Gaming Law 2020 Comparisons

Last Updated November 24, 2020

Contributed By Kalff Katz & Franssen

Law and Practice

Authors



Kalff Katz & Franssen is the only law firm in the Netherlands with a dedicated practice which specifically focuses on the national and international gaming and gambling sector, and related areas. The gaming and gambling practice group adopts a multidisciplinary approach to advise clients on a range of subjects, such as licensing, compliance, litigation, contracts, public affairs, and privacy and data protections. Kalff Katz & Franssen’s clients include listed B2C and B2B operators, software developers, inspection bodies, financial institutions, payment service providers, private equity investors, media companies, hosting companies and public authorities. The gaming and gambling practice group consists of nine members. Various members are affiliated with the International Masters of Gaming Law (IMGL) and the International Association of Gaming Advisors (IAGA). Furthermore, the practice group often provides speakers and moderators for conferences and events around the world, as well as regularly writing for sector-specific publications.

Remote Gambling Act (RGA)

The one major development currently hanging over the Dutch gambling market is the regulatory reform that will be introduced by the RGA (Wet kansspelen op afstand) and accompanying secondary legislation.

On 19 February 2019, the Dutch Senate passed the RGA, which will amend the existing Betting and Gambling Act (Wet op de kansspelen, BGA) and the Betting and Gaming Tax Act (Wet op de kansspelbelasting, BGTA), so as to introduce a remote gambling licensing regime. In his letter of 4 September 2020, the Minister for Legal Protection (the Minister) confirmed, with only the lightest of caveats, that the RGA will enter into force on 1 March 2021. The first remote gambling operators are expected ‘to go live’ on 1 September 2021.

As a general note here: where applicable, this contribution will refer to specific provisions as they will appear in the amended BGA rather than the unintegrated provisions of the RGA.

Market Vision

On 9 July 2020, the national regulatory authority for gambling, the Netherlands Gambling Authority (NGA) published a consultation version of its so-called Market Vision on Games of Chance (Marktvisie kansspelen. Marktordening en markttoezicht vanuit de publieke belangen, Market Vision). In its Market Vision, the NGA notes that new operators might need to be offered the opportunity to create attractive gambling offers. Furthermore, the NGA states it is obvious that state-run monopolies in some land-based sectors will need to be abolished eventually. Although such changes would require amendments to existing legislation, the Market Vision might very well signal an increased likelihood of future developments within these areas.

Information Regarding Remote Gambling Licences

The first half of 2020 saw a lack of detailed information regarding the future remote gambling licensing process. However, preparations for the future licensing regime have gained a lot of traction following the letter from the Minister on 4 September 2020, as mentioned in 1.1 Current Outlook

In Q4 of 2020, the NGA published several (draft) documents consisting of policy rules and guidance on the licensing process and licence requirements. Furthermore, the NGA also provided a “communication calendar” detailing what information the sector could expect, and when, in addition to an overview of the documentation which licence applicants must submit. However, even as later as November 2020 the NGA has not released the remote gambling licence application form.

Cooling-Off Period for Remote Gambling Licence Applicants

During debates in the Dutch Senate in February 2019, a motion (the “Postema motion”) was passed which called for the exclusion of certain illegal operators from the future remote gambling licensing process. According to the motion, remote gambling operators must only be allowed to receive a licence if they had not actively and specifically targeted the Netherlands for a period of two years.

Following the letter from the Minister on 4 September 2020, it became clear that this period would be extended to 32 months. According to the Minister, this extension was necessary to capture the delay in the entry into force of the RGA since it passed the Senate. The NGA will give effect to the motion by criteria which are referred to as the “cooling-off criteria”, which are explained further in 4.6 Application Requirements

Horse Race Betting (Totalisator) Licence Procedure

On 24 June 2020, the Dutch Council of State reached two judgments in the cases brought forward by Trannel International Limited (Trannel) and The Sporting Exchange Limited (the Sporting Exchange) regarding the procedure according to which the exclusive land-based horse race betting licence was awarded. This is explored further in 2.2 Land-Based.

Trannel and the Sporting Exchange objected to the NGA’s decision to award the licence to the incumbent operator, arguing that they were not offered the opportunity to compete for the totalisator licence on an equal footing with the incumbent, and were therefore unlawfully barred from the Dutch market. Trannel and the Sporting Exchange considered this lack of “fairness” to be in breach of Article 56 of the Treaty on the Functioning of the European Union).

