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Spain Updates Its Gambling Laws

Posted on May 18th, 2011

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Spain is a gambling nation more so than almost any other, spending twice as much as, for example, the United Kingdom. Spaniards spend over € 1.9 billion a year on gambling. This translates into € 480 per person, equivalent to 15 percent of the net average income of every household. Some estimates place Spain’s overall gambling market at about € 39 billion. Spaniards have a whole range of games to bet on, from lotteries to the big jai alai games in Madrid and the Basque region. They bet on racing pools, bingo, slot machines and in the casinos. In resort areas, there are even illegal betting shops where punters can bet on foreign horse and greyhound races. The lure of prizes that can run into hundreds of thousands of euros is an irresistible magnet for the people of Spain.

Spain lays claim to El Gordo (The Fat One), the world’s biggest lottery. It is held at Christmas where 108 series of 66,000 tickets are issued. Each ticket costs € 200. Many groups and organizations divide each ticket into 10 shares and sell them for a couple of euros, making a small profit on top. Ticket sales for El Gordo reach over €1.7 billion, 70 percent of which is given away as prizes. However, the Loteria Nacional (National Lottery) run by the state remains the most popular form of gambling. It is conducted to aid various charitable organizations and the Catholic Church. Tickets are sold at the lottery offices at face value, through street vendors who make a 10 percent commission, or at the kiosks of ONCE (the Spanish organization for the blind).

Spain, including Gibraltar, also has about 40 casinos. In these casinos, one can find popular American and French games like black jack, roulette and chemin de fer, plus the usual slot machines and private gaming rooms. In addition, there are about 250,000 gambling machines spread throughout the country. Gambling has always been legal in Spain. However, for a century and a half, this was limited to simple lotteries and was strictly supervised by the state. In 1977, skill-based gambling was legalized by the Spanish government. Games of chance like slot machines were not legalized until 1981. In 2008, Spain set up 17 regions, and each one was authorized to issue its own gambling licenses.

Until 2002, online gambling in Spain was not regulated. In that year, the Spanish government initiated moves to legalize and regulate internet gambling. These efforts have finally reached completion. Last week, a new Gambling Law was enacted and will become official once it is published in the Boletin Oficial del Estado (State Official Bulletin) after a few days. The implementing regulations of the new law are expected to be released before the end of June. The new law creates the National Gambling Commission, mandated to authorize, monitor and regulate the gambling activity of operators. The Commission can also sanction operators, imposing fines as high as € 50 million. The major point of the new law is the taxation of online gambling, which was hitherto untaxed. Online gambling operators have objected strongly to the provision that obliges them to pay taxes (25% of GGR/GPT) retroactively, for the period that they were tax-free.

An interesting provision of the new law involves sponsorship of sporting events. Spanish offline gambling companies are not allowed to sponsor sports teams. On the other hand, this powerful advertising tool is open to online companies, like the betting company Bwin, whose logo adorns the shirts of Real Madrid players. The new law will allow all gambling companies that comply with licensing requirements to make use of this advertising medium. The Loteria Nacional and ONCE are exempted from the regulatory provisions of the new law. Online bingo and live betting are prohibited, because they would compete with the more than 400 sports betting corners, 1,500 sports betting terminals and over 400 bingo halls throughout Spain. Online gambling sites are also required to hold the Spanish domain name “.es” for the government to better control tax evasion, money laundering and terrorism financing.

Behind all this is the economic crisis affecting Spain. The government plans to privatize the Loteria Nacional to raise much needed funds. An IPO will offer 30% to the public, and is expected to generate € 6 billion.