The purpose of this note is to provide an overview on the key aspects of the regulation put in place by the Act as well as of the most recent developments since its official enactment.
Scope
The new regulation covers any type of game of chance, in its different varieties, to be promoted or developed at a national scope including expressly remote gambling through electronic, technological and interactive means. Regional gambling will continue to be regulated by the autonomous regions.
Cross-border gambling is also included under the scope of the new Act, being defined as those games targeting Spanish consumers organised or offered by individuals or entities located abroad.
Promotion and advertising activities related to games under the scope of the law shall also be subject to its provisions. Random combination games ("combinaciones aleatorias") for the promotion of a product or service shall not be subject to the licensing requirements despite shall be taxed in accordance with the new law ie at a 10% over the market value of offered prizes.
Lotteries are reserved by law to the National Lottery Entity (LAE) and to the Spanish Blind Charity Organization (ONCE).
Of particular interest is that the new regulation recognises the validity of any sponsoring agreements entered into before 1 January 2011 (term now extended until 30 June 2012) which shall remain transitorily effective until the granting of the license to the relevant operator, measure to which long time established gambling local operators were firmly opposed.
All companies offering gambling on the internet targeting Spain will be obliged to use a ".es" domain name to allow the supervision and control of the Spanish authorities.
Licensing
The new Act has opted for an unlimited (at least in principle) license-awarding procedure that shall hopefully allow existing operators to legalise their situation in Spain progressively. Any EU operator applying for a license is required to have a permanent representative in Spain.
There shall be two categories of licences required to enter the Spanish market, general licences and a singular licences. General licences are required as a prior step to be eligible for offering any game of chance under the scope of the Act and are granted to the operator for 10 years, renewable for an additional 10 years. Subsequently, in order to start exploiting any specific particular type of game within the scope of a previous general license, a singular licence shall also be necessary which shall last between one to five years depending on the type of game and subject to further renewals.
Singular licences shall be reviewed by the respective local authorities that shall report on licenses required by operators based in their territory and their respective licensing procedure shall be contained in further detailed regulation still to be enacted for each type of game.
Taxation
The new regime introduced different taxation structures for different types of gaming. The percentage of the different taxes imposed falls between 10% and 25%. The taxation for online gambling, set at 25% gross profit tax, may be perceived as a hurdle to profitability in a very competitive market with the majority of large operators having already built a considerable player database after years of tax-free advertising and sponsorship.
Update since the Act was passed
Since the Act was published last May 2011 the privatisation of the Sociedad Estatal de Loterías y Apuestas del Estado has been postponed indefinitely because the offers did not seem to meet the expectations of the Spanish government, and the general framework created thereto has been completed during the second half of 2011 through different Royal Decrees and Ministerial Orders, specially in relation to technical requirements for gambling activities, authorisations and registrations, and specific conditions for different types of games.
However, and despite the licensing process described above has already started and the granting of new licences was initially expected, in principle, by December 2011, the uncertainties that spread throughout the sector during the last weeks of year 2011 raised by the recent change of government have now been confirmed as the new political party in power shall introduce important changes which shall delay once more the practical implementation of the new Act.
In particular, the new Act established a transitory period until 1 January 2012, unless a license is granted before to any operator, to allow companies to legalise their situation and to enable operators to continue advertising until they received licence approval. However, the recent Royal Decree-Law 20/2011 dated 30 December of urgent budget, fiscal and economic measures for the correction of the public deficit has extended until 30 June 2012 the mentioned moratorium periods.
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