Population July 2013: 47.4 million
GDP 2012: 1.079 Billion EUR
GDP per capita: 23,400 EUR
Taxation for Lotteries: 20% on lottery wins over € 2,500
Online Taxation: 25% GGR
   

LEGISLATION

Over the last decades the Spanish gaming market has transformed from a centralised system into a decentralised system with regional legislation. The process of decentralisation started in 1982 when 7 of the 19 Autonomous Communities (Comunidades Autónomas)1 were allowed to legislate and control gaming activities within their own territories. Other Communities followed a decade later and the transfer was completed in 1998.

Gaming activities preserved under the control of the central state are national lotteries, gaming and betting (i.e. lotteries and games carried out in more than one Community) and sports betting. Since 1956, foreign lotteries and the promotion thereof are prohibited in Spain. Since 1985, the promotion of Spanish lotteries at the national level is also prohibited, except for the lotteries of the LAE and ONCE. LAE is the Entrepreneurial Public Entity of State Lotteries and Betting (Sociedad Estatal Loterías y Apuestas del Estado) and the operator of the national (state) lottery since 1984. The second national lottery is exploited by ONCE, the Spanish National Organisation for the Blind. Both operators are from the public sector and are exempted from operational taxes. Other national lotteries are not allowed in Spain.

Additional lotteries may only be organised at the Community level. The Directorate-General of Gambling Regulation (Dirección General de Ordenación del Juego, DGOJ) is a body of the Ministry of Finance and Public Administrations and responsible to the Secretary General of the Treasury. DGOJ regulates, authorises, supervises, controls and, if necessary, penalises gambling activities in the Spanish State.

  1. The Spanish territory is divided into 19 Communities, each with far-reaching autonomy. The first Communities that obtained control over their own territories in the gaming field were Catalonia, the Basque Country, Valencia, Andalusia, Navarra, Galicia and the Canary Islands.

According to Spanish legislation, income earned from gambling is subject to income taxation. Lottery winnings from lotteries and gaming organised by LAE, ONCE and agencies of the Autonomous Communities, were exempted from this rule until the government announced that per January 1, 2013 lottery winnings were to be taxed at a rate of 20% for all prizes above € 2,500.

ONLINE LEGISLATION

Until recently, online gambling was only regulated at a regional level in Spain and for a long time the lottery ONCE had a monopoly for online gambling in the whole country. Because licenses were only issued and valid in the specific region, it was not interesting for online gambling operators to (legally) operate on the Spanish market. In recent years however, Spain decided to implement a new federal regulatory system and give operators the chance to apply for a license and operate legally in Spain. On May 27, 2011 the Spanish Gambling Act (Law 13/2011) came into force, which now regulates the online gambling market in Spain. Because Spain chose the option to liberalise its online gambling market, every operator within the EU can apply for a license in Spain. The online taxation is 25% on gross gaming revenues (GGR).

The Dirección General de Ordenación del Juego (DGOJ), a department under the Ministry of Finance, is responsible for the enforcement of the new gambling Law. There are no restrictions to the location of servers of the online gambling operators, the only condition is that these servers are connected to the regulatory authority. The DGOJ however retains the right to obligate operators to hold a second server on Spanish territory. Also every license holder is required to have a data storage vault located in Spain, which can be inspected by the DGOJ at any time. The Act provides a strict sanctioning regime as well, with the possibility for the DGOJ to issue fines amounting from € 1 million to € 50 million euro. To fight illegal websites the DGOJ can make use of website blocking (Law 13/2011) and payment blocking. The Act also restricts players to a single account per licensed operator.

After the Spanish government approved two Royal decrees, a tender for online operators was issued in 2011. An online gambling license costs € 10,000. Around 60 online operators applied for a license. The first licenses were issued on June 1, 2012 and in 2012 277 licenses had been issued to 53 companies for different forms of gambling. The DGOJ has also issued a blacklist with 80 operators operating illegally in Spain, of which 55 operators have suspended their activities and 25 are still under investigation.

A noteworthy requirement for getting a license approval was that some online gambling operators were ordered to pay ‘back-taxes’. These taxes were settlements between the government and operators that targeted the market in Spain before the licenses were issued. The Spanish ministry of Economy and Finance raised more than € 50 million by settling this issue with the online gambling operators. The legality of the ‘back-taxes’ was based upon two Spanish laws from 1966 and 1977, which had previously been applied to offline betting activities.

The Spanish lottery operators ONCE and LAE are excluded from the new online gambling law and are therefore not subject to its licensing conditions and taxation regime.


CHARITY LOTTERIES

  • ORGANIZACIÓN NACIONAL DE CIEGOS ESPAÑOLES (ONCE)

    ONCE enjoys a dual institutional nature: partly as a public corporation entrusted with certain public functions by the State; and partly, but predominantly, as a membership-based company governed by private

    law. ONCE was founded in 1938 during the Spanish Civil War to find jobs for the blind. The main objectives of ONCE nowadays are personal independence and full social integration of the members in Spanish society and the labour market. At the end of 2012, 71,295 blind and visually impaired people were a member of ONCE and could make use of a wide range of social services, from education to jobs (84,995 jobs have been created in the last 20 years, of which 5,532 in 2012).

    Throughout the years, the focus on the blind was expanded to disabled persons in general. In 1988, ONCE established its own foundation: Fundación ONCE to show its solidarity with all types of disabled people. In addition to spending on social services for its affiliate members, ONCE continued dedicating resources to promoting solidarity with other associations for the disabled both within and outside Spain. However, the emphasis of ONCE continued to be on the blind and visual impaired. The Fundación has as its principal source of income the ONCE lottery (El Cupón).

