Codere has warned investors in the US that they run the risk of losing their online betting operator license in Spain. The reason is a recent legislative change that has allowed these companies to revoke their licenses since last summer if there is an accumulation of very serious violations of state or regional gambling regulations.
The warning contains a Document Recently introduced to the SEC, the US stock market regulator, Codere Online Luxembourg, the Spanish group’s online betting business, which started trading on the US stock exchange last year.
In the section “Risk Factors” that could affect your business, the Spanish multinational subsidiary recalls that “it depends on the licenses to carry out its operations” and acknowledges that its loss or termination may adversely affect it. . In the case of Codere Online, its license is subject to the Directorate-General for Gambling Regulation (DGOJ), which is attached to the Ministry of Consumer Affairs, headed by Alberto Garzon.
In the SEC document, Codere refers to the latest amendment to the 2011 Gambling Law, which introduced a new provision last July disqualifying online gaming operators in Spain: “A natural person, legal entity or its partners, directors or administrators, or any other entity Part of the business group to which it belongs on the basis of a firm administrative decision for two or more very serious violations in the last four years for non-compliance with state gambling regulations. Or autonomous communities. “
This new assumption of leaving a bookmaker without a license is included in Law 11/2021 of 9 July on the Prevention and Control of Tax Fraud, transposing Council Directive (EU) 2016/1164 of 12 July 2016. Establishes rules against the practice of tax evasion, which directly affects the functioning of the internal market, changes in various tax regulations and regulation of gambling.
According to Codere, these legal changes to state regulations (which regulate online gambling: betting halls are an autonomous jurisdiction) are “unclear” and “retroactively apply if the sanction requirement applies only to sanctions imposed after the entry into force of Law 11/2021.”
The Spanish multinational company, which did not respond to elDiario.es’ questions on the matter, said in an SEC document that two Codere Group subsidiaries in Spain, Codere Apuestas Galicia, SL and Codere Apuestas Extremadura, SAU, had been “sanctioned for the last four years. With two (2) or more very serious violations of regional regulations.
“If DGOJ applies Law 11/2021 retroactively, there is a risk that DGOJ licenses will be revoked or not renewed due to sanctions imposed on Codere Apuestas Galicia, SL and Codere Apuestas Extremadura,” the document said.
And if the application of this rule is not retroactive, but Codere or its subsidiaries collect two or more very serious sanctions, its online subsidiary, he acknowledges, “may not be eligible to renew its licenses” in Spain. This country is its main market (in the online game it participates more than half of the income). And this scenario “could have a material effect” for the group, he admits.
According to the sources of the Ministry of Consumer Affairs, the 4-year calculation on the “accumulation” of sanctions “starts counting from the entry into force of the regulations, ie from July 11, 2021.”
“It can not be used retroactively,” explains Garzon. In November last year, DGOJ renewed its Codere Online license to operate as an online betting operator, which it acquired in 2011, according to the agency’s website.
In this document, Codere details the latest sanctions the SEC has received from the DGOJ. On September 24, the Director General informed him of the imposition of a sanction for a “serious” violation of state regulation of online gambling, as it did not prevent access to this activity “prohibits access to the game for at least one person on the Spanish register.”
For this behavior, “on October 7, 2021, Codere Online paid a fine of approximately 92,000 euros.” In December, he received another sanction for “serious” breach of “certain marketing” regulations. In this case, the fine was 6,000 euros.
Codere’s Online Subsidiary merged with DD3 Acquisition Corp.II in December last year as a result of a merger with Special Purchasing Company (SPAC, abbreviated in English). A few months ago, the subsidiary sued American investors “Negative position” of the Spanish government towards the bookmakerFor example, consumer veto advertising in the sector.
Codere Online’s IPO coincided with the liquidation and liquidation of a former parent company in Spain, following the completion of a financial restructuring process announced a year ago that included injections of up to € 225 million, capitalizing on more than $ 350 million in debt. From its creditors and extension of terms until September 2026, in exchange for leaving 95% of the group to hold bonds.
The Codere Group matrix increased red numbers by 43.1% in 2021 to 338.6 million in 2021, although turnover increased by 33% to 790.7 million.
Source: El Diario