The pain in Spain: how trade association JDigital is navigating an increasingly hostile Spanish gambling market

As a frequent interviewer of trade bodies representing the gambling industry, you see commonalities, things that apply regardless of operational market. Trade bodies often deal with extremely unsympathetic governments; they often have to create a consensus of action among very divided and competitive operators; and they have to sometimes go ‘to the mattresses’ to fight the industry’s corner.  Spanish trade association JDigital is no exception to this criterion. It has had its own battle royal with the Spanish coalition government in recent years about the increasingly hostile direction of regulation in the Iberian Peninsula.

As illustrated in the recent lawsuit against the government stemming from the highly restrictive and controversial Royal Decree on Commercial Communications, the trade body is no stranger to run-ins with the authorities. JDigital CEO Andrea Vota chats to EGR Compliance about the organisation’s objectives, its methods and the battle to keep Spain’s market out of the hands of the black market.

EGR Compliance: What would you say is the mission statement of JDigital and how does this fit in with your day-to-day duties?

Andrea Vota (AV): JDigital’s mission is to defend and represent the interests of online gambling in Spain, with a firm and non-negotiable commitment to the protection of players and society.

We are committed to promoting safe, responsible environments and conditions for the online gambling activity in Spain. We do so through the creation of a balanced and competitive regulation, which allows the development of an open and safe online gambling market, while protecting the interests of the actors involved – namely users and gambling operators – and ensuring compliance with the obligations of these companies.

EGR Compliance: You’ve been in the role of director general since July 2020, what’s been your biggest challenge since you took over and your biggest success?

AV: As for the biggest challenge, I would have to say the passing of the Royal Decree on the advertising ban, which was given the green light in July, a couple of days after I was appointed as director general. Since then, our industry has been fighting to reduce the effects of this regulation and right now we are in the middle of a legal battle because there are aspects of this law that are very controversial.

My biggest success is probably the rising visibility that the online gambling industry has been having in the last months, due to my team’s communications efforts and engagement with the right stakeholders. Consequently, we also had the chance to start a constructive dialogue with the most important association of gambling addicts in Spain (Fejar), which led to the signing of a cooperation agreement with JDigital. There is a big lack of knowledge on this industry and how the technology could help to make safer and more responsible gambling. As a trade association, we are intensively spreading the right information on online gambling, which is one of the safest e-commerce businesses in Spain.

EGR Compliance: How do the three different strands of JDigital (general assembly, board of directors, staff) interact on a day-to-day basis?

AV: Beyond the daily work with my team, we have a weekly meeting with the staff (on Mondays) to discuss the main topics of the week ahead and do some balance of the work done in the week before. On a monthly basis, we have a meeting with the board to report and potentially improve our decisions. Finally, we have biweekly communications with all the members of JDigital through our newsletter but since we want to keep the information fluent, we share with them almost every week an update on the latest topics. Social networks also help us to keep our internal stakeholders informed.

EGR Compliance: As a trade body, is it ever difficult or challenging to get regulators and government officials to understand your standpoint? How do you navigate this?

AV: In a normal context, and from my previous experience in the government affairs industry here in Spain, it could take time to make the regulator understand your vision on a certain topic. Nevertheless, a common ground can be easily reached when the two parties speak under a technical and non-ideological perspective. On the contrary, things get difficult when decisions, that should be taken with a more objective point of view, are emotionally taken from a political one. Unfortunately, this is what  the online gambling sector in Spain is now facing.

EGR Compliance: How has the pandemic changed the way JDigital approaches this process?

AV: Despite the pandemic changing the way most people interact and work, it has not stopped our work. On the contrary, the association is growing and its opinions are becoming more and more relevant. While it may be more challenging now to have a meeting with politicians and regulators, we are constantly in touch with them and have regular online meetings with public officials, just as we do with journalists.

As for our narrative, we have been adapting it to the worries of gambling regulators and the current Spanish government which, as you know, is extremely belligerent against our industry. Thus, we are constantly educating regulators and society and focusing our arguments and conversations on the devastating consequences that the ban of gambling advertising approved by the government will have: an increase of illegal gambling and the loss of consumer protection, as well as a huge economic impact on sports clubs and media.

EGR Compliance: What is the one question that you are most often asked by your members and how do you answer it?

AV: After the approval of the advertising ban regulation, most of our members come to us to ask about the interpretation of the new restrictions that have been recently approved. The decree has many unsolved matters that the decision makers didn’t take into consideration, which could lead to misinterpretations that do not help the industry, or other interested players like the media, to work properly.

EGR Compliance: How would you describe your relationship with the DGOJ and with wider government?

AV: As you know, the DGOJ and gambling issues are now included in the Consumer Affairs ministry, which is led by Alberto Garzón. From the very beginning, Mr Garzón has taken the lead on the government’s harsh battle against the gambling industry (both online and retail gambling) and this makes our relationship really challenging.

However, we have always shown our goodwill and openness to collaborate and help the regulator. This is something we highlight every time we can meet with the DGOJ or the minster. Our objective is to create a balanced and competitive regulation that enables the development of this industry, by promoting a safe and responsible environment that guarantees the safety and protection of players.

EGR Compliance: Is the DGOJ doing enough to channel players into the regulated market? If not, what could it be doing to improve channelisation rates?

AV: With the new restrictions on advertising, we believe that there is little incentive for the players to gamble with operators in the regulated market. As a matter of fact, there was an increase in the identification and closure of illegal websites in March/April during the lockdown when similar restrictions on advertising were approved. The first step to avoid and increase the channelisation rates is talking with the industry and understanding what works and what doesn’t. The Spanish gambling market is a mature one and its regulation used to be one of the best in Europe. What has been done in the last year may have destroyed the hard work that has been done so far.

