Spain Leads Online Gambling Regulation

The Spanish gaming law was passed by the Senate that would regulate and legalize internet gambling in Spain was okayed on the 5^th of May. Within the next couple of days it would be confirmed by the main legislative chamber. It simply means that this new law would come into effect before this month is out.

However, upon its publication this new regulation must still be sanctioned by the European Union (EU), also expected this month. In addition, a further three decree laws stipulate the criteria, protocols and conditions that permit internet casinos and providers to apply for licenses and wade through the approval process. Hopefully this would be publicized at the end of June.

The necessary legal parameters are now in place, the new regulation is ready to be implemented and the licensing procedure for internet casinos can now begin in earnest, the first licenses would be issued before the end of 2011 and at the beginning of 2012. It would be subjected to the product and services technical authorization.

Spanish internet gaming law makes provision for the trendiest internet gambling content, apart from live betting, at this stage it has not been confirmed whether or not internet bingo is on the cards. Live betting is permitted to take place at all existing retail outlets in regions including Madrid, Pais Vasco, Valencia, Navarra and Aragón, bingo would be allowed in 400 plus land-based halls across Spain, it goes without saying then that these products would be included in the new internet gambling legislation.

A comprehensive list of permitted casino games would be included in the impending decree; online bingo might be slotted in as well.

During the legal process a couple of changes have been made as per the original draft put forward by the government. These include:

Every operator offering Spanish players remote gambling in Spain and based in extraterritorial jurisdictions must update their tax obligations with the Spanish Treasury if they want to apply and obtain a license for egaming within the new legal framework. This law would will have an impact on sites such as Bwin, Betfair, Bet365, Unibet and various other operators. Prior to the new law relevant taxes must be settled for the five-year period.

A transitory period for advertising and sponsorship contracts with regard to internet casinos has been set forth as well. Until the 1^st of January 2012 they’ll be permitted to maintain their contracts without any form of penalty, after this date no internet casino can sponsor or advertise internet gaming without a legal Spanish license. Connected to this issue, the new law has been revised to rule out the responsibility of media companies on any tax default promulgated by internet casinos with who they have advertising obligations.

Internet casinos that have been granted an online gaming license to operate in Spain will be allowed to keep their servers outside Spain and within the EU on condition they could be accessed by Spanish authorities.

The taxation issue imposed on internet casinos in Spain is still relatively high; hopefully within the foreseeable the tax rate would be lowered. However, for the time being it stands and Spain will stick to its 25% on GGR/GPT for the majority of its internet gaming products. In hindsight Spain’s taxation is not as high as France but worse than the Italian model

It’s going to be difficult for online gambling sites to gauge their profit margins with Spain’s current tax rate. It’s up to the Spanish government now to start with the licensing process bearing in mind the position of the land based casinos who don’t favour the existing terms, since they feel it’s biased.