English

In the realm of gaming and betting, we are currently facing a global debate with historic antecedents, economic interests and greatly varying justifications, in the search for distinct objectives. Gambling activities such as casinos, bingo, slot machines, and game parlours, as well as the lottery and betting, have traditionally been exclusively exploited by the state or the autonomous communities. This has been based on the political justification of protecting citizens. In other cases, such activities are authorized by a restricted number of concessions and are under strict administrative control and subject to heavy taxes (these include casinos and bingo parlours). Another of the arguments for maintaining state control of these activities has been the reinvestment of the profits into socially beneficial causes such as the fight against addiction and the training of athletes.

It appears that the private sector and large corporations that are being created in this sector, especially those that operate on the internet, are not willing to accept the state run monopolies based on any of the arguments set forth up to now. They do not believe that the state should control the choices citizens make on how to spend their money. They also believe that they are capable of dedicating a portion of their earnings to socially beneficial causes just as the state does. Furthermore, they believe that the state promotes gambling in the lotteries and betting games just as much the companies. Finally, they believe that this is a leisure sector that should be liberalized and that there is no reason to maintain the privileges of the state, other than the state wanting to retain its economic interests. The Chief Executive Officer of one of these multinational gaming corporations recently explained in an international conference that his wife buys a new pair of shoes each week. When he asked her about this, her response was, “Darling, I love shoes.” Notwithstanding the gravity of the situation, he affirmed that he did not want the state to regulate the number of shoes his wife is able to buy each year. In the same way, he does not want the state to decide whether or not he is able to bet on the Real Madrid vs. Barcelona soccer match, or if he can purchase lottery tickets in Germany, play poker, or participate in a game of roulette over the internet. He did not accept the moral, protectionist and interventionist justifications for denying, in his opinion, the inevitable liberalization of this lucrative sector.

In Europe, gaming and betting activities are not included in the directives governing the internal market. The Court of Justice of the European Communities (“CJEC”) held that gaming and betting activities are considered as a “provision of services.” The principal of free provision of services between member countries of the EU does not permit the denying or discriminating of companies within one member state of the provision of services in Spain. This means that Spain is obligated to allow the provision of the service of casino games and betting over the internet when such services are being offered by companies that are licensed in countries or territories of the EU, such as Great Britain, Malta or Gibraltar. There is an exception in that the Treaty of the European Union permits any state to deny acceptance of such services in their territory for general interests, such as those related to criminality, fraud, or the protection of minors. However, the CJEC has clearly held that this exception is only possible when the state that prohibits such services on the basis of general interests is not promoting and expanding gaming through its lotteries, games, and state sponsored betting, or if these are controlled by private companies. Spain does promote these activities, and even counts on the “Gordo” lottery, which is one of the largest in Europe.

Spanish legislation in this area is quite a jumble of opposing ideas. In the years 2006 and 2007, the autonomous communities of Madrid and the Basque Country published rules to concede authorization to private companies for the installation and exploitation of betting houses in the territory of the respective community. In other words, more like the pure style of the bookmakers in England. In fact, William Hill and Ladbrokes are two of the companies that have obtained these licenses. In December of 2006, with the General Budget Law for the State for 2007, certain norms were modified so that the activities of selling lottery, betting, and gaming tickets by any national entity or any foreign entity would be considered as criminal contraband. At the same time, in 2007 two large casino projects were agreed to, one in Ciudad Real with a Don Quijote theme, and another in Los Monegros in the style of Las Vegas. All of this makes it clear that Spain cannot oppose the provision of these types of services by providers from other member states over the internet by using the argument of “general interest”; not while it is promoting these activities internally.

As of December 2007, by means of the Law on Measures to Stimulate the Information Society, the principals that should govern the future laws in this sector were set forth. These principals include the affirmation that gaming and betting over the internet would be regulated in the future, and that the state would have jurisdiction in this matter whenever the activity goes beyond the boundaries of one of the autonomous communities. The state will also establish a system of distributing the taxes generated by these activities between the state and the autonomous communities. Finally, to provide these types of services, it will be necessary to get prior authorization from the state, the conditions and requirements of which are yet to be determined.