The NGA rejected the objections from Trannel and the Sporting Exchange on the basis that they could not be considered “interested parties” as they had not participated in the licence procedure. Therefore, they were not allowed to object to the award of the licence to the incumbent.

The Council of State ruled that the NGA must address the objections brought forward by Trannel and the Sporting Exchange, even though neither party participated in the licensing procedure. The NGA must now decide on the objections of Trannel and the Sporting Exchange.

Prior to the entry into force of the amended BGA on 1 March 2021, all remote gambling offers are prohibited. The prohibition on offering unlicensed games of chance will remain, and prior to this key date no licences for remote games of chance can be awarded by the NGA. Once the amended BGA enters into force, licensed operators will be permitted to offer various forms of remote gambling, as per the four categories explained in 4.3 Types of Licences. This current section will address how the new regulatory regime will shape the offers pursuant to different product verticals.

Betting (in General)

The future remote gambling regime will allow operators to offer bets on the outcome of horse racing and harness racing, on the outcome of sporting contests, or events occurring during sporting contests. However, bets on negative events or events that can be easily manipulated (for example yellow/red cards) will be prohibited.

Bingo

Short-odds, high-tempo bingo games will be licensable as casino games.

Casinos

The future remote gambling regime will allow operators to offer:

  • casino games in which the players play against the licence holder (eg, blackjack), including live casino games; and
  • casino games in which the players play against one another, including live casino games (poker games will fall under this category).

Fantasy Sports, Esports and Virtual Sports

Esports betting will be allowed in principle. However, this will be subject to the condition that the underlying sporting contest is organised under the auspices of a recognised (inter)national sports organisation. Until such a time that esports governance reaches this stage, licensed operators will have to refrain from offering bets on such competitions.

Under the future licensing regime, fantasy sports betting will be considered as sports betting and will thus be permitted, insofar as it is based on (elements from) sporting contests that fit the definition of a sporting contest. Furthermore, the underlying sporting contests must be organised in accordance with the safeguards against match fixing.

Bets on virtual sports will be allowed when the outcome is determined by a random number generator. These bets will be regulated as casino games.

Lotteries

Holders of a remote gambling licence will not be permitted to offer lotteries remotely. Charity lotteries may already be offered online, without having an offline offer, but they are not regulated as remote gambling. Furthermore, lotto and the State lottery may also offer their products online by way of specific licence conditions; whereby the internet is used as an additional sales channel to more traditional retail channels.

Social Gaming

Social games that do not include prizes or premiums, but only offer the opportunity to play longer, fall outside the scope of the BGA.

The land-based gambling market in the Netherlands consists of a mix of state-owned and private entities, and a multitude of licensing requirements. This section will provide a general overview of licensable land-based games of chance. The individual licensing systems are explained further in 4.3 Types of Licences.

Readily Available Licences

An unlimited number of licences are available for slot machines. Slot machines can be located in a slot-machine arcade, and in cafés or restaurants targeted towards persons over 18 years of age. Municipalities determine whether slot machines are permitted within their area, and if so, which other restrictions apply (eg, where, how many, and opening times).

Also, an unlimited number of licences are available for charity lotteries, but these licences are subject to conditions, which include a prohibition on generating private profits. Furthermore, all such offers must be for the public good with 40% of revenue going to good causes.

Semi-permanent Licences

Single licences exist in the field of horse race betting, sports betting, the instant lottery, and the Lotto. The Lotto is a game whereby participants can predict a given number of symbols from a predefined range. Subsequently, a draw is made. The instant lottery is offered in the form of scratch cards (krasloten), whereby prizes are allocated to tickets before sales commence.

Licences for these sectors are referred to as semi-permanent since they are valid for a period of five years and have been reallocated to incumbent licence holders.

Permanent Monopolies

Casino gambling (including poker) is offered by the state-owned Holland Casino, which enjoys a permanent monopoly. Furthermore, the State lottery licence was granted to the Staatsloterij B.V. in 2017 for an indefinite period, which essentially perpetuates the permanent monopoly which has long been enjoyed for offering what is essentially “the national lottery”.

Games That Are Exempt from the Licence Requirements

Several forms of gambling are exempt from the "prohibited unless licensed" approach. These forms include small-scale gambling, and promotional games of chance. Land-based bingo games can only be offered when they fall within one of these categories.

Small-scale gambling must adhere to a number of requirements. Most importantly:

  • the offer has to be notified to the municipality fourteen days in advance;
  • the prizes (monetary or in-kind) may not exceed the amount of EUR400 per series (or set); and
  • the total amount of the prizes may not exceed EUR1,550 per gathering.

