Netherlands Pushes Forward With Online Gambling Regulation

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Thursday, April 16th, 2015 | Written by Charles Washington

The Netherlands may be one of Europe’s biggest online gambling markets, but the country of 16.8 million people also has no actual legislation governing its iGaming industry. That may all be about to change soon, however, as the country’s new State Secretary for Security and Justice, Klaas Dijkhoff (photo), has said he intends to push forward with regulation in an effort to prevent illegal companies from targeting Dutch residents, and in so doing minimize the gambling problems which could subsequently ensue. That is not possible under the present system, and as Dijkhoff explains:

“Maintenance and enforcement of the current ban is in reality not possible due to the large online offering and the cross-border nature.”

Netherlands A Lucrative iGambling Market

Dutch citizens in the Western European nation are estimated to spend around €800 million ($862 million) each year on unregulated iGambling sites. In the eventuality of regulation, the country is then expected to generate more than €200 million in gross gaming revenue (GGR) in year one, rising to as much as €370 million by the end of 2016. From that tally, sports betting is forecast to produce the lion’s share of revenues, followed by internet lottery, online poker, then online bingo.

Applications Opened In December 2014

In December 2014, Dutch betting and gaming regulator Kansspelautoriteit (KSA) opened up its application process, with international operators able to apply directly to the regulator’s website for a non-binding “pre-application” license. At that time, the legislative process was still being developed, and by January 2015, the State Secretary for Security and Justice started working on a new piece of legislation called the Modernization Casinos Regime Act, which aims to regulate online gambling, privatize the country’s casinos, as well as open up the brick-and-mortar casino market to international companies.

Licensees Must Be Based Within The EU

Apparently the new application process has already attracted a great deal of interest from operators, and as a KSA statement explained recently, “more than 200 operators informed KSA that they would be interested in a remote gambling license once [the] new legislation comes into force.” However, KSA has stipulated that most of the licensees will have to be based inside the European Economic Area, although certain exceptions could be made purely on a case-by-case basis.

In addition, KSA warned that while the regulator would be happy to work with “reliable operators”, those operators currently contravening Dutch law, on the other hand, could “run the risk that a request for a license under the new Remote Gambling Act will be denied.” In 2014, for instance, the KSA carried out 41 investigations into illegal internet gambling offerings to Dutch citizens, with an undisclosed number of illegal operations subsequently shut down.

Details Of New Plan

Under State Secretary for Security and Justice Klaas Dijkhoff’s plan, internet gambling websites would receive a five-year license, and be subjected to a 20% tax on gross online gaming revenues. That figure is significantly lower than the 29% tax rate currently imposed upon Dutch land-based casinos, but Dijkhoff said that the reduced tax rate was important in order to allow gambling companies to offer games with attractive payout structures, and so compete with unlicensed operators within the country.

“It is easy for a player to [find] a better alternative on the Internet. It is therefore necessary that the future licensees [offer] a sufficiently attractive and wide range of games of chance on distance to direct players to create the legal offer”, explained Dijkhoff.

Responsible Gambling Fund

For the Dutch government, setting up a responsible gambling fund which would help tackle the problems associated with gambling addiction is seen as of paramount importance. Measures being considered include limiting the amount of time certain users will be able to spend gambling online, and setting up a national register of gamblers, which would then be monitored for those people reported as violating their limits.

Keeping player funds safe and free from legal ambiguities will also be deemed very important, as a recent case involving a Dutch gambler and online gambling giant Unibet casino demonstrates. Despite the Dutch gambler losing €170,000 on the unregulated site between June 2010 and January 2012, the Amsterdam District Court still dismissed the Dutch player’s argument to have his lost money refunded. As a result of this and many other examples, many international operators have continued to feel emboldened to treat the country as a grey market with no particular regulatory framework.