Islj 2009 3-4 - TMC Asser Instituut

their activities, being it always refused for the reasons that we will
study later.
Obviously, like any other activity that is carried out outside the
Law, this situation does not benefit anyone, as it not only generates
insecurity (relative, because in fact the activity without authorisation
is simply illegal) and lack of the appropriate legal guarantees, but it
also means (from a financial point of view) that the Tax Department
loses the taxes corresponding to this economic activity.
However, as always, reality moves faster than Law and therefore,
despite the obstacles presented by Spanish legislation, the business of
sports betting over the Internet already moves millions of Euros in
Spain. According to the latest data published by the Telecommuni -
cations Market Commission (an independent public body that regulates
the Spanish electronics and communications markets, which
reports to the Ministry of Science and Technology) in its Annual
Report on Electronic Commerce in Spain though form of payment entities
in 2008 23 , in the fourth quarter of this year it can be seen that:
1. The total turnover in 2008 amounted to 5,183,816,091 Euro.
2. Games of chance and betting represent 7.1% of this total turnover,
occupying the 4th position 24 by sector, after air transport (1st),
direct marketing (2nd) and travel agencies and tour operators (3rd).
3. Regarding the total number of financial transactions, games of
chance and betting took 2nd place, with 8.3% of the total.
4. It is also significant that, if we analyse the data regarding the distribution
of the turnover of electronic commerce involving money
sent abroad from Spain, games of chance and betting are in 1st place,
with 12.3 % of the total. This is also the case for the number of
transactions involving money sent abroad from Spain, of which
gambling and betting also occupy first place, with 13.3 % of the
total.
5. On the other hand, analysing data in the opposite direction with
regard to the turnover sent from abroad to Spain, games of chance
and betting are in last place, together with health services, representing
just 0.2% of the total.
In short, almost all of the turnover from games of chance (gambling)
and online betting in Spain is sent abroad from Spain, with Spaniards
using web pages located outside of Spain.
V. Legislative Framework: Jurisdiction of the State and Autonomous
Communities
A. State Legislation
A.1. Initial regulation: the transposition of Directive 2003/31/CE, of
the European Parliament and Council, dated 8th June, into Spanish
Law.
Spain incorporated European Directive 2000/31/CE, regarding certain
legal aspects of information society services, in particular electronic commerce
in the domestic market (hereinafter “the Directive on electronic
commerce”), by means of Law 34/2002, dated 11th July, regarding
Information Society Services and Electronic Commerce (hereinafter,
“LSSI”).
Strangely, although article 1.5.d) of the Directive on electronic
commerce excluded from its scope of application “games of chance
that involve bets of monetary value including lotteries and betting,” the
Spanish legislators decided to include these services within the scope
of application of the Spanish law. In this sense, in article 5.2 of the
LSSI (“Services excluded from the scope of application of the Law”),
it is stated that “The provisions of this Law, with the exception of the provisions
of article 7.1, shall apply to information society services related to
games of chance that involve bets of a financial value, without prejudice
to the provisions of specific State or Autonomous Community legislation.”
23 Accessible at www.cmt.es/cmt_ptl_ext/
SelectOption.do?nav=publi_info_
comercio_elect
24 Furthermore, according to data provided
by the sector (specifically, the Spanish
Association of Internet Betters,
AEDAPI), during the year 2007 a total
of 650 million Euro were played in Spain
and in business year 2008, the Internet
betting business obtained results of over
200 million Euro in Spain. Furthermore,
there was a noticeable increase in the
importance of sports betting, which in
2009 (according to these estimates) will
increase almost 30%.
However, although the LSSI is based on the principle of the free provision
of services without the need for prior authorisation, a full
analysis of the Law reveals that it does in fact permit the restriction of
this type of services through several of the regulation’s articles. I.e.
although article 7 of the LSSI declares that “the provision of information
society services by a provider established in a member State of the
European Union or the European Economic Area shall be carried out
under the regime of free provision of services, and no restrictions may be
established due to reasons deriving from the coordinated regulatory framework”,
this general principle, with regard to sports betting, is contradicted
as these services may be interrupted when they go against or
may go against the following principles (among others):
• The safeguarding of public order.
• The protection of individuals that are considered consumers.
• The protection of young people.
These are all principles that are closely related to gambling and betting,
which can be used to prevent the provision of online services
related to gambling. But the most important part is the final part of
article 5.2 (“without prejudice to the provisions of specific legislation”), as
this is what prevents the provision of online sports betting services in
Spain on a national level, as the corresponding service providers do
not have the administrative authorisation required to do so. This leads
us to think that the inclusion of betting in the scope of this Law, but
with all of the options for restrictions described, was only done (at
least temporarily) so that the LAE could, as described later, carry out
its activities over the Internet.
A.2. Authorisation of the LAE for the online exploitation of games
of chance and betting.
Given the unstoppable growth of the business of online sports betting,
in 2005 the Spanish government adapted the regulations for
Loterías y Apuestas del Estado (which, as we have seen, manages and
exploits gambling within the State’s jurisdiction) to the Internet, so
that this organisation could exploit its business by means of this medium.
For this purpose, it issued order EHA/2566/2005, dated 20th
July, of the Ministry of Finance and Taxation, authorising Loterías y
Apuestas del Estado to market and exploit its products via the Internet or
other interactive systems.
As stated by the regulation in its preamble, “the rise of information
technology, particularly the Internet, has resulted in the appearance of a
series of environments whose main characteristic is the provision of goods
and services remotely” and therefore Loterías y Apuestas del Estado
“must not ignore the evolution of technologies and the needs and demands
of the public, but rather, as most countries in the European Union have
done, it must adapt the marketing of its products to these new criteria.”
By doing so, the Ministry intended to fulfil two objectives: on the
one hand, authorise the exploitation via the Internet of government
controlled gambling and betting on a national level and, on the other
hand, eliminate or reduce the number of illegal games or bets that take
place via the Internet (“the existence of this new form of participation,
based on the aforementioned requirements in terms of guarantees and
security, shall result in the reduction and even the disappearance of a high
number of illegal games or bets that take place via the Internet” is the literal
text of this rule). That is to say, the ministerial order is declaring
that the only legal bets that can be made in Spain on a national level
are those that are made through the LAE or by any other organisation
that it authorises.
It is worth highlighting that the Order expressly prohibits the LAE
from marketing these betting services on a cross-border basis, which must
be guaranteed by means of technological devices that prevent bets
from being made from abroad. In this sense, point 3 of its article 3
states that “In order to avoid cross-border betting, the operation for validation
by Internet or other interactive means must establish the system
necessary to ensure that participation is only possible within national territory.”
However, although the different forms of gambling and betting
were marketed over the Internet, the rights and obligations deriving
from participation “are those established in the corresponding regula-
A RT I C L E S
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