Promotional games of chance must be organised in accordance with the code of conduct on promotional games of chance (Gedragscode promotionele kansspelen). Important requirements include:

  • that prizes cannot amount to more than EUR100,000 per year; and
  • a prohibition on charging participants any costs for participation or a stake (excluding the costs for communication up to EUR0.45).

The BGA and the BGTA are the primary laws regulating gambling in the Netherlands. The BGA incorporates a prohibited unless licensed approach, whereby it is prohibited to offer games of chance without a licence.

Furthermore, the RGA is expected to enter into force on 1 March 2021. As explained in 1 Introduction, the RGA will amend the BGA and the BGTA, so as to introduce the remote gambling licensing regime.

According to the BGA, "games of chance" consist of two elements:

  • an opportunity to compete for prizes or premiums; and
  • the designation of winners by a means over which the participants are generally unable to exercise a dominant influence.

A prize or premium is defined broadly. The definition includes monetary prizes as well as in-kind prizes. Payment of a stake is not required for a game to be considered a game of chance under the BGA, which increases the prospect of individual games being found to constitute gambling in the Netherlands in contrast to other jurisdictions.

Land-based gambling is not defined separately in legislation. The BGA only mentions those games of chance for which one or more licences can be awarded.

Remote games of chance are defined by reference to the general definition of "game of chance", as provided in 3.2 Definition of Gambling. Additionally, according to the amended BGA, the following two elements must be present:

  • the game of chance is offered remotely, using electronic means; and
  • a person can participate without any physical contact with the operator.

Under the BGA, it is prohibited:

  • to offer unlicensed games of chance;
  • to promote unlicensed games of chance (until the March 2021 amendments take effect); and
  • to knowingly participate in unlicensed games of chance.

Enforcement of these prohibitions takes place primarily by administrative measures, although there are no known cases of players being subject to enforcement measures for having participated in unlicensed offers. There is an option to turn to enforcement via criminal law under specific circumstances, as detailed in the enforcement protocol between the NGA and the public prosecutor.

Following the entry into force of the amended BGA, the scope of the prohibition on promoting games of chance will be expanded so as to cover the facilitation of such unlicensed offers. This will bring payment services providers into the scope of the prohibition; in December 2017, the Dutch Council of State held that payment providers fall outside the scope of the prohibition in its existing form. The expanded scope will apply to providers of other intermediary services too.

Breaches of the prohibitions against offering or promoting unlicensed games of chance (as discussed in 3.5 Key Offences) can be sanctioned by an administrative fine, or a cease and desist order that is subject to penalty for non-compliance. The maximum administrative fine currently stands at EUR870,000, or 10% of the turnover during the previous year if this exceeds EUR870,000. Administrative fines are awarded in accordance with the NGA’s sanction policy.

Criminal sanctions can consist of a fine (up to EUR870,000 for legal entities), imprisonment, and community service. Please note that, as indicated, administrative law is the primary enforcement route.

As explained in 1.1 Current Outlook, the amended BGA is expected to enter into force on 1 March 2021. Alongside the amended BGA, a number of secondary pieces of legislation will be introduced or amended. Key pieces of secondary legislation are the Remote Gambling Decree (Besluit kansspelen op afstand, RGD) and the Remote Gambling Regulation (Regeling kansspelen op afstand, RGR). Both the RGD and the RGR flesh out the regulatory framework established by the amendments which the RGA will introduce to the existing BGA.

Additionally, the RGD and RGR will amend existing secondary legislation concerning responsible gambling and advertising, so as to update them for the purposes of regulating remote gambling, including:

  • the Decree on recruitment, advertising, and addiction prevention 2013 (Besluit werving, reclame en verslavingspreventie kansspelen 2013); and
  • the Regulation on recruitment, advertising, and addiction prevention 2013 (Regeling werving, reclame en verslavingspreventie kansspelen 2013).

Finally, the since the Minister’s aforementioned letter in September 2020, the NGA has published several sets of policy rules and guidance documents, including:

  • Policy Rule on Remote Games of Chance (Beleidsregels kansspelen op afstand) – only available in draft at the time of writing, the final version should be published in January 2021;
  • Policy Rule on Responsible Gambling (Beleidsregels verantwoord spelen) – only available in draft at the time of writing, the final version should be published in January 2021; and
  • Guidance on the AML-Act (Leidraad Wwft) – at the time of writing only available in draft with no information as to when the final version can be expected.

