Guest Blog

Spanish state of alert: effects on the gambling and betting industry

Spanish state of alert: effects on the gambling and betting industry

Xavi Muñoz Bellvehí, Gambling and Betting Partner at ECIJA.

Note on the consequences of the state of alert for the land-based and online gambling sectors

The gambling & betting industry is among the sectors affected by the state of alert ordered to deal with the ongoing Covid-19 outbreak.

The effect on land-based gambling companies has been absolute and direct, with all gambling and betting shops being forced to close. Clearly, the activities of these companies are completely paralyzed.

The situation is much different for online gambling. Although sports betting is almost completely paralyzed as well due to the suspension of nearly every sports competition, part of the product offering (i.e. casino games, slots, and bingo) can be maintained.

We highlight below the legal issues that gambling operators will have to deal with during this public health crisis:

1. Employment

Among the labor measures approved by the government, the most significant is the procedural simplification of the Record of Temporary Employment Regulation (ERTE), which allows employers to temporarily suspend employment contracts or reduce working hours. Employers can carry out two kinds of ERTE:

  • Force majeure ERTE: only in those cases in which the suspension of employment contracts or reduction of working hours is directly caused by the direct impact of Covid-19 on the profitability of the company.
  • Ordinary ERTE: for those cases in which the suspension of employment contracts or the reduction of working hours is not directly caused by Covid-19’s impact. It is worth mentioning that even in this case, the procedure has also been simplified.

Gambling and betting operators, who: (i) are land-based; or (ii) whose activities are exclusively or partly based on sports betting may carry out force majeure ERTEs, as their activities have been directly affected by Covid-19. In the first case, due to the closure of the betting shops and premises to the public, and in the second case, due to the cancellation of most sports events.

On the other hand, those online operators that do not offer sports bets should, in case they consider it appropriate and necessary to carry out an ERTE, comply with the requirements of the ordinary procedure, since the effect suffered in their activity is not directly linked to Covid-19.

2. Contracts

Considering the current situation, gambling operators, both land-based and online, should try to lower their fixed costs. This may include rental fees and licensing costs, as well as allocated budgets for marketing or other services that can no longer be (fully) carried out under the current circumstances.

Notwithstanding the provisions established in each contract and/or in the coverage of the applicable insurance policies, under Spanish law, this situation may be covered by the regulation of force majeure and the “rebus sic stantibus” clause, which consist of the following:

  • Regarding force majeure, provided by art. 1.105 of the Spanish Civil Code, “no one shall be liable for those events which could not have been foreseen, or which, if foreseen, were unavoidable”, which can eliminate or limit all liability of one or both parties, without prejudice to the survival or termination of the contract in accordance with its object, duration and what has been agreed between the parties.
  • Regarding the “rebus sic stantibus” clause (“things being as they are” – which refers to the “circumstances” under which an agreement was signed, which have now changed), it is a doctrine shaped by Spanish Courts. On the basis of “rebus sic stantibus”, termination, review or suspension of contracts may be allowed in the event of disproportionate performance between the parties, resulting from a sudden and unforeseeable change in the circumstances existing at the time the contract was signed; this basically applies to contracts of a successive nature (ongoing).

Hence, depending on the actual context, operators or other firms in the sector may use these two options to rebalance their contractual position with their suppliers (mainly regarding the previously agreed price for temporarily unavailable or irrelevant products and services).

3. Gambling & betting specific regulation

At this time, the Directorate General for the Regulation of Gambling (“DGOJ”) has not issued an opinion on the current Covid-19 crisis, nor has it stated whether there will be any changes with regard to the obligations of online gaming operators (for instance, a moratorium on compliance deadlines, some extra months for those operators who have recently obtained their licenses and must launch their operations within one year, speeding up the approval of new games that could be substitutes for sports bets, etc.). We are following up with the DGOJ to see if they are considering new measures.

4. Taxes

Land-based and online operators can benefit from the nationwide special measures adopted by the government, such as easing of deferrals of up to 30,000 euros for SMEs or the extension of certain deadlines within the framework of tax procedures.

5. Regional measures

In addition, some of Spain’s Autonomic Regions have taken measures to assist firms in the current emergency situation:

  • In Catalonia, the filing and payment of the first quarter’s gaming fee for type B slot machines has been suspended until the state of alert is lifted (Decree Law 7/2020 of 17 March).
  • In Andalusia a reduction in slot machines tax has been approved, and establishes a 50% discount on the fees accrued in Q2 2020 (Decree-Law 3/2020, of 16 March).
  • In the Basque Country and Aragon, the deadlines for gambling tax payment have been extended.

However, these measures have not been extended to the Balearic Islands, where the regional tax office has decided not to extend deadlines or apply moratoriums on gambling tax payments. In this regard, it will be necessary to follow up closely how other regions react to the situation and whether they adopt measures in relation to this sector.

