Gaming in Spain: overview

Gaming Act

Spain has a central government and 17 autonomous regions, and two autonomous cities. Gambling was only decriminalised in Spain in 1977. The Spanish Gaming Act (Ley 13/2011, de 27 de mayo, de regulación del Juego), which came into force on 29 May 2011, regulates gaming. The main aim of the federal Gaming Act is to harmonise the regulation of online gambling in Spain, an activity beyond regional boundaries (see below, Background to Gaming Act). At the same time, regional gambling continues to be regulated by each autonomous region.

The Act provides that:

Background to Gaming Act

The Gaming Act was a result of the fundamental changes that had occurred to gambling following its decriminalisation in Spain in 1977, as a result of the arrival of new electronic communication services, including interactive internet gaming. Technology’s rapid development in the 21st century had rendered the traditional regulatory instruments in Spain inadequate for operators, participants and regulatory bodies.

Prior to the Gaming Act, for example, online games that were developed in more than one autonomous region (usually at federal level) were previously unregulated. In contrast, the regulatory authority for land-based gambling had been delegated to the respective autonomous regions during the 1980s and 1990s. In addition, cross-border gaming was not expressly prohibited, which meant that although unauthorised or unlicensed gaming businesses were prohibited from operating from Spain, the legislation did not consider unauthorised or unlicensed gaming businesses operating from abroad.

Change started in late 2007 with the passing of the Law on Measures to Develop the Information Society (Ley 56/2007, de 28 de diciembre, de Medidas de Impulso de la Sociedad de la Información) by the Spanish Parliament. Its 20th additional provision obliged the Spanish Government to regulate online betting and gambling in Spain, and included a list of principles, which would govern the then future Gaming Act.

Although these principles were expected to be enacted in 2008 or 2009, this process did not start until September 2010 when the state lottery entity, State Lotteries (Loterías y Apuestas del Estado) (LAE), started to lead the regulatory process. In the absence of a formal regulator, LAE started to lead the regulatory process until the General Directorate for Gambling Regulation (Dirección General de Ordenación del Juego) was duly incorporated.

The sixth version of the draft Gaming Act became a Bill when the Spanish Congress published it in its Gazette in February 2011. The Bill was approved by the Congress on 12 April 2011 and was passed to the Senate, the Spanish upper house. Some amendments were introduced on 5 May 2011, and were definitively approved by the Congress on 12 May 2011.

The Gaming Act was published in the Spanish State Gazette (Boletín Oficial del Estado) on 28 May 2011 and came into force the day after (see above, Gaming Act).

General definition

The Gaming Act defines gambling as an activity where amounts of money or economically measurable objects are put in risk on uncertain or future events, dependent at least to some extent on chance. Chance is present even where there is some degree of skill involved, not only in games that are exclusively or primarily games of luck but games of pure skill fall outside the definition (see Question 12). The prizes can be in cash or in-kind, depending on the type of game. However, prizes cannot be in virtual currency with no monetary value (for example, currency used to purchase additional plays of the game).

There are therefore three essential elements of gambling:

If one or more of these elements is absent, the game will be outside the scope of gambling and the Gaming Act and/or any secondary gaming regulation will therefore not apply.

Online gambling

Online gaming refers under the Gaming Act to games performed through electronic channels, IT and interactive systems, when any device, equipment or system is employed to produce, store or transfer documents, data or information, including through any public or private communication network. The communication network can include television, internet, land lines, mobile phones or any other interactive communication system, either in real time or recorded. The definition, therefore, includes where on-site means have a secondary role.

Land-based gambling

There is no separate definition for land-based gambling (see above, General definition).

For federal licences pursuant to the Gaming Act, the competent body for issuing licences, supervising games and enforcement powers is the General Directorate for Gambling Regulation (Dirección General de Ordenación del Juego) (previously the National Gaming Commission).

For regional authorisations, the respective regional competent body is in charge of issuing licences, supervision and enforcement. In most cases, regional bodies will be subject to the supervision of the regional departments of finance or interior.

The Gaming Act and the regional regulations do not prescribe a set limit on the number of available licences. However, this is a condition that can be included on the basis of the public tender for gaming licences, once a call for it has been launched by the corresponding gaming authority.

See box, The regulatory authorities.