These accompany existing documents, such as:

  • Guidance on assessing Games of Chance (Leidraad beoordeling kansspelen); and
  • Fining Policy Rules Remote Gambling (Boetebeleidsregels online aanbod).

The independent NGA is the regulatory authority concerned with the supervision and enforcement of the BGA. The NGA is also tasked with the award of gambling licences.

For slot machines a licence is also required from the local municipality.

As stated in 3.3 Definition of Land-Based Gambling, the BGA embodies a prohibited unless licensed approach. This means that all locally unlicensed gambling offers, other than those forms that are exempt from the requirement to be licensed (as referred to in 2.2 Land-Based), are unlawful.

Current Enforcement Approach for Remote Gambling

Enforcement action by the NGA against locally unlicensed remote gambling offers revolves around a non-exhaustive list of triggers, the so-called prioritisation criteria. Breaching one of these criteria increases the risk of enforcement for the specific operator. The NGA considers those operators acting in breach of the criteria to be specifically and unmistakeably targeting the Netherlands. The criteria include using payments methods that are exclusively or to a large extent used by Dutch residents (eg, iDEAL, a Dutch online payment system), and other characteristics that would indicate an operator is targeting the Netherlands (eg, the use of Dutch flags).

This enforcement approach was first introduced in 2012 and was expected to bridge a relatively short transitional period until the licensing regime for remote gambling was introduced. The current prioritisation criteria were published in May 2017. As of 1 January 2020, an operator will also increase their risk of being subject to enforcement measures should they lack age verification measures, despite the unlawful nature of their unlicensed services in the Netherlands and the fact that the presence or absence of such measures has no bearing upon whether an operator is targeting the Netherlands in anyway.

To comply with the criteria on age verification, remote gambling operators must visibly verify the age of Dutch players using an “objective means of proof” before the registration process is completed. As is explained in 4.6 Application Requirements, age verification also forms part of the cooling-off criteria. Breaching the age verification criterion will negatively impact an operator’s licensing prospects

Through reliance on the prioritisation criteria the NGA merely seeks to prioritise its enforcement efforts. It is important to note that locally unlicensed offers that comply with the prioritisation criteria remain in breach of the law, even though the risk of enforcement might be mitigated.

Enforcement Following 1 March 2021

The prioritisation criteria remain applicable at least until the amended BGA enters into force on 1 March 2020. After 1 March 2021, the context in which the prioritisation criteria were relied upon, will no longer exist. Remote gambling licences will be available. The NGA has not set out its enforcement approach for then, but it is reasonable to assume that there will be a change of direction and that the likelihood of enforcement will increase.

This is especially likely to be the case once operators can no longer rely upon the cooling-off period; operators who seek to rely on the leniency which this will afford must apply within the first twelve months of the legislation entering into force. Once the policy has expired on 1 March 2022, the risk of enforcement for all unlicensed offers on the Dutch market will dramatically increase. The full functioning of the cooling-off period is explained further in 4.6 Application Requirements

There will be a greater risk of enforcement for intermediaries, such as payment service providers and software providers, that serve unlicensed operators. As explained in 3.5 Key Offences, the scope of the prohibition on promoting unlicensed games of chance will be expanded to explicitly capture these “facilitating” activities.

Regulatory Developments Regarding Land-Based Gambling Offers

On 1 July 2019, the NGA published its Guidance on the Duty of Care (Leidraad Zorgplicht). This document applies to all licensed operators and consists of ten recommendation, focussing on four broad categories, including:

  • responsible gambling;
  • access to games or the gambling venue;
  • information for players; and
  • complaints and cancellations.

The Guidance on the Duty of Care will be incorporated in, and replaced by, the Policy Rule on Responsible Gambling, of which the final version is expected in January 2021.

Land-Based Gambling

The licensing systems for land-based gambling services are set out in 2.2 Land-Based. Given of the nature of the semi-permanent and permanent licensing regimes, only slot machines and charity lotteries will be explained further in this section.

Firstly, slot-machine operators can only operate machines for which a valid type approval has been granted. Secondly, operators must possess an exploitation licence from the NGA. Thirdly, slot-machine operators must obtain a licence from the relevant local municipality in relation to the premise in which the slot machines are to be located (premise licence).

Charity lottery licences can be divided into two categories: non incidental and incidental. Non-incidental lotteries are awarded for a period of more than six months. Incidental lotteries are awarded for a period of six months and are allowed a maximum of thirteen draws within that period.

