Legal regulation of sports betting in Spain and its history.

• Author: Vazquez, Yago
• Position: ARTICLES

1. Introduction

   Anyone who knows about the messy and confusing regulation in force in Spain regarding sports betting could think that this is not the best moment for drawing up an introductory article regarding the legal regime for sports betting in Spain. And this is logical considering the fact that we are currently in a period of transition, in which an out of date, messy and dysfunctional legal regime is still in force although we can reasonably expect the introduction of a new set of regulations that we hope will face the real legal problems that arise these days with regard to sports betting (1).

   However, from an European perspective, perhaps it is a good moment to face it if we take into account the fact that this regulatory provisional status also applies to the European framework as a consequence of the recent and continuous pre-legislative work within the European Community (not yet moulded into a specific Directive or into a European Regulation regarding this aspect of European Law), in part due to the important and conclusive case law of the Court of Justice of the European Communities (hereinafter "ECJ") in this area (in particular, the Decisions regarding the cases of "Gambelli (2)" and "Placanica (3)". This Case Law results from a long series of decisions regarding the regulation of gambling, in which the ECJ adopted its current doctrine with a view to achieving better harmonisation of national law with European regulations.

   It is true that the European High Court has restricted the application of the initial doctrine which, for example in the case of sports betting, we can find in case C-67/98 (Questore di Verona/Diego Zenatti). In the decision that resolved this matter, the ECJ declared that the provisions of the EU Treaty regarding the free provision of services did not conflict with national legislation (Italian in this case) allowing certain bodies to reserve the right to collect bets on sporting events, when this legislation is properly justified by social policy objectives designed to limit the negative effects of these activities and as long as the restrictions imposed are not disproportionate with regard to these objectives.

   However, this doctrine was modified soon afterwards by the ECJ in the aforementioned Gambelli Decision, according to which the moral, religious or cultural characteristics of states as well as the negative consequences for individuals and society that, from a moral and financial point of view, could result from gambling and betting, may justify the retention by the national authorities of the power to restrict this type of activities (4), but that in all cases these restrictions must be fully justified and must be proportionate.

   Therefore, regarding the frequent monopolistic regulation of gambling by European states (which, it should not be forgotten, is due to both historic and social policy causes), the ECJ has declared that, as in other areas of Law, the gambling rights of each State (and consequently, rights related to sports betting) must respect the principles of free circulation of people and services that the EC Treaty proclaims in its articles 43 and 49 and that any restriction of these principles must be fully justified.

   This is why perhaps, lege ferenda, it is the best time to analyse the legal regime for sports betting in Spain in order to look at where we have come from, where we are and where we are going.

2. History of Sports Betting in Spain

   Apart from games of chance, the history of sports betting in Spain is linked to the appearance of a game known as "La Quiniela" (The Pools), which has been played in this country since the second decade of the 20th Century and which can be defined (currently) as a mutual bet in which the betters make predictions about the results of 15 football games that appear in competitions authorised by the Royal Spanish Football Federation or other national or international institutions (normally 10 teams from the 1st Division and 5 from the 2nd Division), these 15 predictions forming a single bet (combinations of bets can also be made).

   Although La Quiniela started officially on 22nd September 1946 (soon after, as described later, the "Patronato de Apuestas Mutuas Deportivas Beneficas" - Charitable Sports Pari-Mutuel Betting Board - was created), the truth is that Spaniards had been playing La Quiniela since long before then. According to an article written by the journalist Tomas Gonzalez-Martin entitled "La Quiniela is sixty years old, but it was born at the age of fifteen," which was published in the newspaper ABC on 28th September 2006, people have been playing La Quiniela since 1929 and there is documentary evidence dating from the League championship in 1931-1932 (5).

   According to the records kept, on this first day of La Quiniela in 1946 a total of 38,530 tickets were purchased generating an income of 77,060 pesetas, of which 34,677 pesetas were used for prizes (45% of the income, as shall be explained later) distributed amongst the holders of 62 winning tickets.