Overview

All operators that are interested in developing federally or regionally regulated games (that is, exclusively or essentially games of chance or mixed with a player’s skill), must obtain the corresponding licence or authorisation. Games that are exclusively games of skill (not officially approved) do not need a gaming licence.

Regulation is divided between online gaming that is offered at federal level and land-based gaming or online games that are offered at regional level (see Question 1, Gaming Act). Therefore, the gambling products that are identified depend on whether the regulation is at federal or regional level. If a game is not identified/regulated, it is forbidden.

Federal regulation. The Gaming Act does not establish a catalogue of games and each type of game must have its own regulation if it is subject to a licence. The gambling regulations at federal level have approved the following games, providing specific regulation for each of them:

• Pools on sports betting.
• Fixed-odds sport betting.
• Pools on horse racing.
• Fixed-odds horse racing.
• Other fixed-odds betting.
• Exchange betting games.
• Contests.
• Poker.
• Bingo.
• Roulette.
• Complementary games.
• Blackjack.
• Baccarat.
• Slots.

LAE maintains the monopoly on lotteries offered at federal level together with the National Organisation of Spanish Blind People (ONCE). Only charity organisations are allowed to organise lotteries.

See also Question 7, Available licences.

Regional regulation. Spain has 17 autonomous regions. Each regional regulation contains its own catalogue of games of regulated gambling products that are allowed to be offered by an operator. Each of the 17 autonomous regions in Spain has its own licensing regime to allow companies to operate if authorised. The regions have their own catalogue of games approving the gaming products that can be developed and offered by the operator.

With slight differences between the regions, the gaming products within the regional catalogues of games are generally the following:

Poker

Poker is subject to a licence and is regulated both at federal and regional level (see above, Overview).

Betting

Betting is subject to a licence and approved both at federal and regional level. Betting games are those placed on the result of one or more events included in the programs previously established by the operator (such as events related to society, mass media, economy, shows, culture and so on). A betting event can never be related to sport or horse racing since there is a special licence for these type of bets.

Sports betting

Sports betting is subject to a licence and is regulated both at federal and regional level (see above, Overview).

Horse racing

Horse racing is subject to a licence and is regulated both at federal and regional level.

Casino games

Casino games are subject to a separate licence for each type (roulette, blackjack, baccarat or complementary games and federal level or the different casino games approved at regional level). Casino games are regulated both at federal and regional level (see above, Overview).

Slot and other machine gaming

Slots are subject to a licence and are regulated at federal level. Slots and other machine gaming (that is, other slots and gaming devices) are regulated at regional level and subject to a licence (see above, Overview). Slots are regulated both at regional and federal level and other machine gaming (that is, gaming devices) are regulated only at regional level.

Terminal-based gaming

Terminal-based gaming is subject to a licence for the game both by the regulator at a federal level and in the autonomous region where the land-based terminal will be placed. There is no specific licence required for the terminal, only official approval of the technical systems used, provided that the operator is duly licenced for the specific game which is intended to be offered by this means.

Bingo

Bingo is subject to a licence and is regulated both at federal and regional levels (see above, Overview).

Lottery

LAE and ONCE maintain the monopoly on lotteries offered at federal level. Only charity organisations are allowed to organise lotteries (see above, Overview).

Generally, land-based gambling operators are only subject to the prohibitions on gambling that apply to:

Restrictions

Online gambling at a regional level is restricted (for example, only tax residents of the Madrid region are allowed to play there). In theory, a tax resident of Madrid is entitled to play on the website of a Madrid operator from any other location within Spain, only by virtue of their tax residency. However, autonomous regions, such as Madrid, have authority only in their own territory and have no authority in others regions where their tax residents might go. Therefore, there is a clear conflict between the authorities of the different regions.

Anti-money laundering legislation

Land-based casinos must identify and check the identification of persons that enter their establishments (Article 7.5, Spanish AML Act ( Law No. 10/2010)).

Casinos must also identify all persons requesting any of the following:

Online gambling in Spain can be offered in one specific autonomous region, in more than one region, or at federal level. The latter is the most common case for online gaming. The federal licence covers every region, so an operator that holds a federal licence does not need to apply for a regional one.

The aim of the Gaming Act is to regulate all types of games at federal level to:

This should be done without affecting the requirements of the regional statutes.

There are no issues as to the legality of the local law at EU level.