In conclusion, we consider that the main uncertainties that the gambling market in Spain is currently facing are the following:

  • When will sports competitions be resumed?
  • When will it be possible to reopen the land-based premises?
  • Will the schedule for the approval of the Royal Decree for Gambling Advertising Regulation be maintained?
  • Will the timings for the approval of the autonomic regulations for land-based and online gambling (i.e. regulation of the Valencian Community whose approval was foreseen for April) be maintained?
  • Will possible moratoriums be granted for gambling taxes both at regional level (in those regions that have not yet made a decision) and at national level?

In addition to this general overview, we have specific notes available on the employment and tax implications of the current Covid-19 crisis. Please contact Xavi Muñoz Bellvehí for more information.

How to prepare for M&A activity in the Spanish online gaming market

How to prepare for M&A activity in the Spanish online gaming market

By: Xavi Muñoz & Mònica Ferrer; Partner & Associate at ECIJA

The third licensing window for the Spanish iGaming market closed over a year ago, leaving the regulated Spanish online gaming market divided among 80 operators. Since a new licensing window is not expected any time soon and gaming licenses are non-transferable, online gambling licenses can only be acquired (or sold) within the framework of an M&A transaction. Therefore, any company wishing to enter the Spanish gaming market can only obtain a Spanish iGaming license by acquiring an already licensed operator. Conversely, any operator wishing to sell all or part of his business should prepare for dealing with prospective new market entrants.

In order to acquire a Spanish gaming license, the interested buyer needs to gain full ownership of the company holding the gaming license. By doing so, the change of ownership of the license shall not be subject to prior authorization by the Spanish gambling regulator. In such a case, the new owner will only need to file a notification with the regulator once the transaction has been completed (although we would always recommend to confirm the transaction with the regulator beforehand).

As part of the acquisition, all relevant business aspects will need to be brought in line with the new ownership situation. This includes the revision of the contracts with software suppliers, the bank guarantee, the policies in place regarding all compliance and reporting matters, and – if applicable – any ongoing enforcement procedure.

Licenses can only be transferred to another party through an M&A transaction at the company level. Thus, if an operator wishes to sell one of its licenses but keep another one (or sell it to a second buyer), the seller should restructure and place each license with a separate company.

Both buyer and seller should look for the right fit. The buyer should consider the reason for the acquisition of a specific operator – whether it is its licenses, its platform, its goodwill and customer database, or a combination of everything. Also, the seller should look for a buyer that values all of his assets in order to get the best price, while the buyer should look for a seller which fits his specific needs in order to pay a just price. To maximize the value of its assets, the seller could also consider selling part of his assets to different buyers by way of multiple agreements – although this should be considered and prepared for well in advance in order to be fully prepared when the time comes.

Due to the high level of compliance requirements, potential buyers should consider issues such as the track record of the seller’s compliance, potential liabilities, and other matters that could impact the requirements for the license to remain valid.

Each acquisition or sale will be different; and we consider it essential to obtain appropriate legal advice in advance in order to prepare for and manage your and your counterpart’s expectations. Additionally, there may be an added level of complexity as the selling company could be a gaming operator located in Malta, Gibraltar or Ceuta, making it essential that all corporate, regulatory and tax implications are mapped properly and incorporated into the design of the deal.

Learn more

On February 27, ECIJA will organize a one-day seminar in Madrid on “Comprehensive compliance and conducting M&A in Spain’s online gaming sector.”

Xavi Muñoz, Partner at ECIJA, Mikel López de Torre, President of trade association Jdigital, and Willem van Oort, founder of Gaming in Spain, will present their visions on the expected consolidation in the Spanish online gaming market and its implications for regulatory obligations and compliance.

Guest blog | Santiago Asensi on regulatory pressure and blurred lines

Guest blog | Santiago Asensi on regulatory pressure and blurred lines

By: Santiago Asensi, Managing Partner at Asensi Abogados

The past 17th of September, fifteen regulators from Europe and the Washington State regulator signed a declaration in which they noted their increased concern with regard to “the risks being posed by the blurring of lines between gambling and other forms of digital entertainment such as video gaming. Concerns in this area have manifested themselves in controversies relating to skin betting, loot boxes, social casino gaming and the use of gambling themed content within video games available to children.”

First and foremost, it should be noted that this declaration springs from the regulators’ desire to protect minors from exposure to gambling-like products. In an increasing number of cases, certain elements of modern video or social games share many similarities with traditional gambling products. These video games and social games, however, are not classified as gambling. Thus, it could be argued that these gambling regulators are not entitled to be part of this particular debate.

