Dutch gaming bill finally adopted by Parliament
The Dutch remote gaming bill was approved by a large parliamentary majority on 7 July, but a 29% tax rate and restrictions on live betting advertising will place doubts on its viability, writes Younes Moussaoui.
On 7 July 2016, two years after submission, the remote gaming bill was finally adopted by a large majority in the Dutch Parliament (111 vs. 39).
The bill has been adjusted when compared to the bill that was submitted in July 2014, due to several adopted amendments.
Some adjustments are for the better, others are for the worst.
So the bill has not remained unscathed, but these adjustments were necessary for it to be adopted and the hardest hurdle has at last been overcome.
The Dutch government has been trying to regulate remote gaming for 16 years now.
Attempts to regulate remote gaming in 2000 and 2008, in which the state casino monopoly (Holland Casino) would get a monopoly on remote gaming as a trial, failed due to a lack of political support.
As discussed in my earlier articles ‘Dutch iGaming: a glimpse into the future’ published in issue 86 and ‘Dutch iGaming: the third version’ published in issue 88 of iGaming Business, the current attempt to regulate remote gaming started more than five years ago.
In March 2011, the State Secretary of Security & Justice (“State Secretary”) announced the regulation of remote gaming.
A draft bill was expected in the summer of 2012, but the fall of the then government in April 2012 made that impossible.
The current government stated in its coalition agreement in October 2012 that it aimed to regulate remote gaming in 2015. A draft bill was published for public consultation in May 2013.
Following the consultation, an amended bill was sent to the Council of State for advice in February 2014 and subsequently notified to the European Commission in March 2014.
The Council of State rendered its advice in May 2014 and gave a very clear signal; the government should “re-consider whether the proposed bill is better than the alternative, i.e. a ban on remote gaming whilst having limited enforcement measures”.
Despite the advice of the Council of State, the State Secretary submitted an (once again) amended version of the bill in July 2014 to Parliament.
There was lots of opposition in Parliament against many aspects of the bill. This resulted in a lot of delay and many submitted amendments.
The amendments have adjusted the bill and the framework in such a manner that it remains to be seen whether the regulation of remote gaming in the Netherlands can be successful under these conditions.
But unfortunately, these adjustments were necessary to obtain sufficient support in Parliament.
Many amendments have been submitted. Some have been adopted and led to changes in the bill or will be dealt with in lower regulation, others have not obtained sufficient support.
The following amendments are the ones that have been adopted and have the most (expected) effect on the bill or upcoming lower regulation.
Restrictions on television
An amendment which was submitted very early in the process centred a ban of remote gaming offerings and products via open (free-to-air) television channels.
This ban will however not affect the current lottery drawings and common promotional games of chance such as competitions via text messages, via open television channels.
A gaming television channel will most likely still be possible via a paid television channel. The consequences are therefore limited to open channels.
29% GGR tax rate
A very big setback for remote gaming operators is the adoption of a 29% gross gaming revenues (GGR) tax percentage.
The bill first included a 20% GGR remote gaming tax rate and a 29% GGR tax rate for land-based gaming.
Many land-based operators, especially the slot machine operators and Holland Casino, opposed this tax differentiation and their opposition has been heard in Parliament.
This is very unfortunate for remote gaming operators because the previously proposed-remote gaming tax rate, including the additional costs, was already considered as very steep.
With the current 29% tax rate, many believe that it will be very hard to compete with the unregulated market, because the unregulated market will most likely be able to offer better odds and a better winning percentage.
The State Secretary said he aimed to channel at least 80% of the current demand to the regulated sector. This objective seems impossible with a 29% GGR tax rate.
According to H2 Gambling Capital, the proposed 29% GGR tax rate would result in capturing only 68% of the consumer demand.
This assessment did not include other costs of operation such as the gaming duty of 1,75% GGR, the contribution to an anti-addiction fund of 0,25% GGR and the non-tax deductible bonuses.
So it is expected that the current proposed costs of operation will result in channelling less than 68% of the current demand. Time will tell.
Incumbents limited in cross-selling via database
Remote gaming operators will be pleased to hear that an amendment has been adopted which ensures that cross selling is prohibited, i.e. client database obtained with a certain gaming product may not be used to market other gaming products.
This entails that lottery incumbents will not be allowed to use their current massive databases to cross-sell remote gaming products in the future.
The chance of a Danske Spill scenario, in which an incumbent is very dominant on the remote gaming market thanks to cross selling, is therefore almost non-existent in the Netherlands.
Betting operators will be obliged to notify any suspicious betting patterns to the Dutch Gaming Authority. Failing to do so could result in a fine up to €810,000 or 10% of the annual revenue, whichever is higher.
The Gaming Authority has been given an additional specific task: the prevention of match-fixing.
Additionally, sport bets which may have a higher risk of manipulation will be placed on a ‘black list’ so as to ensure they are not allowed.
Bets on amateur games, negative game elements such as a red card and game elements which are easy to manipulate, such as the first throw in or corner in football, are considered sport bets with a higher risk.
Contribution to anti-addiction fund
Remote gaming operators will be pleased that the obliged 0,5% GGR contribution for remote gaming operators to an anti-addiction fund will also be extended to land-based slot machine and casino operators and, as a result, will be lowered to 0,25% GGR.
This is a small win with regards to the costs of operation for remote gaming operators.
No DNS- or IP-blocking
Another amendment ensures that the Gaming Authority will not have the power to block remote gaming websites via DNS- or IP-blocking.
This subject encountered a lot of resistance in Parliament and among internet service providers (ISPs).
Non-interference by the government is considered an essential condition for the Internet to function properly.
Furthermore, granting such power to the Gaming Authority would set the door open for similar requests in other industries such as copyright infringement of music and films via torrent websites.
Notification pop-ups and advertising restrictions
Operators will be required to make use of pop-up notifications, instead of the earlier proposed email notifications, to inform a player about its own playing limits.
Additionally, it will not be allowed for operators to advertise live betting during sporting events such as a football match.
Furthermore, gaming operators will not be allowed to conduct online marketing activities between 6am and 9pm. This is similar to the ban on marketing activities via television.
However, this time slot on online marketing activities seems almost impossible in practice.
Conclusion and next steps
As explained, some amendments have a positive effect on the remote gaming bill, some seem to be impossible to execute and others have made it very hard to achieve a successful regulation of remote gaming.
Lower regulation will be published for public consultation in the fall of 2016 and this will shed more light on the exact conditions of the upcoming regulation.
The bill will now be sent to the Senate which will only be able to adopt or reject the bill. The Senate cannot make amendments. The Senate’s Permanent Committee for Security & Justice will discuss the bill on 4 October 2016.
The Committee will then be able to request further information on the bill from the government or decide to directly schedule a plenary debate to discuss and vote on the bill.
The parties that have adopted the bill in Parliament have a majority in the Senate. So it is expected that the bill will not face many difficulties with the upcoming vote.
As things currently stand, it is expected that the Senate will adopt the bill late 2016 or early 2017.
The remote gaming bill will then be published in the Government Gazette and most likely enter into force in the first half of 2017.
License applications will most likely start in the second half of 2017.
However, I have given more than a dozen different expected timelines in the last four and a half years, so I would not be surprised if there will be another delay in the upcoming process.
Younes Moussaoui is a gaming practice attorney at the law firm bureau Brandeis in Amsterdam.
Related articles: H2 iGaming Holland dashboard – May 2016
Interview: Eric Olders, chief executive, JVH Gaming
Privacy implications of the Dutch Remote Gambling Act
Holland: igaming regulation on track for early 2017