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Highlights of the international ECIJA Awedacity conference ‘Online Gaming in Spain – a regulatory update’

The ECIJA and Awedacity conference ‘Online Gaming in Spain – a regulatory update’ took place on 18 April in Madrid. This was the first international conference at which national and European sector experts offered in-depth analysis of the new gaming regulation in Spain and its impact on the industry. Xavier Muñoz, partner of gaming and betting at ECIJA, chaired the conference.

More than 70 representatives from the main online gaming operators in Europe attended the conference. They were joined by representatives of Spain, Malta and Alderney regulators and specialist attorneys in gaming for the UK, Italy and France.

The conference began with a debate on ‘the first draft of the game online in Spain’ where Muñoz introduced the panel who presented the high priority issues to be discussed by the Senate. They emphasised the tax regime, where it was advised that ‘most of gaming maintains a type of 25%, a very high percentage that will drive operators away’. Another high priority issue for discussion was the need to define ‘the game catalogue’.

Fernando Prats, director general of taxation and gaming, Autonomous Government of Madrid, offered a detailed assessment on the new Gaming Bill and the amendments approved by Congress. Prats also emphasised the need ‘to develop a cooperation framework between the different CC.AA in the matter of regulation policies for gaming, […], and establish an appropriate tax regime’. With regard to the issues that the new law will ban, Prats stressed that ‘[the new Law] does not contemplate a ban to the user located in Spain to connect to a foreign operator webpage that offers its services to the Internet audience worldwide’.

With respect to the publicity and sports sponsorship regulation, Prats commented that ‘the Law clearly states that publicity is authorised’. He emphasised, however, that ‘the regulator would have to be more specific on the formal application of the advertising regime‘, and encourage the interested companies to ask the regulator for clarification on the subject. In relation to sport sponsorships, Prats pointed out that ‘the terms of contracts will remain in force until the pertinent licences are granted’. He also said: ‘the sponsorship contracts are private contracts, and therefore their application shall be subject to any imperative regulation of public order such as the advertising regulation.’ In this sense he reiterated that ‘the Law should be more specific on that matter’.

Prats stated that another of the most discussed topics of the new Gaming Bill has been, ‘the granting licence system and its limitation’. He explained that: ’the new Law has suppressed the tender favor of a competition procedure, which has been a good advance’. He went on to say, ‘the Law has anticipated that the licences are granted by a period of ten years extendable, and probably without limit for all those operators that apply for licences and comply with the established requirements’.

As far as the timing of the licences, Alfredo González Echarren, director of security policy, Autonomous Government of Navarra, agreed with Prats that it ‘is not going to be a fast–track issue, although the people in charge affirm that licences will be available to end of this year’, because ‘neither the Council of Gaming Policies or organs to articulate these licences have not been formed yet.’ Sacha Michaud, president of the AEDAPI, however, defended that ‘the best way we can help is by showing the regulator how our industry in the regulatory scope of the European Communities works’.

The panel also tackled the issues around ‘Lotteries and Bets of Estado (LAE), ONCE and their position in this Law’, Prats and Echarren argued that under the new law, the public operators that exclusively hold the commercialisation of lotteries and quinielas in Spain ‘are going to be able to commercialise other games’. They commented that from the CC.AA position it has been requested that both shall be under the same rules as the rest of the operators. Finally, Michaud emphasised that: ‘LAE will be, without a doubt, a very tough competitor in other games’.

During the second panel, with regard to the operator’s perspective of the present market conditions, Michaud expressed the sector’s concern on ‘the advertising standards to compete in regulated markets’ and ‘requirements imposed to users for their online registry in betting houses that may suppose a burden in the use of these portals’. He also defended ‘the creation of an attractive regulating framework for companies’, with an appropriate tax regime that enable them to be profitable, and without limiting licences and products, to ensure that consumers and users can have attractive products’. On the other hand, Eduardo Losilla, chief executive of Quinielista.com, emphasised the legal standpoint of collaborating organisations to the commercial network of LAE that have also been selling  online for many years with the LAE’s knowledge. In its opinion this is ‘another pending activity to clarify in the new Law’.

In the third panel, dedicated to media, financial organisations and telecom companies, Manuel de la Fuente, Director of Digital Publicity of Mundo Deportivo, explained that the mass media have been organised through the AEDE to communicate their message to the government with respect to the scope of application of the new law. He expressed that there is uncertainty in the sector regarding: ’the licences’ scope as far as advertising’.

The fourth session was dedicated to the creation of an appropriate tax regime for online gaming. Javier Gomez, head of tax at ECIJA, clarified that in the last approved amendments, the LAE, like a private company, shall pay taxes for those games that it does not hold exclusively. Heliodoro Giner, secretary general of the Spanish Association of Casinos, pleaded for ‘the advancement towards a harmonized tax system for the entire sector’. Andres Baez, professor of financial and tax law at Universidad Carlos III de Madrid, denounced ‘the lack of homogeneity regarding tax aids’.

The penultimate session was dedicated to technical requirements, homologation of hardware and the security requirements and certifications that the new regulation demands. Guillermo Rodriguez, manager of IT risk at Deloitte, emphasised the need ‘to create a legislation that establishes a standard management system’ and explained that it ‘is currently under assessment which of the present homologations of the CC.AA can be extrapolated to the new regulation’. Rodriguez also emphasised that it would be desirable that ’the Law establishes a comprehensive security framework’ to guarantee that security incidents are minimised. Alexia Smilovic, business development representative at TST GLI Europe, pointed out that it ‘is necessary to ensure that the game is always fair to the player’.

The final session was dedicated to a discussion on compared law, conducted by Gayle Kimberley, representative of legal manager for the Lotteries & Gaming Authority in Malta, Robin Le Prevost, e-commerce director of Alderney eGambling, Joerg Hofmann, partner with Melchers and Nick Nocton, partner with Jeffrey Green & Russell. Gayle stated that in Malta, ‘we think that the laws must be as neutral as possible to avoid having to amend the legislation, also we considered that it is essential to maintain an open jurisdiction, and to reduce the duplicities for the operators’. For Le Prevost, ‘Contrary to the English, should the tax regime be wrong, the Spanish players, will choose to go to other operators, although they are not regulated’. Nocton also pointed out that: ‘the tax impact for the operators, is crucial, if you tax too much the operators lose interest and other operators are going to offer the gaming services in an illegal form’. Hofmann emphasised that ‘a unique licence cannot reflect the realities of each country, in spite of this the operators must be united to decide a series common standards for the industry, for example in the matter of security’.

Muñoz closed the conference. He insisted that the new regulation should get right the key questions that the sector demands. These issues include an open licence system that should be not excessively bureaucratic, a balanced taxation, assumable technical requirements and a catalog of games that allow that operators to offer attractive games and bets for users.