News Item: : ADVERTISING UNDER THE NEW SPANISH GAMBLING LAW
(Category: iGaming Affiliates)
Posted by joginvik
Friday 25 May 2012 - 14:33:45

Firstly, we delve into the regulatory position following the implementation of the Spanish Gaming Law.

ON MAY 29. 2011. the Spanish Gaming Law came into force. This law regulates the activities of lotteries, sportsbetting (and other types of bets), roulette, poker, blackjack, bingo, raffles, contests and other games, provided by domestic Spanish operators or international operators holding a Spanish gaming licence. The law establishes that these activities can be performed via physical presence or electronic means such as the Internet, television, radio and via mobile.

With the liberalisation process up and ninning and developing at a rapid pace, any operator willing to obtain a gaming licence in Spain should, ideally, already be working on it. Since the publishing of the Law in the Spanish Official Gazette, many other draft statutory regulations have also been passed and are currently under discussion. The main rules currently being discussed are via two draft Royal Decrees; one which sets out the requirements and conditions to obtain/receive authorisation for a gaming licence, and the other which sets out the technical requirements that the gaming platform and all the appliances for the various types of games will need to comply with. Both aspects are crucial for national and international gaming operators and these Royal Decrees will begin to shape the Spanish gaming market.

In this article, we will focus on the aspects of the new regime that affect the advertising, promotion and sponsorship of gambling activities in Spain.

The new advertising regime

Under the new Law. the advertising, promotion and sponsorship of gambling activities will be permitted, but only those duly licensed in Spain. Also, such publicity wiE have to be in-line with the particular allowance for advertising contained in each gaming operator's licence. Gambling licences granted in other countries are not
valid to offer, advertise or promote games in Spain. Indeed, operators advertising gambling or betting activities without the corresponding licence are doing so illegally, and are subject to heavy fines imposed by the Spanish National Gambling Commission (CNJ).

Advertising agencies, media channels, or Internet website editors are responsible for ensuring and checking, before publishing any advertisement or promotion, that the operator/advertiser is duly licensed and that such particular advertising is allowed under the terms of the operator's licence. In any case, should these media entities take publicity from non-licensed operators they would also be responsible.

Additionally, these media entities may be formally requested by the CNJ to stop any illegal ad campaign, effective within a two day notice period. If the deadline is not complied with, again, the media entity could be fined.

Fines and liabilities

The new Law offers a wide definition of the persons or entities that could be liable, which consists of "any person or entity that performs any of the breaches provided by the law, as well as any other that gives them support, advertise or promote them, or in any way obtain profit from them".

The following are examples of gross breaches of the Law, punishable by fines ranging from ?100,000 to ?1 million and suspension of the activity for up to two years:

To promote, sponsor or advertise games, or provide any intermediation service, when those offering the games lack the corresponding licence, or when the games are advertised breaching the conditions and restrictions set out in the licence or in the regulations, whatever media or channel is used for the advertising.

Failure to comply with information or termination requirements issued by the CNJ. A media owner and/or the advertising agency could be liable for these types of infringements, jointly with the gambling operator.

The Law also states that any person or entity obtaining relevant profits directly linked with the development of gambling activities may also be classified as the gambling operator, and subject to the same liabilities and fines foreseen for gambling operators. In this case, for example, the Law states that it is a 'gross breach', punishable by fines ranging between ?1 million and ?50 million and closure of business, "organizing, celebrating, commercializing or exploiting the gambling activities subject to the Law when they lack of the corresponding license or authorization".

"With the liberalisation process up and running and developing at a rapid pace, any operator willing to obtain a gaming licence in Spain should, ideally, already be working on it."We understand that a provision defining such a wide scope of liability is particularly relevant with regards to 'revenue share' agreements that media entities (affiliates) could enter into with gambling operators. In such agreements, it could be considered that the media entity is directly participating in the revenues and profits obtained from the gambling activity and, therefore, could be found jointly liable with the gambling operator, not only as an advertiser, but also as an operator itself.

It is also important to take into account the joint liability with regards to the payment of gambling taxes and duties established by the Law, which not only affects the gambling operator but also "any person or entity who obtains profits from the gambling activities" (please note the Law refers to "any type of profit" and not necessarily "direct" or "relevant" profits), provided that such person or entity had not properly checked that the gambling operator had its licence duly in place. This Liability also comprises those online service providers who should have known that their infrastructures or their services were being used for the provision of gambling activities.

Transition period

The Law sets out a transition period which applies to sports sponsorship and advertising or promotion deals signed before January i, 2011. The advertising activities under those agreements will not be subject to fines until the conclusion of the first licensing procedure or until January 1, 2012 at the latest.

In any case, please take into account that this transition period does not affect other obligations of the Law. This means that since the Law came into force, operators are now- tasked with complying with the obligations set forth therein (including the declaration and payment of taxes) and, in respect to those entities advertising gambling activities, they should ensure that the operators hold the necessary licences granted by a Spanish competent body. Additionally, the transition period doesn't apply to the joint and several liabilities for the payment of gambling taxes mentioned above. It could also be understood that, during this transition period in which the new fining regime is suspended, the previous fining regime provided by the Anti-Smuggling regulations should still be in force.

In this scenario, advertising agreements that media companies signed before January 1, 2011, will remain valid until the conclusion of the first licensing procedure or until January 1, 2012 at the latest. However, this does not apply for any new advertising agreement or campaign undertaken during the current transition period. In those cases, the media company would assume certain risks under the former fining regime, which is still applicable while the new one is 'on hold'. On the other hand, taking into consideration how online gaming and betting has been provided in Spain in recent years, we consider it improbable that the CNJ or the Spanish Authorities would enforce the regulations or apply the former fining regime.

Once the new gaming licences are in place, we believe that the CNJ and other Spanish authorities will be very strict in clamping down on any illegal gaming activity and any illegal advertising. We consider that the Spanish government can not afford the gaming and betting industry to continue as it has in the past few years with foreign operators offering their games to Spanish residents without holding any licence in Spain and without paying any taxes in the country.

The granting of licences is expected to take place before the end of this year. However, it is not clear if this will be achievable. One thing that could impact on the schedule would be if the country's general elections are advanced to take place before the end of the year. In that case, we believe the whole liberalisation process of the gaming market will be put on hold for at least six months.


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