Online gambling in Spain is an emerging sector, with a 2018 survey indicating that roughly 6% of male participants and 1.2% of females have placed wagers over the Internet. Landbased gambling appears to enjoy significantly greater popularity as roughly 62% of the male respondents admitted to have gambled in brick-and-mortar venues during the same period as opposed to nearly 57% of female participants.

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Nevertheless, the popularity of online gambling has been on the rise in Spain in recent years. Figures unveiled by the country’s Dirección General de Ordenación del Juego (General Directorate for the Regulation of Gambling) indicate the sector grew by 20.1% during the first quarter of 2019 compared to Q1 of the previous year, with locally authorized gambling operators generating €193.2 million in revenue.

With that said, the country’s gambling industry is projected to grow even further across the online vertical in the years to come. According to forecasts made by the renowned advisory and consultancy firm Ficom Leisure, the online gaming market in Spain is expected to reach anywhere between €1 billion and €1.5 billion by the year 2023.

Both landbased and online gambling activities are legal and rigorously overseen in the country, with the regulatory powers being distributed between the federal and regional authorities. State laws are applicable to online gaming operators since they can offer their services across regional borders. Regional landbased gaming facilities are subject to the oversight of individual regional regulatory bodies.

Landbased Gambling Regulations and Laws in Spain

Brick-and-mortar casino gambling is legal under valid licenses. This is a popular form of entertainment in the country, which has more than forty landbased casinos. Unlike the online gambling sector which is subject to a unified regulatory framework, landbased operators are tied to a physical location and therefore, fall within the supervision scope of the authorities of the respective autonomous region.

The country comprises 17 autonomous communities, or Comunidades Autonomas in Spanish. The legal forms of landbased gambling in Spain include casino gaming, poker, bingo, sports wagering, horse race betting, and lotteries. Following the fall of the fascist regime under General Franco, the country legalized most traditional forms of gambling.

The country’s newly formed government decriminalized these activities in the late 1970s with the passage of a Royal Decree referred to as Law 16/1977. It was signed into law by Juan Carlos I, King of Spain, on February 25, 1977, for the purpose of regulating game of chance, sports betting, and other forms of gambling in the country.

Law 16/1977

Law 16/1977 also outlined a framework for the penalization of non-compliant operators of unauthorized games of chance. Under Article 2 of the legislation, such violators face penalties like arrests and fines ranging from Ptas 10,000 to Ptas 50,000. Those guilty of recidivism were penalized with imprisonment and higher fines of up to Ptas 100,000.

In addition to penalization, this Royal Decree outlined a framework for the taxation of authorized gambling operators. Taxes are annual but apply on a quarterly basis. Law 16/1977 stipulated that said taxes range from 15% to 50%. The higher the accumulated revenue of the operators, the bigger the taxes they had to pay.

Spain’s gambling regulations went unchanged for many years following the Royal Decree’s passage. However, the advent of interactive gaming at the beginning of the 21st century called for the establishment of a new regulatory mechanism within the country’s gambling sector. The changes aimed at ensuring legal safety both for online operators and Spanish gamblers.

Permitted Gambling Products in Spain’s Autonomous Regions

Brick-and-mortar gambling activities are supervised by each of the seventeen autonomous communities of Spain. It makes sense each autonomous region has a catalog of the legal betting products its residents can participate in.

The same goes for the legal requirements gambling operators must meet to service the regions’ citizens. Authorization from the regional authorities is also necessary for this purpose. Most of the legal forms of gambling coincide although there may be some discrepancies between different regions.

The following products are generally authorized on a regional level: roulette (single-zero and double-zero varieties), baccarat, blackjack, craps, casino-banked and tournament poker, cash games for poker, slots and other forms of machine gambling, bingo, raffles for charities, horse race wagering, sports betting, and wheel-based games of chance like the Wheel of Fortune.

Card games like Trente et Quarante (Thirty and Forty) are largely allowed across regions and so is Boule. The latter is a game of chance that resembles roulette but features a wheel with 18 numbered pockets only rather than 37 or 38.

Landbased Casino Regulations

Each autonomous region has outlined its own framework where supervision, licensing, and taxation of landbased gambling operators are concerned. Public tenders are required before a given region issues a license to a landbased casino operator.

