Alla Serebrianskaia, Partner, Asensi Abogados
On April 2, 2024, the Supreme Court issued its ruling number 527/2024, which partially granted the appeal filed by Jdigital against Royal Decree 958/2020 on Gambling Advertising. The outcome of the judgment is significant as it voids certain provisions that restricted the advertising of licensed gambling operators in Spain.
The ruling
The central arguments of the Court for voiding these provisions were twofold: first, the lack of firm legal grounding as these regulatory restrictions can only be approved either by a legal text with force of law or by a secondary regulation as long as it is duly supported by a legal text with force of law; and, second, a violation of the principle of proportionality since several general prohibitions that were approved are not proportional to the purpose of the regulation.
The Supreme Court considers that the activity of advertising is part of the freedom to do business: operators must be able to advertise their offers to make these known to new, potential customers.
The articles affected by the Supreme Court ruling are as follows:
Article 13 sections 1 and 3: Prohibition of offering welcome bonuses and restrictions on advertising and offering promotions;
Article 15: Prohibition of appearance of well-known people/celebrities in advertising;
Article 23.1: Prohibition on the display of commercial communications through “information society services” (i.e., most web pages/web applications);
Article 25.3: Restrictions for gambling advertising on accounts/channels on video-sharing platforms; and
Article 26, sections 2 and 3: Restriction on the targeting rules for addressing gambling advertising on social networks and restrictions for gambling advertising on accounts/channels on social networks.
Practical impact
Still, we must consider more closely what this voidness means for operators and how they can act on account of this ruling. In practical terms, the main consequences that operators should consider are the following:
Welcome bonuses are permitted.
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, as from now on 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 the internet is allowed, advertising bonuses on the internet is permitted or, for example, link building actions and SEO/SEM positioning are 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 noted 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 directing advertising to specific individuals through social media has been annulled, meaning that there is no restriction in this sense.
In summary, it is worth saying that, although this ruling is very good news for the industry, not all the restrictions outlined in the appealed Royal Decree on Gambling Advertising have been affected by the Supreme Court’s ruling, as there are significant restrictions that are still applicable, such as the restriction on sponsorships activities, as well as the 1am to 5am time restriction for advertising on TV, radio and certain gambling advertisements on video sharing platforms. There are also other restrictions foreseen in the Advertising Code of Conduct that would need to be considered.
When will the ruling go into effect?
From a technical regulatory point of view, the Spanish legislation (art. 72 of the Law of Administrative Litigation Jurisdiction) establishes that Court rulings voiding general provisions or regulations shall have general effects and their entry into force shall be from the day on which such Court rulings and voided provisions are published in the same official gazette in which the voided regulations were initially published.
In this regard, there is no legally established timing in which this kind of Court rulings must be published in the Spanish gazette (BOE). Unfortunately, due to this lack of information, at this point it is difficult to confirm the specific date on which the ruling will enter into force. This means that, even if the affected parties have already been notified about the ruling, technically and legally speaking, the relevant articles will cease to be valid only when the ruling is published in the Spanish official gazette which in practice might take, on average, even a month.
Therefore, to proceed with the advertising actions voided by the Court ruling, the more conservative approach from a black-letter law point of view at this stage would be to wait for the Court ruling to be published in the BOE.
Notwithstanding the above, there are elements that can also lead to the conclusion that the operators could already start with the advertising actions that are being voided by the Court ruling without any negative consequences.
First, given that the DGOJ was a party in the judicial proceeding that ended up with the Court ruling, it could be understood that from the moment they were notified about the ruling they would have been legally aware of the fact that relevant articles of the Royal Decree on Gambling Advertising will cease to be valid, so it would not make much sense for them to take action now against the operators who have already started with the advertising actions that are being voided by the Court ruling.
Another reason that leads us to think that it is very difficult – if not impossible – for the DGOJ to sanction operators who have already started with the advertising actions that are being voided by the Court ruling is that the publication of this ruling will mean that all ongoing sanctioning procedures and all sanctions that are not final will be considered null and void, so it would be incomprehensible that the DGOJ would now initiate sanctioning procedures for these actions if they are going to be declared null and void.
What can we expect in the future?
Regarding the reception of the Court ruling by the DGOJ, it was obvious that all alarms were going to be raised as significant restrictions foreseen by the Royal Decree on Gambling Advertising have been declared void by the Supreme Court.
The DGOJ, specifically the Director General of the DGOJ, has already declared his intention to take the necessary actions to restore the legality of the restrictions on gambling advertising voided by the Supreme Court.
It is likely that this will be effected through a legislative procedure to incorporate the voided provisions into the Spanish Gambling Act. However, it should be noted that such legislative procedure is complex, so in the short term it is unlikely there will be new developments or restrictions in this regard.