According to the Gaming Act, entities interested in operating must obtain both:

The Royal Decree 1614/2011 of 14 November 2011 developing the regulation of the Gaming Act 13/2011 on Licences, Authorisations and Gaming Registries, together with the ministerial orders approving the specific regulation of each kind of game, establish the categories for the single licences in accordance with each type of general licence.

Available licences

There following general licences are available:

For example, if an operator intends to offer fixed-odds sports betting and poker games, it must obtain:

Operators can only obtain a general licence during the public tender announced by the Minister of Finance. So far, there have been public calls in November 2011 and in December 2014. Single licences can be applied for together with the general licence or at any other time, if the applicant already holds the relevant general licence.

The number of licences or operators was not limited by the tenders and all operators meeting the tenders’ requirements have obtained a licence. The unsuccessful ones are banned from operating in Spain, at least until the relevant public tender is held.

Eligibility

There is a long list of requirements and documents that the applicants must file.

The main requirements that an online gaming operator must comply with are:

The documents filed with the applications fall into three groups:

Application procedure

The window to apply for licences is open for 30 working days from the day after the call for public tender was published. Once the applications are submitted, the General Directorate for Gambling Regulation has up to six months to either issue the licences or refuse the application.

Duration of licence and cost

General licences are granted for a term of ten years, which can be extended to ten more years. For the licence to be renewed, the operator must submit certain documents certifying its compliance with the renewal conditions to the General Directorate for Gambling Regulation 12 to four months before the licence expires. The main condition is the continued exploitation for six years of any of the single licences that are under the corresponding general one. Single licences are granted for a minimum term of one year and a maximum of five (depending on each single licence), and can be extended for identical periods of time. Similarly, to apply for a renewal, the operator must submit certain documents to the General Directorate for Gambling Regulation. For both general and single licences, if the operator will be granted the renewal if it meets the necessary conditions. Therefore, licences could be perpetually extended.

The administrative fees payable when a gaming licence application is made are:

Operators must also pay by 31 January every year the annual levy for the General Directorate for Gambling Regulation’s regulatory activities. This amounts to 0.075% of the previous year’s annual turnover.

Prohibitions

Online gambling operators are prohibited from (Gaming Act):

Restrictions

The main restrictions are related to whether the type of game is approved, and whether the operator is authorised to offer it (see Question 7). If a game is not approved, it cannot be offered.

Anti-money laundering legislation

To prevent money laundering, the online operator must identify and verify the identity of the winners of prizes of EUR2,500 or more through reliable documents and must keep copies of the records.

Both B2C and B2B operators are covered under the “gaming operator” (Royal Decree 1614/2011 on 14 November 2011, developing the regulation of the Gaming Act 13/2011 on Licences, Authorisations and Gaming Registries). Whether a company that organises, exploits or commercialises gaming activities is a gaming operator depends on the specific services that each operator renders and the conditions under how it does so. Gaming operators are defined as individuals or legal persons that both (Article 3.2, Royal Decree 1614/2011):

If a gaming operator manages a gaming platform that it is a member of, or which other gaming operators join and pool together stakes from their respective users, it is also a gaming co-organiser. In accordance with the terms of the public tender call or the applicable regulation, the General Direction on Gambling may adapt or establish exceptions to certain requirements for gaming operators if these rules are not directly applicable to the activity performed as gaming co-organisers, as well as limit their liability regime, (Article 3.3). The General Direction on Gambling has not yet officially implemented the liability regime of B2B operators. This provision will allow the General Direction on Gambling to limit the responsibility of B2B operators in case of a breach of any regulatory provision, when appropriate according to the characteristics of the activity of a B2B.

In practice, therefore, there is no distinction between the law applicable to B2B operations and to B2C operations in online gambling. If an operator meets the requirements established by the regulation, it will be considered a gaming operator requiring a licence.

There are no specific technical measures set out in the regulation to protect consumers from unlicensed operators. However, the General Direction on Gambling can request ISPs and financial entities to adopt blocking measures within sanctioning procedures initiated against illegal operators. Blocking access from Spanish IP addresses and payment blocking are the most common measures.

Mobile gambling and interactive gambling

There are no differences between the regulation of mobile gambling and interactive gambling on television since the Gaming Act is equally applicable to these activities.

Games of pure skill/for no monetary value

The concept of gambling requires the existence of three essential components which are:

• Chance.
• Pay-to-play.
• The existence of a prize.

See Question 2, General definition.

