Interview Patricia Lalanda – member of LOYRA-Abogados y Asesores
By Óscar Domínguez
Patricia Lalanda, Law Degree from the Carlos III University of Madrid. LLM in Intellectual Property by the Autonomous University of Madrid. Lecturer in LLM of IP and New Technologies (Cryptocurrencies) of the UAM since 2011. In 2015 she receives the recognition and prize from Global Gaming Business “40 under 40 Emerging Leaders». Regular collaborator of specialized publications in gaming and new technologies. Speaker at various congresses and conferences. Responsible for the areas of IP, IT and NNTT in Loyra-Abogados y Asesores where she has been partner since 2017.
Partner of Loyra Abogados and Advisors since this year 2017, Can you tell us a little about the history of Loyra Abogados?
Loyra Abogados was founded more than 35 years ago as a specialized firm in the gaming sector. For necessities of that moment, it was essential that a first gaming association be created. One of the founders was chosen secretary of the association, the clients were guiding the specialization of the firm from the beginning.
Carlos Lalanda and José Ramón Romero founded the firm in 1982 and after more than 25 years I joined. I am the daughter of one of the founding partners, Carlos, whose professionalism I have always been tremendously proud of; Ramon is like my uncle, he has seen me grow. I have been living the gaming industry in my home since I was little. I was very interested in law, I listened to my father for hours telling me stories and legal cases. Yes, it can be said that my internship began before reaching the age of 10. In 1998 Fernando Martín joined the firm and he was named partner in 2006 demonstrating his tremendous value as an expert especially in litigation and administrative law. In 2011, Cristina Romero joined Loyra to further develop the international area of the firm and provide a financial approach to the practice. She was in a very big firm for 5 years and previously worked in banking.
Currently we have grown a lot, we have added a Corporate law department for the needs of the sector itself, to respond to a lot of M&A activity. In addition, we have incorporated an area of Tax law. In the same way, we have a collaborating firm that takes care of Labor law. Hence, we cover all the legal areas offering the client 360 degree advice. I am very happy with the solid and ambitious team we have.
The firm began specialized in the field of land-based and later online gaming. In addition, we now have clients from other regulated sectors.
In 2010 I joined Loyra with a law degree and a LLM in Intellectual Property and New Technologies, having studied more than 6 years in the USA and combined both formative stages with practices in firms and institutions. My incorporation to Loyra takes place when the legal online gaming market is regulated and opened in Spain. From the technological point of view, the online gaming sector needs experts who know about new technologies, software-related intellectual property, gaming licenses and data protection.
Currently, as a partner, I lead the intellectual property department, including industrial, new technologies and data protection.
Can you make a brief review since you first got to know about Bitcoin and Blockchain until today?
The first contact I had with Bitcoin was studying the online gaming industry that existed both in Spain and abroad. Over the year 2011/2012 I found a very eye-catching website «Satoshi Dice» and I was ultimately surprised. This website let me bet with something called Bitcoin. From there I began to investigate how, why and the moral motives of Satoshi. I have the tremendous luck that my husband is an engineer and helped me in every way possible to understand how it works from a technical point of view (and continues to do so).
The technological part of Bitcoin and Blockchain is always being hit with the legal reality of life. It is very important there be people who act as intermediaries between what is said by an engineer and a lawyer. And that is my role many times. It’s a very fun part.
Luckily, I am bilingual in English since most of the sources of information were in this language back in 2012. I saw that the number of transactions was growing. At that time, I remember that 5% of all Bitcoin transactions worldwide were made from «SathoshiDice» web page. Since then, I have continued to investigate and study incessantly because every day this disruptive phenomenon changes. Technology is always a step ahead of its creator, reason why the rest of us are always well behind.
I have met great personalities both in Spain and abroad who are interested in this world. They feel passionate and want their professional life to revolve around it. People, for example, of the Bitcoin Foundation, Jon Matonis. It opens doors to very interesting and intelligent people, on a personal level this attracts you. Thanks to this I have been able to be in the headquarters of Facebook in New York with one of the people who directed the Bitcoin Center NY.
All this has led me to have been able to give advice in the gaming sector or to customers that are only related to Bitcoin. I also receive a lot of support from the other partners in the firm, especially in relation to the rules on the prevention of money laundering.
You are a teacher in the Master of Intellectual Property and New Technologies of the UAM since 2011 illustrating the students about cryptocurrencies. How does the university community understand Bitcoin and what does the university Community think of Bitcoin?
I have been teaching since the academic year 2011 – 2012, although the first year I was called to cover the gaming sector. When I gave the first course, the coordinator called me to ask what else I could offer about new technologies. At this point I spoke to them about Bitcoin and cryptocurrencies and starting the following edition, this subject was incorporated being one of the first Masters in Spain to introduce cryptocurrencies in its agenda.
The way I go about explaining all this phenomenon is to tell them that I’m going to talk about a movie that they will not understand what on earth is happening until all the pieces come into place at the end.
Regarding the student profile at the UAM, it is interesting since many of them don’t attend with a computer to class. It is a student profile that is not so involved in new technologies in its day to day life, as opposed to what I have observed in students in the IE Business School, for example. There are students who have told me that my session on Blockchain and Cryptocurrencies had changed their perception of life.
During the first part of the class I set base on what is understood by “money”. They have never stopped to think where it comes from. I explain the trajectory, the gold standard etc. When they see the evolution there has been they begin to question why the current perception wouldn’t be different the day of tomorrow. I comment on what the Bitcoin project is based on.
I talk about how it works, all the kind of altcoins that exist. Since the last year I’ve been explaining Ethereum, smart contracts. They get excited, it’s something that makes you think. Nothing evolves without a philosophical thought. From the labor point of view, I open their eyes to another fascinating subject that they can dedicate their professional lives to.