To participate in the public tender, each interested operator must submit a proposal. The latter must cover the region’s requirements when it comes to the size of the investment, technicalities, financial stability, and guarantees.

The applicants are evaluated based on their overall score. Restrictions apply to the total number of landbased venues any given gambling company can operate within the same region. Landbased licenses granted by Spain’s regions are not transferable.

It is, however, allowed to transfer one’s ownership of the casino to another gambling company as long as proper notification is given to the regional authorities. Some autonomous regions like Catalonia and Madrid have passed laws that authorize integrated resort-style casinos within their borders.

Landbased Gambling Machines Regulations

Gambling machines and arcades must meet a number of requirements before operators are allowed to install them on their premises. To begin with, the manufacturer of the machines must be registered and authorized by the regulatory body of the relevant autonomous region. If approved, the machines must clearly display the manufacturer’s name and their licensing permit. The payout percentages should also be known.

As for the operators themselves, they are expected to provide financial guarantees and maintain detailed records for each gambling machine they operate. The locations where such machines can be installed are also subject to regional regulations. The same is valid for the maximum number of permitted machines within a single venue.

Online Gambling Legislation in Spain

1Overview

Unlike landbased gambling, the online sector of the industry is regulated on a state level under a unified supervisory framework. The sector was legalized in 2011 following the passage of Law 13/2011. This piece of legislation also led to the establishment of DGOJ which has the remit to oversee and license all online gambling operations on Spanish soil.

2Law 13/2011

The online gambling segment in Spain is regulated on a state level by the local Dirección General de Ordenación del Juego (DGOJ), which translates as the General Directorate for the Regulation of Gambling. The sector falls under a legal framework which came into force in 2011.

Said legislation is known as Law 13/2011 (also called the Spanish Gambling Act) and was officially introduced on May 27 of the same year. This piece of legislation was implemented following the approval of several other regulations. These include Royal Decree 1613/2011 which tackles the technical requirements licensed operators must cover and Royal Decree 1614/2011 that deals with licensing and authorization.

In general, Law 13/2011 regulates interactive activities like online casino gaming, online sports betting, raffles, pari-mutuel betting, lottery-style games, and wagering on horse races. Under Law 13/2011, all forms of unauthorized gambling are strictly forbidden.

3Article 6 of Law 13/2011

Article 6 of the legislation outlines several subjective and objective prohibitions. It states that gambling operators are disallowed from offering their services to underage individuals, persons who have been declared disabled by law, and people who have voluntarily self-excluded from such activities. Only individuals who are 18 years old or above can legally participate in online gambling.

4Article 8 of Law 13/2011

Article 8 of Law 13/2011 deals with players’ protection and the responsible gambling policies approved operators must follow. Locally licensed operators should pay due attention to people from risk groups and provide their customers with all the necessary information on responsible gambling. Under Spanish law, gambling operators are strictly prohibited from servicing customers with mental disabilities.

Spain’s Policies on Gambling-Related Ads

As for promoting online gaming activities, these fall under the general advertising rules outlined in Law 34/1988. Any gambling-related advertisements should display “play responsibly” messages to remind residents of the country to keep their gaming activities in check.

With that said, the Spanish Minister of Consumer Affairs, Alberto Garzon, plans to introduce several restrictive measures to rein in gaming-related advertisements in the country. The changes were proposed in February 2020 to combat the increasing gambling addiction among Spanish residents. The planned measures are extremely rigorous.

These include restrictions on televised gamblings ads by up to 80%, prohibiting operators from using celebrities to promote their products, and a ban on promotions that involve offering free-bet bonuses to new customers. The proposed amendments could restrict gambling ads on radio and television to a four-hour window, which starts from 1 AM.

Sponsorships will be allowed as long as the teams do not feature gambling logos on small-sized kits designed for children. Free-play is also under fire. The free demo versions of the casino games should use the same Random Number Generator as their real-money counterparts.

This is in response to the practice of some casinos where they use RNGs with higher win rates in the free-play versions of their games. Time will tell whether these changes in Spain’s gambling advertising policies will come into effect. Minister Garzon is yet to give a specific timeframe for their approval and implementation.

