Patricia Lalanda Ordóñez, Partner, LOYRA Abogados
The Draft of Royal Decree on Commercial Communications of Gambling Activities (“the Draft”) was published for public allegations February 24 (2020) and the deadline was March 16 (2020). However, due to COVID-19 crisis, the state of alarm was declared in Spain March 14 and consequently all administrative terms were suspended. This allowed interested parties to add more fuel to the fire. Once the administrative terms were resumed in the beginning of June (2020) the allegation period closed. Notwithstanding, the document was remitted to the European Commission March 3, in compliance with the provisions of Directive 98/34 / EC of the European Parliament and of the Council which obliges EU Member States to immediately communicate to the Commission any technical regulation draft. Since its registration, Spanish Government had to wait three months, at least, to adopt the Draft. Interestingly, on July 9, Spanish Government reactivated the processing and sent a new version of the Draft to the Commission via urgent processing, which, if accepted by the Commission, would involve eliminating the obligation of waiting three months before enacting the draft into Regulation With only one last formality pending, worst or best case scenario (depending on who’s reading the article), the Draft could be adopted as Regulation any day now. However, the General Director of the Spanish gaming authority stated in a recent interview that he was aiming for Autumn.
Online gaming was regulated in Spain in 2011 (Law 13/2011). The text expressly requests the development of the Law via Royal Decree (a.k.a regulations) involving three matters, (i) technical requirements of gambling activities, (ii) matters pertaining to licences, authorisations, and gambling registers and (iii) advertising. The first two were developed that same year, however the third seems to be “cursed”. The first phase of the processing of the Draft began in March 2015, all administrative formalities were concluded; around 20 operators and 20 ministerial departments, councils, organs, entities and agencies of the regional and state governments, consumer protection associations and other entities submitted their reports, nonetheless the Draft was paralyzed. In November 2017, the processing of the Draft reopened and again underwent all the administrative formalities. Regardless of the Government’s efforts, 2017 version never saw the light either. Nine years later after the enactment of the Spanish online gaming law, we are now doubtful if by the third strike there is a home run.
Even if specific online gaming advertising regulation does not exist, this does not mean that there is an anarchy in advertisement activities; General advertising law and consumer protection laws are applicable. In addition, the Code of Conduct on Gaming Activities Communication was approved in 2012. This Code of Conduct consists of self-limitation/regulation that most of the online gaming operators have adhered to. The latter has alleviated to some degree the online gaming advertisement ferocity perceived by many.
Should the current Draft be passed, there will be a complete change of paradigm for an industry that just in 2018 invested 286 million Euros in advertisement. The most relevant issues can be enumerated as follows:
In the area of advertising, (i) the Draft lays down specific provisions according to the advertising channel: In audio-visual communication services, (which includes “on-petition” or “on-demand” services) the advertisements can be broadcasted only from 1AM to 5 AM, however with some exception for lotteries, pool betting and bingo; In land-based environments, there is a general reference to the rules of the Spanish Regions, which are often more restrictive or prohibitive, but also with exceptions. Special rules are established for advertising in video exchange services, for email marketing, on web pages, or on social networks (in this case, of complicated technical application); (ii) Special rules are established for commercial communications of tipsters or forecasters.
In terms of sponsorship, (i) Incorporating operator’s trademark into sports equipment is banned, thus reducing sponsorships to the bear minimum; The use of gaming operators trademark is also prohibited in activities, sporting events or their broadcasting when addressed to minors or in events which minors participate exclusively. (ii) Trademarks cannot be used to identify sports facilities or entertainment centers or add the trademark to the team name.
In terms of promotional activities, (i) As for promotional activities, such as bonuses, they are prohibited when directed at new players, and are only allowed for consolidated players.; (ii) These promotions cannot be directed at ,among others, customers listed as players “at risk” (new player category introduced by the Draft).
As for responsible gaming: (i) the figure of the responsible gaming delegate is introduced; (ii) The Draft establishes the obligation to incorporate mechanisms and protocols for detecting the risk behaviours of registered users; (iii) Rules concerning the suspension of user accounts are introduced in the case of participants registered in the Register of prohibited players (a state-wide centralized register gaming operator’s platform to which it is connected), and the voluntary self-exclusion regime. These obligations will particularly bring the operator to adopt further legal and technical compliance policies and are sure to be the rabbit hole for administrative information or sanctioning proceedings.
In principle, failure to comply with any of the obligations established in the Draft when and if adopted will be considered a serious infringement which is sanctioned with a fine (100.000€ to 1.000.000€ and/or a suspension of the activity for a period up to 6 months.
As Prof. I. Nelson Rose pointed out in one of his 2017 articles, “the proliferation of legal gambling is shaped by such factors as historical legal baggage, feelings of morality and tradition, demographics, social and psychological factors, and pure irrationality”. Well, we are now witnessing the proliferation of political parties who compare the gaming industry to the mafia (Spanish Senate June 26, 2020) and seek to practically ban gaming activities (not only online gaming) through the Royal Decree Commercial Communications of Gambling Activities as this objective was contemplated in the political programs and campaigns. Anyone who understands the hierarchical pyramid structure of the norms in democratic systems knows that this is not possible, which does not mean that this will not be free from court battles.
The main factors that must be taken into account in this moment of history are mainly that COVID-19 health crisis is affecting Spain’s economy gravely and raising taxes is already on the table; and that legal gaming has in the past been seen by many jurisdictions in the world as a painless way to raise revenue, therefore, perhaps it is not the best moment to indirectly make the Al Capones close down.
However, the main factor that no political party should lose sight of is, ss Johan Huizinga very well analysed in his book Homo Ludens, gambling is inherit to human nature.
We will soon see the outcome of this third sequel.