EGR Compliance: Is the Spanish market over or underregulated? Why?

AV: Gambling is a highly regulated industry, not only in Spain but also in most of the European markets. Thanks to this, we offer a legal, controlled leisure activity to adults who choose our products and services responsibly.

I would not say it is overregulated, since the industry has always supported the creation of balanced and competitive rules that order this activity and enable its development in the same way as other sectors of the digital economy. Nonetheless, I do believe that the measures that the Spanish government is approving will entail negative consequences like the increase of illegal gambling, as well as the fact that they discriminate between public and private gambling.

EGR Compliance: The Royal Decree on gambling advertising claims legislation is required to restrict gambling advertising on public health grounds, do you feel this goal is being achieved by the decree?

AV: There is no evidence of that.

As we have always said, we support any regulation that is fair, non-discriminatory and balanced. Most importantly, we request it to be based on real data that infers that online gambling is a public health problem, as suggested by the government. However, there is no such evidence and the latest reports from the National Drugs Plan show a decrease in the prevalence of potentially problematic and problematic gambling conducts in Spain, which remains lower than the 0.5% of the population aged between 15 and 64. In addition, European surveys such as ESPAD demonstrate that Spanish adolescents gamble significantly less than the average of European teenagers and suffer less from problematic gambling as well.

[quote]I do believe that the measures that the Spanish government is approving will entail negative consequences like the increase of illegal gambling, as well as the fact that they discriminate between public and private gambling[/quote]

EGR Compliance: What for you would be proportionate restrictions on gambling advertising?

AV: As stated earlier, the online gambling industry in Spain has always supported a balanced, effective regulation that enables the development of our activity in a free-market environment. As a matter of fact, this sector is a reference in terms of regulating a new online market in Spain and the existing rules have also inspired regulations in other European countries.

The online gambling industry in Spain has a strong commitment to protecting customers, especially those more vulnerable. Hence, we have developed self-regulations that limit our advertising campaigns in terms of schedules and content, banning them during kids’ viewing time, prohibiting the use of famous faces and influencers in the operators’ commercial campaigns, or fixing a limit for welcome bonuses. In our opinion, these are proportionate, effective restrictions that protect customers and vulnerable groups and do not cause major harm neither to the licensed operators, nor other actors like media or sports clubs.

EGR Compliance: You have chosen to launch a lawsuit against the Spanish government over the decree, can you explain why you have chosen to pursue this in the courts?

AV: Because the regulation that has been passed is discriminatory and there is a lack of proportionality in the measures adopted. Spanish gambling addiction rate is very low, hence the belief that the decree has not been drafted under the threat of a public health issue. It’s being used to capitalise on a political crusade against a sector which is sufficiently regulated and with the highest standards of safety and security within e-commerce platforms.

EGR Compliance: Despite the restrictions coming into force, Spanish marketing spend by gambling firms has actually increased, why do you think this is?

AV: Considering that operators will be obliged to significantly reduce their investment in marketing soon and that they already had advertising campaigns compromised before the start of the pandemic, it seems logical to us that they tried to make the most of their marketing budgets before the Royal Decree comes into force. Additionally, we must bear in mind that their revenues collapsed during the lockdown period because of the cancellation of sports competitions. Despite that, the GGR of Q3 2020 was only 2.83% higher in comparison to the same period in 2019.

EGR Compliance: Spanish football clubs, which are already struggling due to the absence of crowds, now must deal with the loss of gambling-related sponsorship revenue. They have been given until the end of the season to end all such sponsorships, do you feel this is justified/realistic?

AV: The loss of the online gambling sponsorship revenue will be major for sports clubs. La Liga has estimated it at €90m, and this will not only affect big clubs like Real Madrid or FC Barcelona, but also other smaller clubs, women sports, minor competitions…

Nonetheless, apart from the economic loss, we must remember that the ban of online gambling sponsorships in sports will not necessarily imply a reduction in its use, just as it happened with other industries like spirits or tobacco. What’s even more worrying is the fact that this ban will most probably imply an increase in the activity of unlicensed operators, similarly to what happened in Italy with the ‘Decreto dignità’.

EGR Compliance: Based on your observations, what do you estimate to be the size of the Spanish black market? Do you think this will increase following the new advertising restrictions?

AV: There is no official data about the online gambling black market in Spain. However, DGOJ reported closing 196 websites of unlicensed operators in 2019. Since 2013, the organisation has shut down 1,318 sites.

In addition to this, PwC has recently published a report about the growing black markets of online gambling in countries with very strict restrictions on licensed operators like France, Norway and Spain. As observed in other countries like Italy and also during the first lockdown period in Spain, we are convinced that illegal gambling sites will have more visibility once the advertising restrictions are implemented in Spain on the legal ones. We are extremely worried about it because this time consumers, especially vulnerable groups, will be completely unprotected.

EGR Compliance: What are your objectives for the rest of 2021?

AV: Despite the hostile context surrounding the online gambling industry in Spain, JDigital faces 2021 with energy and eagerness to continue to legitimise the sector through the promotion of safe and responsible environments and conditions for online gambling, and to promote it as a responsible way of entertainment.

We will work tirelessly to ensure the development of the activity of our sector in the best conditions and act responsibly before the whole society, launching prevention initiatives focused on vulnerable audiences and fostering a responsible consumption of this option of leisure.