For both incidental and non-incidental charity lotteries, 40% of revenue must go to good causes, and operators are prohibited from generating private profit. Licences issued by the NGA are intended for lotteries with prizes amounting to a total of more than EUR4,500. Licences for lotteries with prizes totalling an amount of EUR4,500 or less, are awarded by local municipalities.

Remote Gambling

The amended BGA will introduce a remote gambling licensing regime. According to the RGD, an applicant can apply for four categories.

  • Casino games in which the players play against the licence holder (eg, blackjack).,
  • Casino games in which the players play against one another (eg, poker).
  • Bets on events occurring during a sporting contest or on the outcome of a sporting contest.
  • Bets on the outcome of horse racing and harness racing.

The permitted remote gambling services outlined in 2.1 Online fall in one the above categories.

Land-Based Gambling

As explained in 2 Jurisdictional Overview, there is no cap on licences for charity lotteries and slot machines and in reality these are the only licences which can be considered as being “readily available” in the land-based sphere. However, in terms of slot machines, practice will be determined by the policies of local municipalities.

Remote Gambling

The number of future remote gambling licences will be unlimited, but applicants will have to fulfil strict requirement on subjects such as:

  • the reliability of the applicant;
  • separation of player funds;
  • addiction prevention;
  • consumer protection; and
  • payment transactions.

It remains to be seen how strictly the NGA will apply all licensing criteria in practice. While more information is filtering through at the time of writing (November 2020), the extent of some licensing requirements is not completely established yet. For example, requirements regarding the location of electronic means (eg, servers, and the random number generator) seem ambiguous, as it is not clear how the NGA will approach operators with parts of their systems inside the EU with elements outside. Whilst the NGA provides detail on how it will assess various policies in its draft Remote Gambling Policy Rule, given that this is somewhat unchartered territory, with this being a new licensing regime, many challenges and questions of interpretation are expected to emerge. Furthermore, applicants with an unlicensed presence in the Netherlands will have to consider their compliance with the cooling-off criteria as explained in 4.6 Application Requirements. This will certainly have an impact on whether a particular applicant is eligible for a licence.

The offer of slot machines requires three separate documents, with different durations. The slot-machine type approval will in principle remain valid unless the model has to undergo changes. The premises licence is awarded by the relevant local municipality, and these are usually valid for between one and five years. The exploitation licence is awarded by the NGA for a period of, in principle, ten years.

As mentioned in 4.3 Types of Licences, charity lotteries are awarded for a period of six months, or a longer period (in practice five years).

Future remote gambling licences will be awarded for a period of five years.

Given that licences are effectively only available for charity lotteries, slot machines and remote gambling, attention only focuses upon these forms here.

Reliability Assessment for Remote Gambling Applicants

One of the key requirements for remote gambling licence applicants is the reliability assessment. The NGA will investigate whether the reliability of the applicant is “beyond any doubt”. The reliability assessment includes relevant legal and natural person, such as shareholders, and daughter companies.

The reliability assessment for remote gambling applicants will consist of a three-step approach: an investigation into whether the applicant has had an unlicensed presence in the Netherlands, a reliability test and probity screening.

Locally unlicensed presence

If the applicant has, or has had, a locally unlicensed presence, the NGA will consider whether it has targeted the Netherlands. For those applications submitted during the first twelve months after the entry into force of the amended BGA, an unlicensed presence on the Dutch market will, in and of itself, not render an applicant as lacking a sufficient degree of reliability. This will be an exception to the “default” position surrounding unlicensed offers and the NGA’s assessment of an applicant’s reliability. In order to benefit from this exception, the applicant will have to provide evidence demonstrating compliance with the cooling-off criteria for the 32 months prior to the date of the application.

A licence applicant will not be deemed to have complied with the cooling-off criteria, if in the 32 months preceding its application:

  • the offer was entirely or partially made via a website with a .nl URL extension;
  • the website was entirely or partially available in the Dutch language;
  • the offer or the operator in question was advertised on television, radio or printed media directed towards the Dutch market (the NGA has explicitly stated that affiliate marketing also violates the cooling-off period);
  • domain names with references to things closely associated with the Netherlands in combination with references to gambling (eg, klompenbingo ("clog bingo") or rood-wit-blauw-casino (red-white-blue-casino) were used for the offer;
  • the websites on which the offer was available contained one or more characteristics from which it can be concluded that the offer was targeted at the Netherlands; and/or
  • for the purpose of the offered games of chance, payment methods which are solely or primarily used by Dutch residents could be used (iDEAL is specifically referred to in the draft policy rule).