If one of these factors is not in place, the game falls outside the definition of gambling and the Gaming Act does not apply. This means that no gaming licence is necessary if a game is free to play or if there is no prize. The same rule applies to games using virtual currency of no monetary value, even if credits can be purchased for real money but the player cannot win anything of value other than additional game plays, chips, coins or other virtual items. Games of pure skill also fall outside the scope of gambling as they do not involve a degree of chance and therefore do not require a licence or a regional authorisation.

Regulation of complementary games

With regard to social games, there is a regulation at federal level for complementary games (incorrectly called “social games” in the previous draft versions of the regulation). By definition, there are different complementary games that combine chance with skill, culture and knowledge. What they have in common is that their main purpose is fun and they are not ultimately based on economic profit.

The maximum amount that a player can risk on such a game is EUR1 per hand. The maximum prize that the player can win is 40 times the amount risked (that is, EUR40).

For complementary games, there is no general catalogue list of games: each operator must produce a catalogue containing all complementary games it intends to commercialise within the platform. This catalogue must be notified to the General Directorate for Gambling Regulation at least 15 days before the start date of commercialising the games, together with the specific rules of each proposed complementary game. Once the General Directorate for Gambling Regulation analyses the catalogue, it may suspend it or demand certain changes to guarantee the participants’ protection.

Gambling debts are enforceable in Spain. At the time of applying for a licence, operators must execute an economic guarantee to cover the payments of prizes to players, fines and gaming taxes in case the operator cannot meet such payments on time.

Taxes differ according to whether the applicable legislation, the applicable autonomous region or whether they are regulated by the federal government (see Question 4).

Land-based gambling

The applicable taxes to land-based games are approved by each regional regulation. For example, in the Madrid region, they are:

The tax rate applicable to casino games depends on the tax base. The tax base is the gross income derived from the amounts that the players dedicate to the participation of the games (turnover). GGR is the total amount that the players dedicate to the participation of the games minus the winnings/prizes paid by the operator, and it is:

Fixed rates

There are fixed rates that apply to operating betting terminals or automatic appliances that are suitable for the development of games. The amount is dependent on the applicable regulation.

Online gambling

The tax rates for online games subject to the Gaming Act at federal level are as follows:

Land-based gambling

There are advertising rules for land-based games in each autonomous region. Most regions require a prior specific authorisation for advertising activities. Other regions seek to relax the regulatory burden and are removing this separate authorisation for advertising activities. One of the most recent regional regulations is in the regions of Canary Islands and Valencia. Instead of the prior separate authorisation, these regulations only establish general principles and prohibitions to ensure that the use of the advertising tool respects the rights of citizens, and in particular protects young persons, children and consumer health.

Carrying out advertising activities, by any means, without authorisation or outside the limits established in the certificate or regulation, is a criminal offence (see below, Online gambling).

Online gambling

Since licences were granted on 1 June 2012, the general rules are as follows:

Land-based gambling

Probably the most significant regulatory change within land-based gambling in recent years is the increase of the sports-betting regulations: out of the 17 regions, 15 have developed regulations for land-based gambling.

Overall, the legal status of land-based gaming has not changed significantly in recent years. However, different regional regulations include a number of minor changes that make them less restrictive and more accessible to operators. A convergence between the territorial regulations and the federal ones is therefore likely in the medium term.

Online gambling

The legal status of online gambling has changed significantly in recent years since the sector was unregulated until May 2011 and online gaming operators had almost no obligations (see Question 1). In contrast, they are now prohibited from operating without a licence and the ones that are legally operating have duties and obligations imposed by the gaming legislation.

Land-based gambling

Most of the regional regulations are being amended to implement the appropriate legislative requirements to establish the procedure to authorise licensed operators at federal level to commercialise online gaming activities through physical terminals placed in the territory of each autonomous region.

Online gambling

The General Directorate for Gambling Regulation is reviewing the federal gaming tax regime. The currently applicable tax rate to online casino games and fixed odds betting games at the federal level is 25% on GGR. In comparison to the 10% rate that applies to gaming regionally, 25% is considered excessive by the industry and it results in a lack of competition. This rate should be synchronised with the regional rates applicable to the online games or at least reduced to the much more economically viable rate of 15%. However, even though the General Directorate for Gambling Regulation is reviewing the tax rate, a different body within the Ministry of Finance will then need to approve it. The changes in consideration are unlikely to be adopted in the short term.