Danish market faces uncertain future

In the third quarter of 2018 it became clear that Denmark’s gaming market was experiencing a slow-down, with the decline of land-based gaming slowing overall market growth.

This could be seen as a natural consequence of the migration of players from offline to online gaming.

It’s difficult to read how the next year will pan out from the numbers published by Spillemyndigheden. While the market did grow last year, there was a significant impact from the World Cup. In the coming year we have no major sporting events, which would suggest revenue will stagnate or even decline.

However, additional factors outside licensees’ control look set to halt the growth of the Danish iGaming market in the year ahead.

At the time of writing, the Danish government has just launched a consultation on new regulations for iGaming bonus promotions. However the proposals go further than simply tightening controls around bonusing, and will make it increasingly difficult for licensees to advertise in general.

In addition, the government is pushing the industry to sign up to a new code of conduct. This is being presented as a voluntary measure but the implication is clear – if operators don’t agree to its terms, the government will make sure they do. Through this code operators, are expected to introduce “voluntary” limits on advertising, similar to those being brought into the UK.

All of this will make life harder for operators in the Danish market, especially when a number of political parties have failed to rule out proposing increased taxes for the sector. With the bonusing and advertising restrictions, I think there is a chance that the iGaming market will fall into a decline. Should this be coupled with a tax hike, decline is almost certain.

As in other markets, this ultimately comes down to an emotional agenda. A 2016 prevalence study suggested that there were virtually the same number of addicts as there had been in 2007, but it also highlighted a rise in the number of at-risk individuals. At the time the authorities said the findings were inconclusive, as there was no sign of a major increase in gambling addiction.

However the state-funded treatment centres argued that this was a major problem. This, in turn, seems to have convinced politicians that they need to make action.

This increased pressure from the treatment centres has been exacerbated by a push-back against iGaming advertising in general. People are annoyed by the intensive marketing campaigns carried out by iGaming operators. Some lawmakers, in turn, have reached the conclusion that increased advertising has directly contributed to the rise in at-risk gamblers, even though there’s no scientific proof for this.

It’s important to note that this should not be read as an implication that the Danish regulatory model, as implemented in 2012, was the wrong fit for the market. It’s based on a pragmatic view of gambling, and has contributed to years of growth, both in Denmark and in other markets. But it’s a fine balance; Denmark is a small market, so when regulators start to adjust different parameters, the scales can be tipped against the industry. With a wave of new controls, that may just happen in 2019.