All questions

Overview

i Definitions

The generally accepted legal definitions of gambling concepts in Spain are set out in Law 13/2011 on gambling, as amended (the Gambling Act), which is the primary piece of legislation governing the state-wide gambling sector in Spain.

Gambling is defined as any activity in which money or economically valuable goods are at stake over future and uncertain results that to some degree depend on chance and that allow the sums to be transferred between the participants, regardless of whether the level of skill of the players is decisive in the results or they depend wholly or fundamentally on luck, stakes or chance. The results must be 'future' (thus excluding past facts) and no minimum degree of chance is required (as a result, to the extent that there exists any chance, an activity is considered gambling even if there is a significant skill component).

As regards the main actors of the gambling market, 'operators' and 'participants', are defined as follows.

Operators

'Operators' may be legal or natural persons, as the case may be, of Spanish nationality or of a nationality of any European Economic Area (EEA) Member State with a permanent representative in Spain. However, only limited liability companies are allowed to participate in the public tender for the awarding of general licences for the operation of non-occasional games. The corporate purpose of such entities is limited to the organisation, marketing and operation of games.

The Gambling Act limits the possibility of providing occasional and non-occasional gambling activities to legal and natural persons who fall within the prohibitions set forth in the Gambling Act or the laws of the autonomous communities governing these matters. The Gambling Act imposes obligations on gambling operators to deposit bank bonds or another type of security in order to guarantee compliance with the obligations established in the Gambling Act. In order to protect consumers and guarantee responsible gambling, operators are not allowed to grant loans or any other credit or financial assistance to participants in gambling activities.

Participants

The Gambling Act does not define the concept of a 'participant', but nevertheless identifies the rights and obligations of participants in gambling activities. The Gambling Act confirms that the relationship between gambling operators and participants is subject to private law; therefore, any dispute between operators and participants must be resolved through civil courts, notwithstanding the regulator's sanctioning powers and arbitration functions.

The Gambling Act defines four specific types of game (lotteries, betting, raffles and contests) and one general category ('other games') that serves as a catch-all for activities that fall under the general definition of gambling but not under any of the four specific games definitions.

Betting

Betting is a gambling activity in which money is at stake over results of a previously determined event with an outcome that is uncertain and alien to the betters. The following types of betting are regulated and permitted in Spain:

  1. 'pool betting' or 'mutual betting', where a percentage of the bets placed is distributed among the winners;
  2. 'fixed-odds betting', where the better bets against the gambling operator and the prize is the result of multiplying the amount bet for the odds previously fixed by the operator; and
  3. 'exchange betting', where the operator acts as a broker and guarantor ensuring that the bets placed between betters are duly performed, and subtracts the fee previously set by the operator for its services.
Contests

Contests are games, the offer, development and resolution of which are carried out via telecommunications media (e.g., television, radio, internet). In this type of game, the right to win the prize requires any form of payment by the participant, which may consist of telephone calls, sending text messages or any other electronic procedure. If there is no payment by the participant, the activity is not regarded as a contest. The fact that a skill component is involved in addition to chance is irrelevant; the activity would still be considered a contest.

Lotteries

Lotteries are a gambling activity in which prizes are awarded in cases in which the number or combination of numbers or signs stated on a ticket, coupon or electronic equivalent coincides in whole or in part with that produced by way of a draw or event held on a previously determined date or, in the case of instant or pre-sorted lotteries, at a prior time.

Betting on the results of lottery draws is not regulated. As not-specifically-regulated games are deemed to be prohibited, this type of bet would also be prohibited.

Raffles

Raffles are games consisting of the award of a prize upon holding a draw or selection by choice between the acquirers of tickets, coupons or electronic equivalents, the acquisition of which is made upon payment of a price. The prize cannot consist of money.

Other games

Other games are defined as any games that do not fall under the definitions of lottery, betting, raffles or contests, such as poker or roulette, where there is a chance component and money or goods are at stake.

Spanish law does not recognise the concept of 'skill games'. If games involve any degree of chance, they are deemed 'contests' or 'other games', as explained above, and their operation would require an administrative licence.

Although there is no express legal definition or reference made in connection with fantasy leagues, they are considered as contests and fantasy operators require an administrative licence to offer fantasy league services in Spain.

Additionally, free prize draws in Spain are categorised as 'random combinations with advertising or promotional aims' and defined as raffles aimed exclusively at advertising or promoting a product or service for which participation there is no payment whatsoever by the participant, other than the price that, as the case may be, the participant paid for the acquisition of the promoted product or service. No licence is required for performing these activities, although gambling tax is levied as explained in Section V, below.