Deposit Limits, Cryptos, and Payment Security

Locally authorized gambling operators process the payments of Spanish residents in line with the security guidelines, set forth by the local regulator. Spanish players have the option to register their accounts in EUR, Spain’s official currency as of the beginning of 2002.

All accounts undergo obligatory identity verification and are protected with industry-standard SSL encryptions. Due to regulatory requirements, Spain-licensed casinos would automatically enforce the following limits on initial deposits: €600 for the day, €1,500 for the week, and €3,000 for the month.

Players have the option to upgrade their limits after verification. Customers can use cryptocurrencies like Bitcoin to process online casino payments but only on condition their gaming accounts have been nominated in the EUR currency.

Player Taxation and Penalization

There are no known cases of players being individually prosecuted by the Spanish government on charges of gambling at unauthorized offshore casinos. With that in mind, the local regulator DGOJ is bent on suppressing illegal gambling in the country.

Providing gambling services to Spain’s residents without holding a valid local license is considered a serious infringement under Spanish law. As such, it is subject to hefty fines that range from €1 million to €5 million. In addition to monetary penalties, the Spanish authorities also restrict the access to unauthorized online casinos and banking methods.

Spanish law requires casino fans from the country to declare their gambling-related earnings in their personal income tax return. Gambling losses are also deductible, with earnings being leveled at the maximum. As for online casino operators, they must pay the so-called Impuesto de Actividades de Juego (IAJ or Tax on Gambling Activities in English).

It amounts to 20% of their gross gaming revenue under Law 13/2011. The percentage is cut in half to 10% for gambling operators based in Melilla and Ceuta, both of which are autonomous territories located on the African northwest coast. These taxes are paid quarterly.

Spain Online Gambling Regulator

All forms of allowed online gambling in Spain fall within the remit of the Directorate Generale for the Regulation of Gambling (Dirección General de Ordenación del Juego or DGOJ), which oversees the sector on a state level. Integrated within the Ministry of Consumer Affairs, this entity is tasked with regulating interactive gaming activities as well as with the license issuance of approved operators.

To legally penetrate the Spanish market, operators are required to apply for and obtain a local license by the Directorate General. The latter issues two types of permits, general and singular.

The singular licenses cover several individual verticals including table games like blackjack, baccarat, and roulette, online slots, bingo games, poker, pooled sports betting, fixed-odds sports betting, exchange and horse race betting.

Licenses are granted to approved operators after a tender, which can be held either officially or at the request of the interested gambling companies. The approved operators are then added to the registry of the Spanish regulatory authority. Companies are approved only on condition they meet all technical requirements along with various conditions pertaining to fraud prevention and operational finance.

Another condition of the regulator stipulates that licenses are granted only to publicly limited or limited liability companies, registered within a member state of the European Economic Area (EEA). When entering the website of a licensed gaming operator, Spanish residents should be redirected to its .es domain.

Authorized operators should contribute a €38,000 fee for technical reports along with a registration fee of €2,500. Those looking to obtain general licenses for betting and casino games must have at least €100,000 in capital to request the permit. The candidates are approved or turned down within six months.

Only operators who have obtained general licenses can apply for singular (also called “specific”) licenses. Each general license expires after ten years but operators have the option of renewal. As for singular licenses, their validity ranges from one to five years. The exact timeframe depends on the type of product or game on offer.

It is stating the obvious to say that the level of scrutiny and regulatory oversight of online operators’ marketing activities across European markets has increased significantly in recent years.

The current situation in Great Britain is a case in point. In England alone eight Premier League clubs have gambling operators as shirt sponsors. And with marketing being the most high-profile of the industry’s activities, it was always bound to be closely scrutinised.

In that respect Italy and Spain have gone further. The former has banned bookmakers and casinos from all major advertising platforms and the latter is set to introduce its own ban in the coming weeks.

France is steering a different course on the matter. There is no talk of forbidding operators from advertising on radio or TV; even if there are regular complaints, from both inside and outside the industry, bemoaning the volume of adverts for online bookmakers during half-time breaks.