Furthermore, and although this does not reflect whether an offer has targeted the Netherlands, as of 1 January 2020, operators must also have been verifying the age of players before completing the registration process (see Current Enforcement Approach for Remote Gambling in 4.2 Regulatory Approach for more information).

Operators with an unlicensed presence who submit their licence application after 28 February 2022 (ie, twelve months after the entry into force of the amended BGA), cannot make use of this exception to the default position. As such, the applications of operators with a (previous) presence on the Dutch market, submitted after 28 February 2022, will in principle be rejected. The reliability of these operators will not be considered to be “beyond any doubt”.

Reliability test

The second step in the overall reliability assessment is the reliability test as based on the amended BGA and secondary legislation (as amended) and will apply to all applicants. The reliability test includes direct and indirect shareholders that hold a stake of 25% or more or have effective control over the licence applicant.

Probity screening

Finally, the third step consists of a test based on the Public Administration (Probity Screening) Act (Wet bibob). If the NGA deems it necessary, and in specific situations, it will ask for an advice of the Bibob Agency (Landelijk bureau Bibob). This Agency is specialised in integrity assessments and providing advice to government authorities.

Reliability Assessment for Land-Based Slot-Machine and Charity Lottery Licences

The reliability assessment as described above for remote gambling applicants does not apply to land-based slot-machine (exploitation) licence applications and charity lottery licence applications. Moreover, no policy equivalent to the cooling-off criteria prevails. However, applicants for these licences will have to fulfil requirements regarding integrity and reliability. The NGA’s investigation will include an assessment of:

  • the financials of the applicant;
  • its antecedents;
  • its organisational structure; and
  • business relationships with other natural or legal persons.

Furthermore, applicants for land-based slot-machine and charity lottery licences could also be subjected to a test based on the Public Administration (Probity Screening) Act (Wet bibob), which includes an assessment of whether there is a risk of the licence being used for criminal purposes.

The NGA will have six months to assess a remote gambling licence application. This period can be extended by another six months. Current expectations are that the first licence applications will be submitted on 1 March 2021, with the first locally licensed remote operations commencing on 1 September 2021.

Licence applications for slot machines, incidental lotteries and charity lotteries have to be completed within eight weeks. This period can be extended depending on (additional) information required from the applicant.

Fees for slot machines consist of the fees for both premises and exploitation licences. According to the information provided by the NGA, premises licences are set by individual municipalities with a maximum of EUR22, plus EUR34 per slot machine. The exploitation licence awarded by the NGA is subject to a one-off fee of EUR1,815.12, and a yearly fee of EUR453.78.

Fees for charity lottery licences (both incidental and non-incidental), depend on the total amount of the prizes that can be won.

  • Prizes totalling an amount above EUR4,500 and up to EUR45,000 are subject to a fee of EUR226.
  • Prizes totalling an amount above EUR45,000 and up to EUR450,000 are subject to a fee of EUR907.
  • Prizes totalling an amount above EUR450,000 and up until EUR4.5 million are subject to a fee of EUR1,558.
  • Prizes totalling an amount above EUR4.5 million are subject to a fee of EUR2,268.

Remote gambling licences are subject to a non-refundable licence application fee of EUR48,000.       

As described in 4.8 Application Fees, the exploitation licence for slot machines is subject to an annual fee of EUR453.78.

Although not an annual fee as such, remote gambling licence holders will be required to pay a levy of 1.75% of gross gaming revenue (GGR), which will cover two things. 1.5% of GGR will be designated to cover the annual costs associated with the NGA’s performance of its tasks, whilst the other 0.25% will cover costs associated with the addiction prevention fund.

As explained in 4.3 Types of Licences, a premises licence is required for slot-machine operators. These licences can be awarded by local municipalities. Specific requirements including opening hours, location, and number of slot machines are determined by the relevant municipality in which the operator has its premise.

The existing fourteen casinos within the Netherlands are all operated by the State-owned Holland Casino. Other venues calling themselves casinos are not actual casinos; they are not allowed to offer games that are supervised by human dealers but only machine-based gambling.

Land-Based Gambling Monopolies

The land-based licensing systems were introduced based on the premise of a restrictive legal offer. The rationale was that open licensing systems should only be introduced in the sectors where it was necessary. In 2011, the then State Secretary for Justice & Security stated that there should be more room for an attractive gambling offer. However, most land-based licences (such as the State Lottery, the Lotto, the instant lottery, horse race betting, and sports betting) are still awarded to a single operator – on a permanent or semi-permanent basis. To date, legislative reform has only altered the regulatory landscape in terms of remote gambling.