Despite the fact that the in December of 2006 it was stated that these activities are to be considered criminal contraband, it appears that Spain will be one of the next countries to liberalize this sector. Without a doubt, the international operators are paying close attention to the legal developments, taking into account the potentially lucrative market that Spain represents, given the fact that history has shown elevated tendencies for its citizens to spend money on games, lotteries, and betting.

The Resolution approved by the Director General for Spanish Lotteries and Bets last 18 June sat out the following requirements for online betting, applicable exclusively to the activities of the State-owned Lotteries and Bets organization (LAE – Loterías y Apuestas del Estado) :

1. Bets will be made at the website www.loteriasyapuestas.es, although the Loterías y Apuesas del Estado organization is allowed to use other domain names.
2. Participants must register completing their user name, password, date of birth and email address. However, additional data may be requested.
3. If the participant wins a price above Euros 600 he will need to identify himself properly in order to obtain payment.
4. Bets from users in other countries are not allowed and shall be prevented.
5. Participants must use an electronic bank account authorized to operate in Spain and from a bank registered within this system. Such bank account must belong to a person with residence in Spain.
6. Bet payments can also be made with secured bank cards issued in Spain, in which case participants will also need to provide a bank account to receive any payment of prices.
7. Taking bets with this system will only be possible when the central system of Loterías y Apuestas del Estado is generally taking bets.
8. The maximum amount to have in the participant’s betting account will be Euros 200. This will also be the maximum amount for any bet.

These requirements are only applicable to the LAE, however they can be an indication for future regulations in this area.

On December 2007 the Spanish Parliament passed Law 56/2007, containing measures to boost Spanish information society. The 20th Additional Provision of the law obliges the Spanish Government to regulate gaming and betting activities in Spain. It then sets out a list of principles which will need to be followed in the drafting of such new regulations. However, the law does not establish a deadline for all this to happen and it is not clear if the directions now approved will necessarily be followed.

In summary, although it is unclear when the new regulations will be approved, the Spanish Government has now expressed its opinion on online gambling in a law and has been obliged to draft a future law to regulate the activity.

The principles that will guide the Spanish Government are as translated from the law’s 20th Additional Provision below:

“The Government will present a Proposal of Law in order to regulate gaming and betting activities, in particular those activities developed by means of interactive systems based on electronic communications. The above mentioned proposal shall follow the principles set out below:

1. To ensure the compatibility of the new regulations with the applicable regulations in other areas that are related to these types of services; in particular, with regard to the regulations relating to the protection of the minors, the protection of youth, the protection of especially sensitive groups of users as well as of the protection of consumers in general, and of personal data and electronic services regulations.
2. To establish new regulations on the provision of gaming activities by means of interactive systems following the rules and the general principles of European Union law.
3. To create a system of control for gaming and betting activities provided by means of interactive systems, which ensures secure and fair market conditions for the operators of such systems as well as suitable levels of protection for users. In particular, the new regulations shall regulate the activity of those operators which already hold an authorization to provide the above mentioned services granted by the authorities of any Member State of the European Union.
4. To establish a tax system for gaming and betting services provided by means of interactive systems taking into account the origin of the transactions being subject to taxation. The above mentioned regulation shall also foresee a tax distribution system between the State and the Autonomous Regions with regard to the revenues obtained from the taxation of gaming and betting activities provided by electronic means within Spain, and taking into account the specific tax status of the historical regional regimes.
5. Gaming and betting activities using interactive systems based on electronic communications shall only be provided by those operators duly authorized to do so by the competent Public Administration [authorization], which can be obtained by fulfilling the established conditions and requirements. Operators that have not received such an authorization shall not be allowed to perform any activity related to interactive gaming and betting. In particular, the necessary measures to prevent advertising in any way shall be put in place, as will the prohibition of using any existing payment system in Spain. Furthermore, the operation of gaming and betting activities by means of interactive systems without holding the relevant authorization shall be fined in accordance with regulations relating to the repression of smuggling/contraband.
    
6. The jurisdiction for organizing gaming and betting activities developed by means of interactive systems shall correspond to the General Administration of the State whenever the scope of such activities is the whole national territory or more than one Autonomous Region.”