Making hay while the sun shines

It is a generally held view (although not universally held) that in the run up to the introduction of a new licensing regime within a jurisdiction, the appetite for any enforcement against offshore operators who, arguably may be acting in contravention of existing laws, is relatively low. However, in such situations, there is a game to play – stakeholders jockey for position as they set out their respective stalls in preparation for the regulated market and some make genuine short-term commercial sacrifices so as not to harm the opportunities within a regulated market going forward. Others seek to exploit the transitional period, up their marketing activity and make hay while the sun shines.

The legal challenge filed by Codere against Bwin in relation to the bookmaker’s sponsorship of Real Madrid comes at an interesting time in the Spanish market. Many offshore operators have relied on a reported lack of enforcement appetite in that market, backed up by the usual EU freedom of movement arguments. Certainly, the sector has viewed the jurisdiction as carrying low regulatory risk when compared with others and this has led to proliferation of advertising throughout Spain, most visibly on the shirts of many of the teams participating in La Liga.

Whilst in the run up to the Spanish market opening, clubs/operators have been given confirmation that any deals signed before the end of 2011 can be retained in the new market, Codere, one of the large incumbent Spanish land-based giants, has objected to current situation that allows Real Madrid (and others) to provide Codere’s rivals with almost 24/7 brand exposure throughout the country.

At present, Codere continues to have the legal and regulatory justification to advertise within Spain whilst others, it is arguing, do not. Not only that, its marketing is subject to various social responsibility-related restrictions, imposed through the licences holds. Others advertising in Spain and yet who hold either no licence or licences of limited application are not subject to such wide ranging restrictions. Codere’s gripe is understandable.

It will be interesting to see which way this particular challenge goes. Litigation can move relatively slowly and legal tactics can be employed to draw out a process. But perhaps more pertinent is whether there is an appetite for this within the Spanish authorities. When there is an ever-increasing likelihood that the situation that led to the challenge in the first place (in this case, the existing Spanish laws) will change in the near future, you do wonder what those Spanish authorities will do, when the clear momentum is towards the opening of the Spanish market.

Those who take the view that such market’s opening is the opportunity to push the boundaries of what is permitted (and make a little more hay in the process) should keep a close eye on which way this dispute goes.