On 9 July 2020, the NGA published its Market Vision on games of chance in the Netherlands. The NGA called for the abolition of land-based gambling monopolies, although any change of this degree will require amendments to primary legislation.

State Monopoly on Land-Based Casinos

An expected, a key reform was the end of the state monopoly on land-based casinos in 2019. Plans to privatise Holland Casino and to remove its monopoly on land-based casinos eventually failed on 17 May 2019. The bill that was supposed to arrange the privatisation of Holland Casino and the removal of the monopoly was under consideration at the same time as the bill on remote gambling. During the Senate debates in February 2019, several parties expressed their doubts regarding the simultaneous liberalisation of both the remote gambling sector and the land-based casino sectors following the adoption of both bills.

As the Minister did not expect to find a majority on the privatisation of Holland Casino, he asked the Senate not to vote on the bill. Eventually, the Minister withdrew the bill on privatisation completely on 17 May 2019. In his letter of 17 May 2019, the Minister stated that privatisation was still preferred by the cabinet. At the time of writing (November 2020), there are no indications as to when a bill will be (re-)introduced to this end. As explained in 1 Introduction, the bill on remote gambling was adopted in February 2019.

As indicated in 2.1 Online, the future remote gambling licensing regime will allow the offer of most gambling verticals. Subjects that will be addressed during the licensing process include:

  • the reliability of the applicant (including shareholders and ultimate beneficial owners);
  • financial continuity;
  • the separation of player funds;
  • addiction prevention;
  • consumer protection;
  • integrity; and
  • outsourcing.

An important restriction on the use of remote gambling licences is the prohibition on anonymous payment instruments. Other payment instruments can in principle be used if those instruments have been issued by a bank or payment institution that is licensed in accordance with EU regulations.

Furthermore, operators are not permitted to offer lottery services remotely on the basis of a remote gambling licence. As explained in 2.1 Online, some land-based gambling offers may currently be offered online, but they do not represent a true remote gambling offer.

The remote gambling licensing regime is aimed at players in the Netherlands. Remote gambling services licensed in the Netherlands are not be exported to other jurisdictions on the basis of the operator’s Dutch licence.

Remote gambling licences obtained overseas are not and will not be recognised in the Netherlands. Locally unlicensed gambling offers available to Dutch customers remain illegal even if the operator in question is licensed abroad. The Dutch Supreme Court, in its 2005 Ladbrokes decision, adopted a very low threshold for a gambling offer to be considered “available in the Netherlands”. There is no requirement in terms of specifically "targeting" the Dutch market, nor is it necessary for one or more Dutch residents to have actually participated in a particular offer.

The amended BGA will not introduce a licensing system for B2B service providers. Service providers such as software suppliers and affiliates are, in principle, free to provide their services to locally licensed remote gambling operators. That said, B2C operators will be subject to extensive requirements regarding outsourcing. Furthermore, licence holders will remain responsible for advertising activities performed by affiliates.

Remote gambling applicants will be required to submit their outsourcing policy to the NGA, which will assess this policy during the application process and will investigate the risks associated with the outsourcing of certain activities to third parties. The NGA will specifically assess safeguards within an applicant’s policy and relevant contracts to ensure that all relevant regulatory requirements will be upheld and standards met, despite the fact that the applicant intends to rely on third parties for the given elements of their operation.

As remote gambling is currently prohibited, the NGA performs periodic investigations into affiliate marketing for locally unlicensed gambling offers, and affiliates have been subjected to cease and desist orders on the basis of Article 1(1)(b) of the BGA (the prohibition on promoting unlicensed games of chance). Practice demonstrates that the NGA awards affiliates 48 hours, one week or two weeks to discontinue all advertising activities for unlicensed operators. The orders are subject to a penalty of EUR1,500 for every day an operator fails to comply with the order, with a maximum penalty of EUR21,000.

Affiliate marketing will be allowed under the forthcoming remote gambling regime. Nevertheless, affiliates will be subject to advertising requirements under the amended BGA, and under secondary legislation via the licensed operator. In light of the legislative requirements, the NGA has published a (draft) Policy Rule on Responsible Gambling which will also apply to affiliate marketing activities aimed at the Netherlands. The Policy Rule on Responsible Gambling will replace the existing Guidelines for Gambling Advertising 2016 (Leidraad reclame voor kansspelen) which also covers unlicensed offers and those with a role in the advertising of games of chance (eg, affiliates).

