Last week, the Spanish Council of Ministers finally approved the long-awaited Royal Decree on Gambling Advertising. The text of the Decree was published in Spain’s Official State Bulletin on November 4 and entered into force on November 5.

As we reported earlier, the Royal Decree will introduce a near-blanket ban on gambling advertising. In this special edition of the Gaming in Spain newsletter, we take a closer look at the approved text, industry reactions, and the legal courses of action still open to the industry.

Finally, the current Director General of Spanish regulator DGOJ, Mikel Arana, shared his agency’s position on the new Royal Decree with a select number of industry publications – including Gaming in Spain. Our report on this video call is included in this newsletter.

The new Royal Decree: Overview and deadlines

Gaming lawyer Xavi Muñoz Bellvehí, Partner at ECIJA, has summarized the most important provision of the recently approved Royal Decree on our website.

Included among the new measures are severe restrictions on broadcast advertising, sports sponsorships, as well as a prohibition of welcome bonuses. Additionally, commercial communications made through digital means are subject to a bevy of new restrictions.

The transition period for the measures outlined in the Royal Decree is very complex. Not all provisions come into force at the same time and there are grace periods for existing contracts.

For an overview of all applicable deadlines that operators and other stakeholders must meet, please consult this document.

Legal battles and uncertainty ahead?

According to an article published by Loyra Abogados, there are still avenues to challenge the Royal Decree in court:

“There are various legal tools that can be used, such as direct administrative appeal before the Supreme Court within two months of publication – a procedural instrument whose purpose is to eliminate rules from the legal system that are contrary to Spanish law or the Constitution. Moreover, it is probable that certain restrictions referred to in the Royal Decree, duly analyzed by the national courts, could be further referred to the Court of Justice of the European Union. It should be noted that these procedures are extremely complex and can be lengthy.

Moreover, it seems likely that the change in the conditions of the respective licenses previously granted, could be a reason for massive challenges by the entities concerned.”

Additionally, the fallout of its provisions could lead to contractual disputes regarding existing advertising agreements and sponsorship contracts:

“Finally, the technique used to affect the relationships between sponsored operators and sports clubs will be an important source of conflicts related to advertising sponsorship contracts between both parties.

Furthermore, as regards to sponsorship contracts, it is clear that there will be a multitude of contractual disputes due to the effects of the Royal Decree on existing contracts, which in many cases will prejudice one (or both) of the contracting parties. Such disputes will involve damage claims and corresponding compensation, despite the transitory period contemplated in the Royal Decree. Without a doubt the specific wording of the contracts and circumstances will be key.”

Industry reactions

Trade association Jdigital released a statement that was severely critical of the new Royal Decree. The new advertising restrictions would only serve to undermine the competitiveness of regulated operators to the exclusive benefit of their black-market competitors, the association said.

Jdigital also protested the de facto distinction the government made between “good” gambling by (semi-)public lottery operators (SELAE and ONCE) and privately-owned “bad” gambling.

The trade association also stressed that Spanish problem gambling rates are consistently low and thus, that the new restrictions are both “ideological” and severely disproportionate:

“At Jdigital we consider that the Draft Royal Decree on Commercial Communications of Gambling Activities discriminatory, unfair, and disproportionate, especially in a market in which online gambling is a legal activity and already highly regulated and where the incidence rate of problem gambling has remained stable at 0.3% of the population between 15 and 65 years of age since 2015, being one of the lowest in Europe, as indicated by the National Plan on Drugs.”

Eduardo Morales Hermo, Gambling & Betting Consultant at iGamingCo, called the new Royal Decree “absolutely unjustifiable,” adding that the Decree’s provisions amounted to “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.”

As a result of these overly restrictive measures, the Spanish government declared itself “a de facto ally of unlicensed, offshore gambling operators, seriously damaging the competitiveness of the legally authorized operators.”

DGOJ Director General Mikel Arana discusses Royal Decree, stresses need to address public concerns

In a video call earlier today, Mikel Arana, Director General of Spain’s gambling regulator DGOJ, discussed the new advertising restrictions imposed by the Royal Decree.

When asked whether the advertising restrictions were proportionate considering the consistently low problem gambling rates in Spain, Arana responded that Spain is currently facing an “alarma social” over excessive gambling advertising and its possible impact on gambling addiction rates. Addressing these public concerns is a legitimate government interest, Arana said. The DGOJ director also cited an increase in the percentage of young (adult) players and a strong growth in the number of self-exclusions since 2015 as reasons to limit the amount of allowed advertising.

As to the worry that restrictions on gambling advertising by licensed operators would make it harder for these operators to compete with illegal offerings, Arana stated that the DGOJ would continue and intensify the existing policy of DNS blocking. In addition, the DGOJ would continue to monitor payment traffic to identify the main black-market operators targeting the Spanish market.

Finally, Arana expressed his concern that too many Spanish consumers appear unaware that only gambling services offered through an .es domain are fully licensed. Surprisingly, he called on licensed operators to take on the responsibility of informing the public of the distinction between gambling offerings on .com and .es domains.

While Mr. Arana certainly appeared well informed of the industry’s concerns, his answers failed to remove doubts regarding both the practicality and proportionality of the new advertising restrictions. It appears that, at least to some extent, emotion has triumphed over a more even-handed, evidence-based approach.