    Tickets for the lottery are sold on the streets by some 20,000 salesmen who are (visually) disabled. ONCE offers lotto games (such as El Cupón and Euro Jackpot), number lotteries and scratch tickets. The sales of the tickets represent about 80% of the income of the organisation. Total gaming sales in 2012 were € 1,914 million (2.2% decrease compared to 2011), making up for 7% of the total gaming sales in Spain (almost 26 billion euro) compared with 36% market share of LAE.

    Apart from spending on social services for its members, amounting to € 166 million in 2012, the ONCE has contributed € 60 million to different institutions to consolidate its solidarity with other disabled groups such as the contribution of 3% of gaming sales to the ONCE Foundation for Cooperation and the Social Inclusion of the Disabled, amounting to € 57 million, and its contribution of € 1.5 million to the ONCE Foundation for Solidarity with the Blind in Latin America (FOAL). As a result, the total amount allocated to social services for the blind and the disabled came to € 226 million, representing 11.8% of gaming sales. For more information see: www.once.es

As far as we know, no other charity lotteries exist in Spain that meet the criteria of a charity lottery. As the LAE does distribute part of the sales to good causes, it is mentioned below.


OTHER LOTTERIES

  • LOTERÍAS Y APUESTAS DEL ESTADO (LAE)

    The LAE is a service of the Spanish state and is, therefore, subject to governmental control. The LAE offers different products to the Spanish gaming market: the Lotería Nacional (state lottery), La

    Quiniela 1X2 (football betting), El Quinigol (sports betting), Lotería Primitiva and Bonoloto (lotto), El Gordo de la Primitiva (with the biggest lottery of the year, on the 22nd of December), El Niño (lottery on January 6th, Epiphany), Lototurf and Quíntuple Plus (both horse racing betting). The LAE cannot sell tickets directly for these lotteries, but has around 11,000 official points of sale throughout the country. The LAE evaluates the premises proposed in order to award licenses to these selling agencies.

    In addition to the national products, the LAE has initiated EuroMillions, a supranational European lottery, together with Camelot (operator of UK state lottery) and La Française des Jeux (French state lottery). The first common held draw took place in 2004. Today, nine European state lotteries participate weekly in Euro Millions. The LAE spends 50% of total sales on prize money in this lottery. The other products of the LAE have a minimum pay out percentage of 55%.

    In 2012, the total sales of the LAE amounted to € 9,253 million (↓4,8%), making up for roughly one third of total gaming sales in Spain. Prize money was € 5,600 million (60.3%). The state treasury received € 1,600 million (a decrease of 48% compared to 2011). Another € 21 million in contributions was destined for a number of social initiatives such as the Spanish Red Cross and the Spanish Association against Cancer.

    Except for the drawings for the Red Cross and the Spanish Association Against Cancer, legally fixed destinations for the revenues of the LAE do not exist. For more information go to: www.loteriasyapuestas.es


REGIONAL LOTTERIES

  • LOTERIA DE CATALUNYA

    At the regional level, local lotteries exist that are regulated by the laws of the Autonomous Communities. In Catalonia, for example, the exclusive right to operate the local lottery, since 1986 the Loto Catalunya, is in the hands of the Catalonian Government throughout its Autonomous Entity for Gaming and Betting (EAJA, L’Entitat Autònoma de Jocs i Apostes). The revenues of the lottery are invested in social projects for the elderly and the disabled and in social child-care centres.

    In 2009, total sales amounted to € 257 million (↑12%). Prize money represented 83% (€ 215 million). Games offered are lotto, bingo, keno and video lottery terminals. For more information: www.lotocatalunya.net


ONLINE GAMBLING OPERATORS

When the Spanish government reformed their online gambling market, they chose a liberal approach where there are no restrictions to the number of operators applying for a license. All operators from the European Union could therefore enter the Spanish market. The application process for getting an online gambling license in Spain was open between November 16 and December 14, 2011. In total 59 operators submitted an application before the deadline expired. On June 1, 2012 the DGOJ announced that there were 277 licenses issued to 53 companies.

The DGOJ has also issued a blacklist with 80 operators that operate illegally in Spain, of which 55 operators have suspended their activities and 25 are still under investigation. For more information please visit: www.minhap.gob.es

Prognosis

The gambling market in Spain has, like many other European countries, changed rapidly since the outbreak of the financial crisis. The new online gambling reality and the missing out of gambling taxes has put pressure on the Spanish government to reform the gambling regulation. One of the major reforms was the legislation on online gambling, which was finalized in June 2012. Since then, online operators can offer their gambling products in Spain and pay license fees and taxes to the Spanish treasury. The expectation is that the online gambling market will grow to € 680 million GGR in 2015.

Another effect of the financial crisis has been the pressure on the state lottery LAE to gain more revenues for the cash-strapped country. A result is that there are plans to privatise around 30% of LAE in order to raise between € 20 and € 30 billion, which will be used to repay the Spanish debt. Due to the financial crisis LAE is also being used as a financial fundraiser for the Spanish regional authorities. The Spanish government has to pay high interest rates on their financial loans and LAE can raise financial resources at a more competitive rate. And because the Spanish regions are in dire need for financial aid the Spanish government has raised € 6 billion to help finance the € 18 billion bailout fund to support the autonomous regions.

Another way for the Spanish government to help the Spanish economy were the plans for ‘EuroVegas’, a project based on the casino and hotel businesses in Las Vegas. Head of the Las Vegas Sands gaming corporation, Sheldon Adelson, has announced that he wanted to invest in a megaproject near the capital Madrid where he wants to build 12 giant hotels, 6 casinos, conference centres, golf courses, shopping centres and restaurants. However, these plans have currently been shelved.