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In July, the Spanish Supreme Court (judgment 1349/2018 of July 23, 2018, Judicial Review Division) established doctrine regarding the meaning of “commercialization” when interpreting article 40.1 Spanish Act 2013/2011 of May 27, 2011 on Gaming (the “Gaming Act”) in relation to online lottery.

The appellant, a company engaging in selling lottery tickets online, had been fined by Spain’s Directorate General of Gaming on grounds that it had breached article 40 of the Gaming Act. The appellant claimed that that provision of law had been wrongly interpreted and that its activity was not based on commercializing lottery but was simply a mandate: users ordered the tickets they wanted, and the company acted as an intermediary.

It also claimed that the lower courts had broadly misinterpreted the concept of “gaming material.” According to the appellant, the judgment under appeal had held lottery tickets to be the equivalent to gaming material; however, it contended that gaming material should be understood to be “unlawfully acquired or counterfeit material.”

The Spanish counsel for the state in the case contested the appeal. The counsel maintained that commercialization extended to “any activity, means, or channel for acquiring tickets.” Countering the claim that the company’s activity was simply a mandate, the counsel argued that the necessary attributes were lacking, as the material was at the appellant’s disposal (it was capable of holding back winning tickets) and its remuneration would not exist if the lottery tickets did not exist.

The Supreme Court’s analysis focused on deciding whether the appellant’s conduct was in breach of the Gaming Act.

First, it pointed to one of the primary special features of the gaming sector: it is reserved exclusively for state-owned entities, e.g., ONCE (Spain’s National Organization for the Blind and Disabled). Indeed, the gaming sector is one in which the overriding general interest needs to be protected. This is the interpretation of the Court of Justice of the European Union, which allows state involvement as long as it does not unjustifiably obstruct free establishment of the services, citing certain possible justifications: reasons of social policy, protection of minors, and prevention of money laundering.

Second, the court defines the meanings of “commercialization” and “gaming material.” The Supreme Court concluded that commercialization of gaming material entails carrying on regular, not occasional, commercial or business activity aimed at distributing or selling the material means of gaming, for profit. Regarding the definition of gaming material, the court held that it should be understood to be any modality that can be put in practice in the present context (on paper or digitally).

Based on the above, the court ruled that the appellant’s conduct did in fact breach the Gaming Act, because even if its activity could be considered to be a mandate, that was not incompatible with it also being an activity for the commercialization of gaming material. What mattered was that the company had an organization designed to buy and distribute lottery tickets and to facilitate dissemination, although it did not hold the corresponding authorization.

 

Author: Esther Ballesteros.

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esther.ballesteros@cuatrecasas.com

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