Regulated operators also point out that marketing enables them to channel the vast majority of players to legal betting and gaming sites, even if context is also important in this instance.

A recent report in the financial newspaper Les Echos highlighting the €1.4bn unregulated online casino industry that targets French players was shared widely by the European Gaming and Betting Association and other stakeholders to put pressure on EU regulators.

When it comes to advertising however, it also showed that legal advertising was not always needed to develop a substantial vertical. Black and white hat SEO and online advertising are very efficient in developing a strong, albeit unregulated, igaming activity in a highly regulated market.

“Serious concerns”

In late January, France’s igaming regulator the Autorité Nationale des Jeux(ANJ) published a statement in laying out its roadmap for monitoring operators’ promotional strategies for 2021. Few could have expected to read its blunt words about the marketing practices of national lottery monopoly La Française des Jeux (FDJ) and its horse racing equivalent Pari-Mutuel Urbain (PMU).

Describing the “specific case of the monopoly operators (FDJ and PMU)”, ANJ commented: “From an examination of the promotional strategies of these two operators under exclusive rights, it emerges that the Authority has serious concerns […], in particular with regard to the case law of the European Court of Justice and the State Council which recalls that the advertising efforts of the monopolies must remain measured and strictly limited to what is necessary to channel consumers into controlled gambling networks.

“In addition, in connection with this case law, ANJ will be vigilant to ensure that any advertising or promotional campaign by these operators does not hide behind arguments of general interest to give a positive image of gambling or to justify it.”

The wording is noteworthy and direct. Essentially ANJ is saying that FDJ and PMU are very close to glamorising gambling and giving it an overly positive image. Looking back at some of the recent decisions published by the ANJ’s monitoring committee (collège), things become clearer.

An ANJ decision published on 21 January restated the point that under European law gambling monopolies must focus on channelling consumers to regulated products as part of a campaign of controlled growth. They must protect against excessive play and any potential for underage gambling, it continued.

Noting the scope and ambition of both groups’ marketing strategies for 2021, ANJ warned that FDJ’s marketing should not “encourage a natural disposition towards gambling by making it appear commonplace or giving it a positive image linked to general interest activities or through the potential for major financial rewards.”

Meanwhile PMU’s strategy to increase “the attractiveness of its offer and modernise its image can unintentionally lead to the targeting of young adults even though this category of the population presents a high risk of developing problem gambling” behaviours, ANJ said.

It made similar points about FDJ’s targeting of younger demographics and in relation to both groups’ personalisation and customer loyalty strategies. It said this could increase the intensity and frequency of those consumers’ betting and gaming habits.

A quick look at this slick FDJ promotional video gives an idea of what ANJ is referring to. Furthermore, the regulator’s industry data for the third quarter of 2020 showed that 56% of operators’ marketing budgets were spent on acquisition and retention of players. This indicates why its statement focused on personalisation and customer loyalty in its statement.

Competitive pressures

The proactive monitoring of operators’ marketing and promotional activities shouldn’t come as a surprise. ANJ’s new president Isabelle Falque-Pierrotin spelled out her intention to put players at the heart of her work in an interview with iGB last year.

If the wording of the comments towards both historic operators was somewhat surprising, it should also be viewed within the context of the commercial and competitive pressures FDJ and PMU are under.

The pandemic has of course had a major impact on both companies’ retail activities. FDJ’s activities suffered in 2020, while for PMU the closures of many hippodromes across France last year was keenly felt. But overall both companies’ offline activities also illustrate how they need to reform and rejuvenate their clientele.

The average age of a PMU retail client is 45 years old, compared with 35 for an online horse racing enthusiast and around 30 years old for an online sports betting and poker player. FDJ’s core demographics, considering retail sales remain by far its largest channel, are likely to be similar.

The marketing drives undertaken by both companies should be seen in that context: strategies to modernise their respective images and attract a younger (online) player base that they can develop and maintain on a long-term basis. In theory this largely applies to their land-based activities.

But when it comes to online verticals and specifically sports betting, FDJ’s Parions Sport and PMU.fr lag some distance behind the leading trio of Winamax, Betclic and Unibet. Those three brands each have around a 20% share of the online market, while PMU and FDJ hover around the 5% mark along with a number of other betting brands.

