New advertising restrictions looming as Spain’s online market matures By Willem van Oort, founder, Gaming in Spain and Gaming in Holland September 25, 2019 at 2:50 am The regulation of Spain’s online gambling market has been a great success. Since the regulation of online gaming began in the country, the Spanish regulator has issued around sixty general operator licenses. Since 2011, the regulated online market has grown from €200m in annual GGR to almost €800m, with double-digit growth percentages being the norm. However, this spectacular growth has come with a cost. The rapid growth of the online gambling market has caused influential voices, including the National Ombudsman’s, to question the sustainability of the sector. The state of Spain’s online gambling market Currently, the Spanish online gambling market has around one million active players and generates €800m in annual GGR. During its latest licensing window, which closed in late 2018, the Spanish regulator DGOJ issued around thirty new operator licenses, almost doubling the number of licensed operators. Of these new licensees, around half has already launched or is expected to go live in the next few months. Though the Spanish market still holds a lot of promise, a closer look at the latest market figures suggests that the previous double-digit growth percentages may not continue. During Q2 2019, gross gaming revenue from Spain’s regulated online gambling market increased 6.69% year-on-year as total revenues hit €178.3m. Compared to Q1 2019, however, quarterly revenues fell 7.85%, mainly due to a slump in sports betting. The number of new player accounts fell 12.00% year-on-year and 13.87% compared to the previous quarter. The monthly average of active accounts was 861,237, a 0.18% increase compared to the same quarter of the previous year. Marketing spend grew 1.18% year-on-year, but was 10.30% lower than in Q1 2019. With growth percentages clearly shrinking, the competitive pressures faced by both incumbents and new market entrants are only expected to increase. Greater advertising demand in the face of a public backlash With a significant number of (new) operators competing for the favors of a player pool that is no longer rapidly expanding, the demand for advertising of one kind or another will grow significantly. Saturation and price inflation will both be inevitable. This situation will be exacerbated further by the widespread public perception – despite consistently low problem gambling rates – that Spain’s increasingly visible online gambling sector is contributing to, or even causing a number of social ills. “What we need right now is a public perception that the sector can operate sustainably. I am not exaggerating when I say that this is a very decisive moment for the industry,” Juan Espinosa García, Director-General of the Dirección General de Ordenación del Juego (DGOJ), recently told Gaming in Spain in an exclusive interview. The need for precise market intelligence In an increasingly crowded market, blanket advertising approaches are fast becoming impractical and, moreover, can only provide fuel for the simmering public backlash against “excessive” advertising. An obvious solution is less volume and more precision in advertising, but too often operators, media brokers, and other stakeholders lack the necessary market intelligence to actually make this happen. At present, reliable information on brand reputation, movement, and consumer preference is virtually non-existent for the Spanish online market. But in order to keep the sector sustainable, we expect that reliable market intelligence (on the level of individual operators and consumer groups) will play an important role in the decision-making processes of Spanish-licensed online operators. To help fill the above-mentioned information gap, we recently launched the Gaming in Spain Market & Brand Monitor, which has been set up as a multi-measurement study with the aim of tracking both perceptions and use of Spanish-licensed iGaming brands across representative survey populations. This November, we will be ready to share our first findings with a wider audience. New advertising restrictions expected soon A Royal Decree outlining new restrictions on gambling advertising has been in the works for several years. But shifting political fortunes have so far prevented the Decree from being passed. Nonetheless, new advertising restrictions for online operators are clearly a priority across much of Spain’s political spectrum. New regulations could have been introduced if acting prime minister Pedro Sánchez had managed to either form a majority coalition or conclude a supply and confidence agreement with one or more opposition parties before September 23. However, new elections are scheduled for November 10th, so it is likely that not much will happen for at least a couple of months. And after the next government is formed, new online gambling advertising restrictions are expected to be introduced relatively quickly. Self-regulation and sustainable advertising At present, the Spanish industry is drawing up a framework for the self-regulation of advertising volumes and standards, the results of which will be presented at the upcoming Gaming in Spain Conference on November 21-22. Regardless of how successful (or timely) the Spanish industry’s self-regulation turns out to be, sustainable advertising will be, without doubt, the theme that will dominate discussions on Spain’s online gambling market in the foreseeable future. Since the introduction of new products is a political no-go at the moment, new market entrants in particular will have a hard time standing out from the crowd. Thus, the main question facing the industry right now is how it can have an effective media footprint that is sustainable and compliant.