Certainly, one of the main aspects of drawing up gambling regulation is to identify those particular elements (among many others) that fall under the legal definition of “gambling.” This is absolutely crucial when it comes to drawing up the red line between gambling products that require a license and games that do not need a license. This distinction, naturally, also helps define – and limit – the particular scope of gambling regulators’ powers. Those games that fall under the definition of gambling are subject to their oversight, while those games that do not qualify as gambling are beyond their competences.

However, the real cornerstone of any given gambling regulation is the collection of public policies, defined by the legislature, that underlie the gambling regulation as developed by the regulator. The protection of minors is a common goal of all the jurisdictions whose gambling regulators have signed the declaration.

Second, the regulators’ initiative needs to be placed within the context of the various political debates currently taking place in relation to matters like gambling advertising, product restrictions, age verification, etc. Without question, these debates are pressuring regulators into taking up defensive positions, where any new policy, rule or provision that could be applauded by the industry requires much stronger justifications than in the past. Political and media pressure sees to that.

Hopefully, the declaration will be effective in achieving positive results with regard to the protection of minors. Furthering this laudable goal through working closely with consumer protection authorities, as well as holding discussions with other relevant stakeholders seems the right first step. These discussions, however, should not only help to accomplish the primary goal of protecting minors, these may also assist in improving the public image of the industries involved.

Santiago Asensi
Managing Partner
Asensi Abogados

Guest Blog: Gaming sector making the most of Spain’s strong talent market

Guest Blog: Gaming sector making the most of Spain’s strong talent market

An update on the Spanish gaming talent market from Pentasia’s Giuliano Lafirenza

Talent is fundamental to any successful gaming business. Spain remains an attractive region for the sector not only for its market, but also the quality and size of its gaming talent pool.

Gaming operators and suppliers hiring in Spain generally find a good range of strong candidates, sourced either within the region or further afield as expat candidates look to bring their experience back home. Barcelona and Madrid remain the top locations for gaming operations, and talent is clustered around these areas.

Internationally, Spain is renowned as an excellent location for digital innovation and entrepreneurship, with inflow of both talent and investment in tech. The gaming sector here largely employs specialist leadership talent, marketing functions, operations and customer service, whilst locating more substantial teams – such as tech – elsewhere in Europe.

Challenges come in the form of the sector’s own expansion – through new licenses – and closely related industries – such as ecommerce, fintech, payments – which will undoubtedly increase competition for talent. The growth of Spain’s overall tech sector is clearly good for gaming, but employers will need to remain aware of new jobs which may appeal to valuable staff.

Tax changes should also be considered from a talent perspective. Operators looking to benefit from a Ceuta or Melilla location will need to base senior leadership talent in the North African cities; a potential opportunity for many candidates, but unlikely to appeal to all. Staff across the sector will also expect to see at least some benefit from the more favourable conditions.


Pentasia is the world’s leading iGaming Recruitment agency, with offices in Barcelona, London, Malta, Las Vegas, New York and Singapore. 

How AI (Artificial Intelligence) can be used for Responsible Gaming – Guestblog by Dennis Hvam

How AI (Artificial Intelligence) can be used for Responsible Gaming – Guestblog by Dennis Hvam

Award-winning AI technology for early detection of problematic gambling behavior and individualized customer approach.

With increasing availability of online gambling, more people are at risk of developing problem gambling behavior. They often neglect their problem and are unsusceptible to preventive measures offered by operators, including general information, prevention programs, voluntary self-exclusion and limit-setting. Some operators use machine learning to predict later self-exclusion, but only a minority of at-risk or compulsory gamblers self-exclude which negatively affects such predictive algorithms.

At Mindway AI, we take an innovative approach to solve these limitations.

With onset in neuroscience and clinical psychology, we use artificial intelligence which relies on human expert evaluations of thousands of gambling trajectories. A board of clinicians and pathological gambling researchers have meticulously analyzed a large volume of online gambling trajectories, considering the compound gambling behavior over hundreds of thousands of single bets. Applying their expertise, they have scrutinized the underlying gambling behaviors for any signs of developing risky behavior. The result is a completely objective assessment of individual customer’s gambling behavior.

We have developed a fast AI approach to ’digitize’ this evaluation process and we have demonstrated that we are able to evaluate online behavior just like the experts, with accuracy close to 90%.

Moreover, we identify different types of problematic behavior which allows us to generate targeted and individualized conversation guides that can be used in reaching out to customers either online or by an operator’s help-line staff.

The system has already been in use with a major operator for almost two years and has been very well received by customers. We believe this is due to a combination of early detection, where dialogue is efficient, and the highly individualized dialogue due to the tailored speaking guide generated by the AI and expert based system.

Our approach sets a new standard for responsible gambling operation as well as opportunities for operators to keep customers in a long and healthy relationship.