Industry reaction as Spain implements severe gambling ad restrictions

Spain inspired another regulatory headache for the industry this week after the government revealed it would look to ban gambling advertising on TV and radio, except between the hours of 1am and 5am.

The prospective regulatory changes were included as part of a raft of measures aimed at addressing the proliferation of gambling ads in the country, as announced by Spain’s Minister of Consumer Affairs Alberto Garzón.

Stopping short of an Italy-style gambling advertising ban, Garzón claimed it would be better for both public health and the gambling market to continue in a controlled and regulated manner.

Below, Spain-focused operator R Franco, gambling consultant Eduardo Morales Hermo, Loyra Abogados partner Patricia Lalanda Ordóñez and Asensi Abogados’ managing partner Santiago Asensi all share their observations on the new proposals.

Ruben Loeches, CMO at R. Franco Group

In my view, the measures will prompt a return to the previous situation we saw in the early 2010s – when the market in Spain was “a-legal”. This suggests that international operators will reduce their M&A budgets drastically due to a lack of quality advertising. Affiliation, sponsorships and digital marketing are once again set to be the main route when it comes to player acquisition.

Retention and loyalty have, of course, always been important, but with the latest regulatory developments, I expect it to become an even greater fixture once research into a competitors’ offering gets harder. Combined with the fact that the cost of acquiring a ‘first deposit’ will increase exponentially, it’s clear that customer loyalty and boosting retention rates has to become priority number one for operators in 2020.

It [the gambling industry] will almost certainly contract – the question is, by how much? The recent tightening of advertising regulations, and the negative press attention that comes with it, naturally makes the Spanish market less attractive to international companies. Growth will be slowed by a reduction in the number of operators applying for a licence in the Spanish market.

Today’s restrictions are significantly less severe than what was expected just a few days ago. Statements from the relevant authorities suggest they are realising that prohibition is unfeasible and that the goal should be regulation, not prohibition. Which, if done right, we will support.

Patricia Lalanda Ordóñez, partner, Loyra Abogados

In my opinion, the restrictions will not drive players to the black market in principle as none of the 37 articles are completely restrictive. However, licensed operators will have to be very creative to be able to get their compliant message out to the public. Limiting the broadcasting of TV ads for gambling to the general timeframe of 1am to 5am is perhaps the most flagrant measure. Without a doubt there is going to be a market contraction as a consequence of this bill if it is passed as drafted. Many of the operators, over 70 to date, offer very similar products and use the commercial communications (i.e., advertisement, promotions) to differentiate themselves from one another in hopes to reach their target clients. Should these restrictions lead to reduced numbers in player acquisitions and customer retentions, I wouldn’t be surprised if they [operators] turned their efforts to other more profitable jurisdictions.

Eduardo Morales Hermo, consultant

The minister has said that any advertising content, on any medium, which suggests that gambling is a solution to the problems, incites the compulsive practice of gambling or links gambling with ideas that express personal, social success, economic or professional success will be prohibited. Also, those ads that incite minors to gamble and obtain economic amounts of any kind. As well advertising may never include direct or indirect references to promotions or bonuses of any kind, with phrases such as “play now”, “enter and win” or “bet now” also be banned under new rules.

However, the reality though is that online gambling and betting operators do not make commercial advertisements or promotion of gaming and online bets that link gambling with ideas that express personal, social, economic or professional success, much less encouraging children to play and collect economic amounts of some kind. This is simply a lie.

I believe that there is still time to think and analyse to conclude what measures are needed to improve the gaming regulation in Spain, both in the land-based and online channel. There is enough experience, studies and knowledge to make it possible to reconcile the objectives of improving security, protection and guarantees of consumers, with the existence of a legitimate gaming offer that absorbs demand in the regulated environment.

That is the real impact of reducing the time frame for advertising from 1am to 5am, which is no less than a real disguised ban.

Italy established a ban on advertising (and is now regretting it) and they did not achieve their stated goals in doing so, in fact the contrary has happened. It has been an incentive to move the demand from the regulated to the unregulated offer, and by doing that consumers lose protection and guarantees of being in an online gaming and betting regulated environment.

One thing is to try and improve regulation for advertising and commercial actions of online gaming and betting, and another is to ban advertising, which is in essence what this draft of the Royal Decree Law does. Leaving a very narrow gap for advertising.

Any measures that prevent a rational and normalised activity transfers the demand to the unregulated market and those who want to be protected will suffer from an absence of the consumer and governmental protections inherent in using sites within the legal, regulated and protected market.

Santiago Asensi, managing partner, Asensi Abogados

My view on the current draft is that, in general terms, we should celebrate that the new government has listened to the regulator and has avoided a situation like the one caused by Decreto Dignità in Italy. Then, we can agree or disagree with the specific details of each one of the rules that this decree introduces but, whatever is the case, it still gives a lot of opportunities for promotion, sponsorships and advertising. It is also worth mentioning that this draft decree comes together with a regulatory impact analysis, which is an in-depth study of this matter and shows how the Spanish regulator has reached its conclusions. Such an analysis is a masterpiece of the Spanish gambling literature and could be quite helpful in order to inspire other jurisdictions.

Picture: iStock/tupungato