Spotify started prioritising local files over its own. It couldn't play local files gapless already for a long time and that hasn't changed.
I tried Mike Oldfield's "Tubular Bells 2003" and the Android client inserts gaps. Then I tried something I don't have in my iTunes, "Kylie Minogue: Live at the Hydro S.S.O." and it plays gapless. I also tried a song of my own and I was shocked to hear a demo version. I ran to check it on iTunes and sure enough the right version is there.
While generally preferring local files is a great idea, because it gets rid of mismatches, gapless needs to be FINALLY introduced for locally synced files. Please don't give me "did you try to switch it on and off again" advice. Spotify changed the functionality both on desktop (where gapless works) and Android (where it doesn't). I don't see a setting for that.
I think I'll be downgrading ASAP because this is extremely uncomfortable.