Opinion: Spain - the path to regulation is far from smooth

Following the general election in late November last year it seemed as though recent changes in the Spanish government would not affect the online gaming application process. Everybody expected the existing policies to be applied smoothly and without any surprises until licences were supposed to be granted in mid-April. What a difference a few months can make in politics.

The departure two weeks ago of Juan Carlos Alfonso, the principal regulator in charge of co-ordinating the process, has overlapped with some important news which for will almost certainly affect all licence applicants and their strategies for a regulated national online gaming market in Spain.

First, the schedule to grant licences will suffer a further setback. Although there had been rumours that the process could even come to a complete halt, the new director general for the development of gaming, Mr. Enrique Alejo, announced in a recent public appearance that his compromise in meeting the deadline had been legally established. In accordance with current gaming regulations the General Directorate has a six month term in order to approve or reject applications. If this expires and no resolution is issued, this administrative silence would be viewed as an approval. Therefore, everyone now expects that licences should be expressly and definitively granted before the six months’ deadline arrives at the beginning of June.

On the other hand, it appears that the tax authorities are preparing to adopt a more aggressive approach towards online gaming activities that have taken place in the last few years. Since May 2011 every operator and service provider that wishes to be present in a regulated Spanish market has paid gaming taxes, a ruling created by the Gaming Act in that same month last year. More alarmingly, the Spanish Tax Agency is now considering retroactively investigating the activities of these operators going back as far as 2007 in order to try to reclaim additional revenue, and in particular non-resident corporate income tax (around 24% of all net profits generated during this period). From a legal standpoint this is a path full of obstacles and is more than questionable, but the authorities seem now to be prepared to fight for it.

Finally, Sportingbet suffered a defeat in its legal battle against Spanish land-based operator Codere with a court forcing the UK operator to take down its miapuesta.com and miapuesta.es sites. The sites are still up and running, however Sportingbet has informed its Spanish customers that it cannot accept any new players or bets between now and and the market regulating.

It is important to emphasise that this is an isolated court order that does not affect other operators in Spain. In fact, Codere has filed injunctions in several courts against other online gaming companies all of which have been rejected (Pokerstars and Bwin). Besides, the measure has a limited scope, as once Sportingbet is granted a licence it will be able to resume its activities.