Sportsbook operators in Spain may feel the constricting effects of a gaming regulatory crackdown on advertising that mimics what several other EU countries are doing.
Last year, along with dealing with the effects of Covid-19, Spanish gaming providers, including sports betting operations were battered by tighter restrictions by the Ministry of Consumer targeting advertising—virtually amounting to an advertising ban.
The Royal Decree on the Commercial Communications of Gambling Activities was passed in November and will take effect sometime this year.
At first it looked like sports betting might not be as badly hit as casinos, but that perception turned out to be a chimera. The regulations by the Dirección General de Ordenación del Juego originally limited advertising to between 1 a.m. and 5 a.m., except for ads during live sporting events. Eventually, however, the final draft removed that exception. Sponsorships were banned.
Spain imposed a temporary advertising ban on iGaming during the second quarter of 2020, which caused the number of active players to plummet by 25.3 percent. It also hamstrung new registrations by more than half. This could happen to sportsbook numbers, operators fear.
Some project that the sponsorship ban could hit profits of sporting associations, since some clubs get extensive revenue from the gaming industry. The government has also advised that existing sponsorships must end by the end of the 2020-2021 season.
Brick and mortar casinos are also feeling the pinch, with constricted operating hours and the requirement to display health warnings at entrances.
According to a statement by the Spanish trade association Jdigital Chief Executive Andrea Vota: “The main measures of the Royal Decree that will regulate online gambling advertising have not yet come into force, so we have not been able to see its immediate effects.” He added, “However, we have always emphasized that the main consequence of this regulation is the ban, de facto, of commercial communications of this activity in Spain.”
Vota continued, “We are concerned that this prohibition will only lead to an increase in illegal gambling in Spain, leaving users and, especially the most vulnerable groups, unprotected against companies that do not comply with the security and protection measures that the licensed operators we represent do respect.”
In response to the new regulations, Jdigital argues that no data exists to show that there is a public health problem related to gambling in the country. Rather, statistics indicate Spain’s population has one of the lowest rates for problem gambling in the world.
The gaming industry fears that Spain may take the path of Italy, which in January 2019 banned all gaming advertising, which resulted in a revenue loss of €100 million ($119 million) per year.
Vota believes something similar could happen in Spain with “devastating” effects. “To get a sense of the losses they can experience,” Vota said, “in 2019 the industry invested €372m in marketing, and the approved restrictions could see sport clubs lose up to €90m in advertising revenues, according to LaLiga.”
Italy also shows the way for getting around such a ban: a partnership with a media partner. Ad bans don’t extend to informational content.
Spanish operators may follow the example of operators in other countries who have reacted to similar rules changes by changing the products they offer and how their websites engage customers—and more importantly what they do to retain loyal customers.
Jdigital warns that Spain’s regulators may do the opposite of what they intend by making it easier for black market gaming operators to make inroads to take advantage of legitimate operators handicaps in reaching new customers.
La Liga soccer league President Javier Tebas told Reuters that it was “contradictory that in a country where gambling is a legal activity, advertising it is prohibited. We believe forbidding it outright is a mistake.” He added, “Evidently it’s going to cause lots of damage and while we have appealed to the government, the clubs will have to scrape around in a very difficult moment.”
In a separate but related development, media reports that Real Madrid, a Spanish soccer club, was building a casino inside its stadium have turned out to be false, according to SportsMoney correspondent Zak Garner-Purkis.
Given the government’s move towards banning sponsorships with betting operations, many had been skeptical of the reports. Garner-Purkis wrote: “The fact the story gained traction, however, shows how deep-rooted the perceived connection between gambling and soccer still is. In reality, the two sectors are moving further apart and that can only be a good thing.”
