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Court ruling throws Dutch lottery monopoly into question

| By Marese O'Hagan
A ruling from the Netherlands' East Brabant District Court against gambling regulator de Kansspelautoriteit (KSA) may have far-reaching implications for Nederlandse Loterij's monopoly.
Dutch lottery monopoly

As reported by Casino Nieuws, the businesses applied for instant lottery, sports betting and lottery licences, which were rejected by the KSA on 4 September 2022. The businesses were not named in the official ruling, but Dutch newspaper Brabants Dagblad has named them as Jack’s Casino and Jacks.nl, which are owned by JVH Gaming.

In its response, KSA argued the licence had been granted to a third party – Nederlandse Loterij – and could only be issued to one legal entity, as per the monopoly policy.

KSA referred to the Netherlands’ gambling policy “horizontally consistent” in its response. The claimants countered by arguing that this hadn’t been the case since the Remote Gambling Act (KOA) was introduced in October 2021.

They also pointed to rulings issued on 2 May 2018 and 10 March 2021. The 2018 ruling preserved the monopoly status quo on sports competitions and instant lotteries while the second, ahead of the Dutch igaming market opening, ruled it was permissible to maintain the lottery’s monopoly while granting permit to charitable lotteries.

Dutch gambling policy “no longer consistent”

Assessing the claimants’ argument, the court agreed that the Netherlands’ Remote Gambling Act (KOA) – on which KSA based its refusals – did not comply with Article 56 of the Treaty on the Functioning of the European Union (TFEU).

Article 56 of the TFEU bans restrictions on offering services within EU member states.

The court ultimately determined that Dutch gambling policy is “no longer horizontally consistent” in the “current state of affairs”.

“[The] court notes the current gambling policy, after the entry into force of the KOA Act, has a single licence system for land-based games of chance with a smaller risk of addiction and a smaller chance of criminal activities,” read the ruling.

“While the current system for online gambling with a greater risk of addiction and a greater chance of criminal activities has an open licensing system.

“In the court’s opinion this inconsistency, viewed in the light of the legal developments in connection with the entry into force of the KOA Act and in the light of the actual effects of that entry into force, makes Dutch gambling policy no longer horizontally consistent.”

The court accepted the claim that a monopoly licensing system is not necessary to protect the “public interests” involved in gambling, such as customer protection, or to operate land-based gaming.

Ruling throws up questions

The court concluded that stopping operators from offering services unless it’s within a monopoly system “is not proportionate, because it does not guarantee the general objectives in a systematic and coherent manner”.

The KSA was therefore not within its rights to deny the licence applications on the basis Nederlandse Loterij was already approved to operate lotteries in the market, the court ruled.

The regulator now has 12 weeks to reassess the two applications. The court is aware of the potential impact, noting “this ruling has major consequences for the licensing for organising the three country-based games of chance”.

KSA must also pay €1,750 in court costs towards the two claimants, plus their €365 court fee.

The Dutch Lottery holds, for now, all three available monopoly licences across its three segments – Krasloten, Toto and Lotto.

Ruling represents “logical consequence”

Justin Franssen, attorney at law and partner at gambling law firm Kalff Katz and Franssen, said the ruling was an expected outcome of the introduction of online gaming in the Netherlands.

“This judgment is a logical consequence of the opening of the remote gaming market as well as a lengthy string of case law which precedes todays judgment,” said Franssen.

“The court finds it difficult to reconcile the alleged necessity to grant exclusive licences for certain land-based activities to the incumbent operator with the exclusion of others, whilst at the same time an unlimited number of licences are available for remote gambling activities, including remote sports betting.”

He added that this decision will have an effect on ongoing discussions regarding the future of Nederlandse Loterij’s – also known as the NLO – monopoly, as well as “current discussions surrounding the possible privatisation of the NLO”.

“In due course we expect there will be competition on the market for land-based sports betting which is a welcome addition to, for example, the Dutch arcade market which could definitely do with product diversification and modernisation.”

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