The Netherlands: update on the reformation of the gambling market

by DLA Piper
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Recently, the Council of Ministers approved to the plan of the State Secretary for Security and Justice, mr. Teeven, to reform the Dutch games of chance market.

The current policy on games of chance will be modernized in three areas. Firstly, the online gambling market will be regulated by 2015, so that players can enter websites of providers that are supervised. Furthermore, the lottery market and casino market will be reformed. Holland Casino will be privatized by 2017 and lottery providers will be given the opportunity to innovate more, which is also beneficial to charitable organizations.

Please find the text of the bill, amending the Betting and Gaming Act, here.

Content online gambling area

The bill creates the basis for a license, so that the Dutch player can safely and responsibly participate in online gambling in 2015. Strict license requirements will apply, which will better protect players against, amongst other things, gambling addiction. Licensees in the Netherlands will have to pay certain amounts of their gross gaming revenue: 20% gaming tax, 0.5% addiction funds and 1.5% contribution to the Games of Chance Authority. Furthermore, the content of the bill mainly consists of several enforcement measures that would give the regulator powers through court order to block payments and unlicensed websites and entails requirements were gambling operators are concerned.

Relevant requirements imposed on gambling operators are:

  • operators must be company with legal personality and registered in an EU or EEA Member State;
  • operators must store copies of the data in a controlled database to be installed in the Netherlands;
  • operators shall be required to pay a license fee (Article 31f) and gaming tax (Articles 33e and 33f);
  • operators may be required to make payments to charitable organizations (Article 31g);
  • operators must identify the players, monitor their gaming behavior and intervene where necessary (in as far the most risk-prone categories of gambles are concerned);
  • where appropriate, operators must report a player with problematic gaming behaviour to the gaming authority for involuntary exclusion from participation in such games;
  • operators may be required to record and provide information (Article 34k) and must give the supervisory bodies direct access to the electronic means used by them to organize the gambles (Article 34l);
  • operators may be required to provide financial collateral for any administrative sanctions that may be imposed (Article 35d).

Responses to Teeven’s plan

Many parties have critized the bill. Among them is the Dutch Council of State. Whilst the Dutch government hopes that as a result of the new legislation, 80% of the players that currently enter illegal websites will finally find their way to the legal side, the Council of State believes that there is no evidence showing that people will actually switch to the legal offer.

In this context, the Council of State points to the boundless character of online gambling and the limited effectiveness of measures that are only enforceable within Dutch borders. It is therefore questionable whether a reliable, responsible and verifiable offer of online games of chance can be achieved. Also, the Council of State does not think it is certain that the bill complies with European guidelines with regard to online gambling and it also questions the ‘favourable’ tax rate for online gambling.

The tax rate is also questioned by Speel Verantwoord – the brancheorganization for remote gambling providers. Speel Verantwoord expects that once the online gambling market opens up in 2015, only a little amount of players will enter legal gambling websites.  This will be the result of the 20% betting and gaming tax that will be imposed on legal remote games of chance.

Speel Verantwoord warns that if gambling on regulated websites is not attractive enough, players will find their way to the non-licensed offer easily. It emphasizes that the precondition for a high degree of channelling is that the costs a license holder has to make for a responsible remote gambling offer have to be realistic. The current tax rate the Dutch government considers to implement will be too high to reach the best channelling degree.

Speel Verantwoord encourages the Dutch government to halve the current tax rate. Speel Verantwoord predicts that a 10% rate will lead to 95% channelling, which will guarantee a higher extent of consumer protection.

What’s next

Although the Netherlands is still aiming for the 1stof January 2015 for the Act to enter into effect, the expectation is that this estimated timeline might not be achieved due to the phases the bill still has to follow. At present, the bill on remote gambling is offered to the House of Representatives for written debates and plenary hearing. After the House of Representatives has passed the bill, it will be notified to the Senate for plenary hearing. The moment the Senate has adopted the bill, it will be officially published and will come into force. Operators that wish to be active on the Dutch market can then apply for a license.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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