New Spanish licensing window: Everything you need to know

After several months of rumours regarding the opening of the Spanish online gambling market, the Spanish Regulator – Dirección General de Ordenación del Juego (DGOJ) – has announced plans to offer new licences.

It is important to highlight that, as to previous occasions in the Spanish market, it is not a proper actual opening of the market as the formal approval from the Ministry of Finance (who has a maximum of three months since the 20 September) is still needed. After that, the announcement will be approved through a Ministerial Order and interested companies will be able to start sending their applications to DGOJ.

The licence system in Spain

Spain, differently from other regulated markets, has a “double licence” system to operate in the market. Operators need to firstly obtain a general licence to exploit online gambling, which can only be applied for during the opening periods defined by the Regulator. Previous open windows were:

Late 2011: Corresponding to the first opening of the online gaming market and whose licences were granted in June 2012, meaning the start of the Spanish regulated market. A total of 53 companies were granted 83 general licences.

Late 2014: In parallel to the regulation of slots and betting exchange, it meant the introduction of 10 new operators asking for general licences (other six operators who already have general licences asked for additional ones).

In addition to general licences, operators also need to obtain the singular licences corresponding to the games they want to offer (sports betting, roulette, slots, poker, etc.). Unlike general ones, singular licences can be applied for anytime as long as the operator has the associated general licence.

Under this scenario, it is expected that a series of new operators (specially from international environments) will ask for licences aiming to launch from mid-2018 onwards. Based on our experience as MAG, operating in the Spanish market since 2008, there are many reasons why operators should invest in Spain: the market is growing and not mature; the taxation level is affordable (even if there is room to improve it); the attitude of the Spanish customers toward gambling is positive and DGOJ requirements are clearly defined and manageable by operators.

Schedule for the procedure

Even if this is a slightly different scenario than the last opening of the market in late 2014 where, in addition to the window for new general licences, slots and betting exchanges were regulated, a similar schedule is expected.

In this sense, DGOJ sent a proposal of rules for the tender to the Spanish Ministry of Finance, that has a maximum of three months to publish the final version of the rules (where no big modifications are expected). After this moment, any interested party can present his application for general licences in Spain.

This time around the timeframe to ask for general licences has been increased to 12 months (versus one month in the previous announcement), a much more adequate timeframe for operators to prepare all the extensive required documentation. After the application, DGOJ has a maximum of six months to grant the licences, so new operators are expected to be live since June 2018 onwards.

As a summary, this is the expected calendar for the procedure (Fig.1)

It is also important to highlight that the final certification from operators needs to be sent to DGOJ maximum four months after the licences have been granted.

Requirements for new operators

As expected, no big modifications have been made in the list of requirements defined for companies asking for general licences.

Minimum share capital for applicant companies is still €60,000 (minimum capital required for PLCs – Sociedades Anónimas- in Spain), to be applied both for Spanish companies and companies located in another country of the European Economic Area.

Regarding guarantees, the previous system from 2011 is maintained, with operators forced to present guarantees of €2m for general betting and other games licenses or €500,000 if operators are asking for contests licence. The amount of the guarantees is reduced from year two onwards up to €1m (or € 250.000for operators that only have contests licences).

Overview of the Spanish gambling market

Since the introduction of the Spanish regulated market in June 2012, a growing trend on GGR volume is observed. The market is still betting-driven (covering 50% of total GGR) and casino games show a sustainable growth each month specially thanks to the good performance of slots (meaning casino now makes up 35% of total GGR). Poker shows a clearly decreasing trend (similar to other international markets) that is expected to be slowed down with the introduction of international liquidity in the very short term, meaning currently less than 12% of total GGR versus the 30% that it held just three years ago. The rest of the market is shared between bingo and contests.

In the medium and long term, the market is expected to continue its growing trend thanks to the following factors:

Growth of sports betting: The main product for the Spanish market is also the main acquisition source for operators. Apart from the potential advertisement limits that could apply with the new regulatory regime for gambling advertising (expected to be approved in the coming months), advertising investment from operators is expected to keep growing in the medium term.

Establishment of slots: A product that was not available in Spain until June 2015 and that is showing excellent performance for operators, with sustained month by month growth and that currently shows similar performance than the rest of casino games. Slots growth is expected to continue reaching up to 60% of total casino market (similar to other comparable markets like Italy).

Live games: Market inputs clearly show that live roulette is one of the preferred games for Spanish customers offering a very relevant plus of security and immersion. In the medium term, it is also expected that regulation will allow other live games like live blackjack that is showing great performance in other markets.

Launch of new operators: Thanks to the opening of the market during the next 12 months, new operators will certainly launch their offer in Spain. Recent acquisitions of Spanish operators also show a clear interest in the Spanish market, smaller than other comparable markets (France, Italy) but attractive and potentially profitable for operators with clear strategic visions.

International liquidity: It is very clear that the global poker market is facing complicated times, far from the incredible growth shown in the last decade. In addition, the lack of international liquidity in Spain has contributed to the slightly decreasing volumes on poker activity that is shown year by year since the regulation. The opening of international liquidity between Spain, France, Italy and Portugal can be a very relevant lever for the growth of the market thanks to the evident benefits associated to a bigger number of concurrent poker players.

Fig.3 – MAG estimations of the Spanish market 2012-2020 (€millions)

Source: MAG estimations

Mauro De Fabritiis is a partner of MAG, a strategic consulting company founded in 2004, and is responsible for international business development in regulated markets.