30, 2021.
On social networks, operators can only issue advertising messages to their followers. On video exchange platforms, advertising is relegated to the same time slots as broadcast advertising.
To protect minors, parental control is established through mechanisms that identify games of chance as a separate category in online advertising.
Operators must have instruments in place that guarantee that their advertising is not directed at minors.
Famous people may not appear in any advertising.
False or misleading perceptions of gratuity, customer testimonies, or the impression that the outcome of a game is based on skill are explicitly banned from all forms of advertising.
Gaming operators will be responsible for third-party compliance with these measures.
Non-compliance may be sanctioned with fines of between €100,000 and €1,000,000 and with a license suspension for a maximum period of six months.
A serious distortion of a well-regulated commercial activity
Some of the provisions contained in the Royal Decree are limitations and restriction on common advertising activities that are necessary to carry out an activity such as online gambling and betting. As a result, licensed operators are further limited in their ability to compete with black market operators that do not pay taxes or meet the necessary compliance, AML, or player protection standards. By weakening the position of licensed operators, the Spanish online market will thus become increasingly attractive to unregulated, illegal operators.
The Royal Decree demonizes and even criminalizes the activity of gambling and betting without reason, without arguments that provide evidence to justify these measures, which rather seem to be the result of an ill-will and political opportunism against a lawful and perfectly regulated activity, which - although always susceptible to improvement - now faces unjustified capricious actions and restrictions instead.
It is without a doubt an infringement on the freedom of business, as well as an attack against the legitimate interests of legally established companies that operate with licenses granted by the government based on a law established by the same. Moreover, these companies have made large technological investments in businesses that employ highly qualified technical employees in a segment that is one of the most advanced in technology development and innovation.
Irreparable economic damage is being inflicted on companies that have signed service, advertising and commercial contracts based on established regulation. This uncertainty leads the industry to a situation that is contrary to the minimum respect due to existing rights granted by legislation and that changes, in an abrupt way, the conditions established by laws on the basis of which entrepreneurs have started their businesses and signed agreements to further develop them.
The Royal Decree that comes into force is also discriminatory and establishes a division between "good" gambling and "bad" gambline, not applying the same rules to public gambling - SELAE or ONCE - whose activities in sponsorship and advertising is exponentially more important and invasive than that carried out by online gambling and betting operators and the gambling industry in general.
It is scandalous that the government virtually eliminates advertising by online gambling and betting operators, while allowing the promotion of the gambling offerings of SELAE and ONCE through all channels without limitations on even the messages that promise enrichment or solutions to life problems to those who participate in their games. Moreover, the advertising spend of these (semi-)public operators is far higher than that of online operators.
Contradicting some of the assertions by the Minister for Consumer Affairs, SELAE and ONCE not only offer "harmless" traditional lottery products, but also instant games - scratch cards and similar products - that are nothing but slot machine simulations. These operators, moreover, use the underage in their televised draws and broadcast their advertisements and draw results during the hours when children are watching television.
There is also a major inbalance in gambling particpation between (semi-)public and private operators. More than 30 million consumers participate in SELAE or ONCE games, while an estimated 10 million consumers participate occasionally in games that are offered by private operators, of which only 1.5 million participate in online gamblig and betting.
There are many other examples of discrimination against private gambling compared to state-sponsored gambling.
Furthermore, the public health crises referred to by the current Minister of Consumer Affairs only exists in his mind. There is no evidence whatsoever that confirms its existence. The Minister even admits that he has no data to support his assumptions regarding the existence of this "crisis."
Not even the ongoing Covid-19 pandemic and resulting lockdown offer support for the supposition that gambling is a growing public health risk. The statistics are clear: the lockdown has not led to an increase in consumer spending on gambling products. This conclusion applies to all types of gambling: land-based, digital, as well as the major lotteries. All operators are suffering from the economic and social impact of the pandemic.
Finally, with respect to the supposed increase in problematic gambling, it should be sufficient to refer to data contained in verified reports - some of them official - on problem gambling incidence in Spain:
The incidence of problem gambling in Spain is between 0.3% and 0.5% of the population between 15 and 65 years old - EDADES and ESTUDES, the National Plan on Drugs.
In comparison, addiction levels for tobacco and alcohol (to which gambling is frequently compared) are 34% and 5.1 % respectively – EDADES and ESTUDES, the National Plan on Drugs.
Spain has the second-lowest problem gambling rate in all of Europe.
Little more needs to be said, even though it would be quite easy to further demonstrate the disproportional and unjustifiable nature of this Royal Decree. We can ony hope that at some point common sense and reason will prevail.