The Gambling Act does not expressly exclude speculative and hedging financial products from its scope. However, the offering of these products is generally subject to licences from other regulatory authorities in Spain and there have been no public or significant cases or controversies as to whether the provision of these financial products could be construed as gambling.

ii Gambling policy

At a national level in Spain, any sort of game within the scope of the Gambling Act that is not specifically regulated by the Ministry of Finance and Taxation is prohibited. The fact that a game is defined under the Gambling Act is not sufficient for it to be considered permitted, and specific regulations are required for each particular game by the Ministry of Finance and Taxation. In addition to these regulations, each operator must obtain a 10-year general licence for the general category of game (betting, contests or other games) and one- to four-year special licences for the operation of a specific game, as detailed below.

At a regional level, the policy is similar. Each of Spain's 17 autonomous communities is free to set its gambling policy. The general default rule is that gambling is forbidden unless previously authorised by the regional government of the specific autonomous community.

iii State control and private enterprise

Until 2010, state-wide gambling was reserved to state-owned operators. Other locally-based games, for which participation physical presence was required (e.g., casinos, bingo, slot machines) could be carried out by privately licensed operators pursuant to the regulations of autonomous communities. Lottery activities were reserved to the state-owned operator Loterías y Apuestas del Estado (LAE), which held a monopoly on state-wide sports and horse betting, and to the National Organisation of the Blind in Spain (ONCE), a Spanish foundation aimed at supporting people with serious visual impairment that operated its own lottery. LAE acted as an operator and regulator. Nonetheless, de facto unlicensed online operators abroad offered games to people participating in Spain.

A comprehensive reform was carried out in 2010 and 2011. Considering the Court of Justice of the European Union's (CJEU) case law on market transparency and establishing that the entity regulating the market cannot be the entity operating games, state-owned operators were required to surrender those functions, which were then entrusted to the Directorate General for Gambling Regulation (DGOJ). Following the approval of Royal Decree-Law 13/2010, Spain's regulatory framework now separates those activities. Private operation of games other than lotteries was authorised upon implementation and development of the Gambling Act.

With respect to non-occasional lottery games, however, the Gambling Act maintained the status quo ante. LAE and ONCE are designated as the entities exclusively authorised to operate such games on a national basis in Spain. The Gambling Act justifies the maintenance of this reserved market for LAE and ONCE on the basis of the significant amount of business generated by lottery games and because lottery tickets are instruments payable to the bearer and, therefore, carry the risk that they may be used for money laundering purposes. Because of these circumstances, operators acting in the reserved lottery market are subject to state control. The reserved framework under the Gambling Act for LAE and ONCE addresses the need to subject the games to strict state control to secure the state's interest in preventing fraud, crime and incitement to squander money on gambling and to avoid the negative effect that gambling may have on Spanish consumers.

With respect to other games, a wide range of private companies entered the market. There are currently 52 licensed gambling operators state-wide in Spain.

iv Territorial issues

The Spanish Constitution does not list gambling among the matters over which the state has exclusive authority. As a result, pursuant to constitutional rules, the autonomous communities may assume exclusive responsibility in regulating gambling, as most of them have. The scope of this responsibility is limited to the territory of the corresponding autonomous community.

In light of this vertical distribution of authority, autonomous communities have issued regulations for the provision of gambling services at the regional level and, under this authority, casinos and other physical gambling sites in general are operated. The autonomous communities also have the power to regulate gambling activities, including lotteries (except for charitable sports betting games) within the scope of their respective territories, insofar as they do not infringe on the powers reserved to the state.

With regard to state-wide gambling, prior to 2011 only lotteries and sports, including horse-race betting games, were regulated and reserved to certain specific operators in a closed market (see Section I.iii, above). As of 2011, the applicable legislation, including with respect to online gambling, is the Gambling Act.

v Offshore gambling

Prior to the 2011 reform implemented by the Gambling Act, offshore gambling (i.e., gambling services offered to Spanish customers from operators located in foreign countries) was considered a crime. This was deemed to be conduct amounting to smuggling. However, the ability of the Spanish authorities to prosecute those operators was limited and not enforced in practice.

The situation changed dramatically following the ratification of the Gambling Act. Any private gambling operator could apply for licences to offer gambling services legally in Spain and the Spanish authorities took action to ensure that gambling services could not be offered by unlicensed offshore operators. Likewise, unauthorised offshore operators may not advertise, sponsor or promote, in any way, games of luck or chance, or advertise or promote gambling operators, if they lack the necessary authorisation for advertising actions.

The powers of the DGOJ, a body within the government, include the ability to prosecute unauthorised gambling. To prosecute illegal gambling, the DGOJ monitors the market from time to time and has created a blacklist of possible unauthorised operators based on in-house investigations, user reports and complaints received.

It is also important to note that, under the Gambling Act, licences and authorisations issued by foreign countries (including EU and EEA Member States) are not valid or recognised in Spain. Operators licenced in EEA Member States may apply for recognition of their licences in Spain through the issuance of a Spanish licence, but the original foreign licence is not the valid title per se. There are no restrictions on direct and indirect non-EU investments in gambling operators.