   Those that have studied the history of La Quiniela agree that the game was invented by Manuel Gonzalez Lavin, who had the idea in 1929 following the launch of the Spanish Football League. In fact, the first place in which his invention was exploited or marketed was "Bar la Callealtera, Casa Sota" that he managed, at number 22 in Calle Alta in the city of Santander.

   La Quiniela was so successful that it crossed borders, expanding to cover not only the rest of Spain but also America, through the sailors that left the port of Santander for the American continent. The game also now had a printed set of rules that determined the distribution of prize money and even envisaged incidents such as, for example, what happened in the event of suspension of a League game.

   Initially, 95% of the income was used for prizes and the Tax Department only taxed the remaining 5%, which was used for the administration of La Quiniela. Later, this percentage was increased to 10%, as can be seen on a ticket from 1931 that still exists today and that has the seal of the Spanish Tax Department showing the application of this rate of tax. This shows, undoubtedly, the normality with which the game was played then, even before the existence of specific regulation regarding sports betting, obviously apart from the general regulations applicable to gambling, which the Civil Code regulates in articles 1,789 to 1,801. Similarly, it is clear that the State immediately saw sports betting as an easy way to gain a large amount of income for state coffers.

   Success always has a lot of parents whilst failure is an orphan and so, soon, lots of parties wanted part of the loot. The first was the Town Council of the city of Santander, which in 1932 managed to gain 3% of the revenue, thereby reducing the prize money to 82%. Soon afterwards, it was agreed to give another 2% to charity. This led, almost by surprise, to the creation of an efficient and highly advanced private gambling organisation, which was a pioneer in Spain and Europe but that, like so many other things, was interrupted by the outbreak of the Spanish Civil War on 17th July 1936.

   Following the war (6), in the league's 1939-1940 season the management of La Quiniela (which was renamed "Bolsa del Futbol") was handed over to the religious order San Juan de Dios and it was decided that 50% of the revenue would be used for prize money, 5% for administration and the remaining 45% would go to the religious order in order for it to carry out its own purposes. Finally, and after certain scandals that took place during these years, the State decided to take over its management (thereby appropriating the invention), for which it promulgated the Decree-Law dated 12th April 1946, creating the Patronato de Apuestas Deportivas Beneficas (hereinafter, the "Patronato"). It was at this time that what was initially a strictly private business became property of the State, which monopolised its management and exploitation and forbade private organisations from carrying out this type of activity, under penalty of being accused of committing a smuggling offence. It is curious that what was initially designed as a private business ended up becoming a state monopoly that, notwithstanding certain changes, has survived right up to the present day.

   As explained in the preamble of the aforementioned Decree-Law, "The extraordinary level of interest that currently exists in sport (and football in particular), along with the enormous popularity of this game with regard to football, has given rise to the appearance of numerous bets in which the State is not involved at all in terms of regulation or financial exploitation, as all of these bets are made and exploited by private citizens or entities." It can therefore be seen that the aim of this rule was not so much to regulate but rather to give the State a monopoly over sports betting, even though the money was given to charity.

   This is the intention of the legislator, for whom "State intervention would provide an appropriate guarantee to betters and would give the considerable financial product of these bets to public charity. These are the circumstances that advise the creation of an independent state Body to centralise the placing of these bets, which shall be established exclusively in order to provide considerable new revenue to charity."

   And this is how the state monopoly of sports betting in Spain began which, as can be seen, was initially limited to the world of football. In this sense, the first Article of the aforementioned Decree-Law stated that "With the guarantee and intervention of the State, the Patronato de Apuestas Mutuas Deportivas Beneficas shall be established in Spain, which initially shall only cover football, without prejudice to the fact that in the future, if it is considered appropriate, it may also be applied to other sports."

   This regulation of paramount importance later on, as...