PMU started its online adventure promisingly but has faded in recent years, while Parions Sport, for a number of reasons that were not always within FDJ’s control, never really got going. In addition, newer fixed odds entrants like Zebet, the sports betting site for horse racing tote Zeturf, are growing strongly through aggressive pricing and clever marketing.

CSR central to business model

PMU told IGB that it was focused on meeting ANJ’s stated aim of preventing underage and problem gambling and fighting money laundering.

This was “fundamental to how PMU carries out its activities, the group will put in place all the necessary measures to respond to those aims.

“Beyond that, PMU must be a reference when it comes to responsible gambling and executes its strategy with that in mind.”

FDJ meanwhile told IGB that ANJ had “reminded all operators, and not only FDJ and PMU, of the need to strike the right balance in their marketing of betting and gaming activities.”

With regard to its activities, FDJ added: “Corporate and social responsibility has always been central to FDJ’s business model; the group’s aim is to market its products, but its priority is responsible gaming.

“To this end, the group has put in place specific measures, such as the commitment to devote 10% of its TV advertising budget to responsible gaming, a commitment not made by any other French operator.”

Clearly operators need to strike a balance between marketing their products, building their appeal and attractiveness and preventing problem gambling and underage gambling.

FDJ said its “advertising and marketing strategy aims to promote a gaming model in which many players bet small amounts”.

“For this model to be viable over the long term, it is essential to build loyalty among existing players for the lowest-stakes games and to recruit new players, while developing a growth model that upholds responsible gaming principles,” it explained.

“All of FDJ’s marketing materials are developed with this ultimate goal in mind. They also help channel player demand into controlled networks.”

Online Gambling Companies Spain

The group added it is supportive of regulation of gaming advertising in France and the ANJ’s monitoring and oversight to prevent the negative effects of excessive advertising that could encourage irresponsible gambling behaviour. Such behaviour would be detrimental to all operators, it said.

“However, excessive restrictions – or even a total ban on gaming advertising – would be counterproductive, as they would favour the development of illegal online gaming activities, leaving players and minors less protected,” it continued.

“Betting and gaming advertising is useful in that it channels player demand to controlled environments, promoting games that encourage moderate and responsible use. In this regard, ANJ has a key role to play, particularly with respect to online gaming activities, where advertising by operators is especially prevalent.”

With both FDJ and PMU’s retail activities hit hard by event cancellations and high street closures, the pressure is on to make up for lost revenue. Pandemic-permitting, the rescheduled European football championships and Olympic Games will present them with a major opportunity to sign up new payers.

They and other betting brands will be marketing their products and promotions heavily. As a result, advertising budgets are expected to rise 26% this year on 2019 total of €239m (figures for 2020 are not accounted for as they were badly impacted by the pandemic).

Little sympathy

Speaking to contacts working with licensed private operators in France however, there is little sympathy for either FDJ or PMU. All point to the built-in commercial and regulatory advantages those groups have benefited from since 2010.

Many of these, such as PMU’s co-mingling of online and retail player pools for horse racing, had to be fought and eventually defeated via long and costly legal battles.

Others point to products such FDJ’s retail app (FDJ Points de vente), a bring your own device (BYOD) solution which is distinct from its betting app and allows punters to select a bet, which generates a QR code. They can then take the QR code to a high street outlet to scan and place their wager.

The bluntness of ANJ’s press release was striking, mainly because it is so rare to see such language directed at national operators. By way of comparison, many British operators are adamant that the National Lottery should be more closely monitored when it comes to marketing and player communications.

Online Gambling In Spain Attractions

But ANJ’s remit has also expanded considerably when compared to its online-focused predecessor L’Autorité de régulation des jeux en ligne (ARJEL). It oversees close to 80% of France’s gambling sector, including all FDJ and PMU retail outlets, whereas ARJEL only covered around 11% of the market. Its statements should also be seen in that context.

Online Gambling In Spain Tourist

It will be interesting to follow this topic in the coming months, especially if PMU and FDJ are unable to reclaim market share in the online sports betting vertical. But so far ANJ is doing what it said it would.