Opening of gambling markets in the Netherlands; first round, new chances?

The Dutch gambling markets are developing rapidly. In this blog we will update you on the long-awaited changes in Dutch gambling legislation, the implications for online gambling providers and a number of important judgments passed by the European Court of Justice (“ECJ”) that have influenced this new legislation.

Betting and Gaming Act Modernisation Bill (“Wetsvoorstel modernisering wet op kansspelen”)

The Betting and Gaming Act Modernisation Bill is currently pending before the Dutch Senate. The purpose of the bill is to modernise the current Betting and Gaming Act. The new bill will drastically change the current structure of the Dutch casino market. Holland Casino’s current state monopoly will disappear and the company will be split up and sold. It will then be possible for private parties to enter the Dutch casino market.

The bill introduces a new licensing system with regards to this deregulation. It will be a “closed multi-licence system” with 16 available licences. Holland Casino will be given 10 of the 16 licences at the time of its sale. Four Holland Casinos will be sold separately and two new licences will be introduced that will be auctioned by the Netherlands Gambling Authority. A number of foreign parties have already shown an interest.

Bill on Remote Gambling (“Wetsvoorstel kansspelen op afstand”)

The opening of the Dutch casino market coincides with the development of a regulatory framework for online gambling in the Netherlands in the form of the Bill on Remote Gambling. The plan is to channel online gambling into a lawful (and controllable) supply, in order to combat fraud and gambling addiction. The Netherlands is one of the few countries in Europe that does not yet have specific regulations in the field of online gambling, despite the fact that the online gambling market has grown enormously these past few decades.

The need for clear-cut online gambling regulations is also apparent from the fines imposed by the Netherlands Gambling Authority in 2018: it imposed seven fines in the total amount of €1.7 million – a record for the Gambling Authority. Five of the seven fines were related to the illegal offering of online gambling to Dutch consumers.

The new bill introduces compulsory licensing for online gambling providers. One of its consequences for licensees is a duty of care to prevent gambling addiction insofar as possible. Tax at a rate of 29% will furthermore be due on the gross profit generated on online gambling.

The bills are currently pending before the Dutch Senate. They will most likely be addressed in a plenary debate on 5 February 2019.

European case law

A number of important judgments of the ECJ have greatly influenced the gambling regulations of the European Member States. Many of those judgments relate to the restrictions imposed by Member States on the organisation of games of chance and the extent to which that is in keeping with the free movement of services (Article 56 of the Treaty on the Functioning of the European Union (“TFEU”).

Two prominent examples are the Ladbrokes and Betfair cases on the single-licence system on the Dutch market for gambling casinos. The ECJ found that single-licence systems for gambling casinos are justifiable in certain cases (with a view to combating crime and gambling addiction).

The ECJ recently passed two more judgments that have consequences for the pending bills. In its Unibet judgment, the ECJ found that a Member State may not impose sanctions on violation of the licensing system if that system is in breach of European law. In the case in question Unibet, an online gambling business located in Malta, offered online gambling in Hungary without the required Hungarian licence. In response, the Hungarian authorities imposed administrative sanctions and blocked Unibet’s website in Hungary.

The ECJ found that the existence of a licensing system restricts the free movement of services. A restriction may be justified in the interest of public order, safety and public health, or for other mandatory reasons of general interest that are acknowledged in case law of the ECJ. The ECJ noted in this regard that Article 56 of the TFEU opposes national regulations that are directly or indirectly discriminatory towards the providers of services in other Member states. A licensing system must be based on objective and non-discriminatory criteria, made known in advance. If a system does not meet these conditions, it is in breach of Article 56 of the TFEU and the sanctions imposed on that ground are also in breach of European law.

In a similar judgment passed in the spring of 2018 (Sporting Odds), the ECJ also found that Hungary’s gambling policy was in breach of European law. The regulations for online gambling providers were the target in that case. To obtain a licence in Hungary to offer online gambling, the applicant must have an “offline” branch in the country. The ECJ found that such a provision is unnecessary to achieve Hungary’s justification goals (related to the protection of Hungarian consumers).

This judgment directly influenced the Bill on Remote Gambling. Initially, such an “establishment requirement” for online gambling providers could also be found in the Dutch coalition agreement. Minister Dekker announced that the government waived such a condition for licensees. Instead, a licensee must have its registered office in the Netherlands or in one of the other EU/EEA Member States. The Netherlands Gambling Authority will have the right to grant an exemption from this requirement if a third country offers sufficient safeguards regarding the interests that the Dutch gambling legislation aims to protect and if the licensee has a branch office in the Netherlands.

The future?

Many developments are in the pipeline on the Dutch gambling markets, particularly due to the enactment of the bills. Questions of European law related to the free movement of services have clearly influenced the content of the bills and the resulting policy. That influence is not likely to decrease in the coming years.

We will keep you informed of the developments surrounding the imminent opening of the Dutch gambling markets, in particular the role played by the Netherlands Gambling Authority and the first issue of casino licences, with the accompanying call for competition.

This blog has been co-written by Mr B. Braeken (who, as of 15 July 2019, no longer works at Maverick Advocaten).

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