In what situation is the games of chance sector in Spain at a general level? And in relation to Bitcoin?
I don’t want to bore you since this can be talked about at length but I’ll make a quick summary. The gaming sector can be divided into land-based and online. Lotteries are a monopoly of the state both here in Spain and abroad. They have historically brought a lot of revenue to the jurisdictions.
Gaming operation is subject to previous authorization. At first the power over gaming was at State level. The competences were transferred to the different autonomous communities. Each autonomous community has its own rules and regulations on casinos, bingo halls, gaming arcades, slots, etc. It is as if we had 17 small countries with different regulations.
Gaming is not a harmonized matter in the European Union, i.e. there is no Directive or Regulation that regulate this sector in a homogeneous way. It is the domestic law of each country that is competent. All this requires a lot of specialization and dedication so imagine the burden this entails to gaming operators. This seemed to have been alleviated within Spanish boundaries with the United Market Guaranted Law (Ley de Garantía de Unidad de Mercado). As an example, when depositing a bond the same was not necessary to be deposited in each autonomous community thanks to this new law. Until now it seemed that everything was going well, but Catalonia filed an appeal against this law and the Constitutional Court has ruled on the unconstitutionality of several articles overriding some precepts.
Curiously, there are some communities that have their own online gaming regulation applicable within their territory or for residents of the same. An example is the Community of Madrid, which has granted several online gaming licenses. For business strategy, it may be worth obtaining an online game license for a single community.
Any game that was not authorized in Spain, was prohibited. This is so since the 1977 Gaming Law and until today. As for Bitcoin, as I have already anticipated, gaming has been a very attractive ecosystem and one of the earliest uses that were given. A few years ago we did an analysis to see if it was possible to play with the cryptocurrency; As regards online gaming, there is no legal problem for any authorized online operator in Spain to implement bitcoin as a means of collection / payment and an electronic collection / payment utility with bitcoins provided that the gaming account of the player is nominated in euros, which is what is done with all means of payment. Therefore, the basic requirements are that the operator is authorized and that the account is nominated in euros. Thanks to payment processors this is possible in a simple way.
For Bitcoin, gaming has been a very attractive ecosystem and one of the earliest uses that was given.
Regarding land based gaming, the analysis of playing with bitcoins is a bit different. The rules expressly refer to monetary units in euros (the price of games or bets, the number of prizes, etc.). The solutions that a casino in Las Vegas has given to this, for example, couldn’t be more simple, install a Bitcoin ATM.
It is important to take into account the definition of gaming in Spain. It is considered game of chance when three elements are met: (1) any element of chance, (2) future or uncertain outcome and (3) risk sums of money, or items of economic value in whatever form.
That said, I think it is opportune to differentiate three models operators are following when offering online gaming with bitcoin (or other cryptocurrencies): (a) 100% Bitcoin, (b) bitcoin as a means of payment and (c) mixed.
According Spanish gaming regulation, the first and second models fit in. To date there are more than 100 online gaming sites where you can play and bet with bitcoin.
In this first model bitcoins are deposited and the prizes are paid / collected in bitcoin. There is no doubt that this model is understood as «social games» and that it would escape from the clutches of the gaming definition given by article 3.a of Gaming Law 13/2011 by not complying with all the elements mentioned above … or does it?
If we adopt the interpretation given by the FATF in a report on virtual currencies in 2014, as Bitcoin is a virtual currency convertible to fiat money it can be perfectly understood that the use of Bitcoin fulfills the third element, money or item of economic value. Another thing is the non-convertible virtual currencies that only have value inside the game itself, e.g. the gold of World of Warcraft which, careful, also has its secondary markets, but that’s another story. This model of gaming is the most attractive since there are no exchange rates and therefore it is a 100% global model, but I repeat, legally it is in the thin red line.
The second model can be interesting and lucrative for authorized operators in Spain. This is to use bitcoin as a means of payment. In this model the player transfers bitcoin to play through his/her electronic wallet and thanks to the payment processor that the operator has installed the player’s deposit / game account will be directly nominated in euros, as required by Spanish regulations.
Finally, the mixed model, deposit in bitcoins and withdrawal in euros and vice versa could not be adopted by an authorized operator in Spain for the reasons previously mentioned, in addition to the complications on AML control.
Why did we start seeing in 2007 the Real Madrid players advertising a betting site in their T-shirts?
This is a very common question among my students. Online gaming was born in 1994 in the island of Antigua where also the first specific online gaming software was created (Micrograming). By the way, this company still exists and is doing very well. In 2005 a series of operators in Spain (Bwin, 888, Bet365 …) began to proliferate. These entered a market where the land-based operators complied with strict regulations. No private operator (bingos, casinos, etc.) could advertise as gaming advertising was prohibited or subject to very restrictive requirements. Remember that this is a competition of the autonomous communities so it varied depending on the territory.
Various lawsuits were brought against this offer and advertising of illicit gaming, in fact, one of these cases was recently won in the Supreme Court … five years later. Our legislation, although lagging, is applicable through various methods of interpretation offered by our legal regime (grammatical, teleological, analogy etc.). This system has the advantage that, despite the emergence of new technologies, these can always fit into a current legal framework, in a better or worse way. This is very complex to understand by those who come from the Anglo-Saxon world based on «case law» regimes where «alegality» can exist.
“Our legislation, although lagging, is applicable through various methods of interpretation offered by our legal regime”.
In 2011, a new gaming law (Law 13/2011) was drafted which, among other things, specifically regulates online gaming at the state level by providing operators with a licensing system.
As you can see, lessons learned from the regulatory trajectory and vicissitudes of online gaming help us to better understand the legal significance of the introduction of a new technological phenomenon such as Blockchain and cryptocurrencies.
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