At the time of writing, there is no clarity on the position of white-label constructions. It is unclear whether the entity providing only the mechanics of a gambling offer will be required to apply for a remote gambling licence, considering that it is another entity which interfaces with the customer. No explicit answer to this question is provided in the BGA or secondary legislation.

As indicated in 1.1 Current Outlook, the first remote gambling licences are expected to be awarded in 2021.

Currently, the lack of geo-blocking measures is one of the prioritisation criteria used by the NGA to prioritise its enforcement actions. Operators that do not use geo-blocking instruments are, at least in theory, at a greater risk of enforcement. However, the lack of geo-blocking measures has never, in practice, been a standalone trigger for enforcement measures by the NGA. Furthermore, the use of geo-blocking measures is not required to be compliant with the cooling-off criteria (concerning licensing prospects), as explained in 4.6 Application Requirements.

The explanatory memorandum to the RGA states that enforcement action by the NGA will first focus on those B2C operators offering unlicensed games of chance. However, should these prove ineffective the NGA will also have the ability to issue binding instructions to intermediaries to hinder the ability of the B2C operator to reach consumers in the Netherlands, once the new regime is in place.

All licensed operators will be subject to an “active duty of care” to prevent gambling addiction. Furthermore, land-based casinos, land-based slot-machine operators and remote gambling licence holders will be required to have at least one addiction prevention representative in the Netherlands. According to the RGD, the representative does not need to be a resident of or be established in the Netherlands. Instead, the representative has to be sufficiently present in the Netherlands to carry out his or her duties. Further details will be included in the Policy Rule on Responsible Gambling.

Furthermore, the entry into force of the BGA will introduce several important new tools to combat gambling addiction. One of these tools is the CRUKS system (Centraal Register Uitsluiting Kansspelen). Land-based casinos, land-based slot-machine arcade operators and remote gambling operators must check whether or not a player is registered in CRUKS, before a player can be allowed to gamble. Players that are registered in CRUKS, either voluntarily or involuntarily, may not be admitted to the game of chance.

There are other requirements designed to protect players from engaging in excessive participation. Remote gambling licence holders, for example, may not personalise bonuses to the behaviour of an individual player. This includes both the offering of a bonus as well as tailoring the amount of the bonus to the player’s behaviour. An example is offering a bonus when the player has incurred a significant loss or leaves the game.

It should also be recalled that for existing remote gambling offers, operators must verify the age of a (prospective) player before the player’s registration is completed. The age verification process must be “visible to the player” and conducted by “an objective means of proof”. As noted in 4.2 Regulatory Approach and 4.6 Application Requirements, the age verification is – as of 1 January 2020 – part of the prioritisation criteria (enforcement risk) and cooling-off criteria (licensing prospects). Once the remote gambling regime is in place, verification of age and identity will also have to have taken place before participation in the offering can occur. Legislation does not provide scope for temporary accounts.

Knowledge of, and insight into, the current addiction prevention policy and the risk factors of specific games of chance are compulsory for managers and persons in key positions within the remote gambling licence holder's company. An operator’s addiction prevention policy must also be developed, applied, and maintained in co-operation with addiction care experts. The addiction prevention policy must include a description of how the licence holder co-operates with addiction care experts, and a description of how information on addiction is provided to players.

Another key requirement for remote gambling, is the option for players to set limits for their gaming behaviour. These limits can refer to:

  • the maximum duration of access to the player interface;
  • the maximum amount of deposits; and
  • the maximum credit in the player account.

On 21 May 2020, the Netherlands implemented the Fifth AML Directive (EU-2018/843). Currently only casinos fall within the scope of the revised Dutch AML-Act (Wwft). After the entry into force of the amended BGA, remote gambling licensees will also be subject to the AML requirements. The NGA will issue a non-binding guidance document on the AML-Act for remote gambling licence holders and land-based casinos. At the time of writing, the NGA has submitted a draft version for non-public consultation.

Relevant gambling operators will have to follow a risk-based approach with regards to drafting and implementing their AML policy.

Furthermore, operators must demonstrate that they constantly monitor their business relationship with the customer and money transactions, by means of customer due diligence (CDD) checks. CDD data on higher-risk players must be updated more frequently, this concerns, for example, players from high-risk areas.

Unusual transactions, conducted or intended, must be reported to the Financial Intelligence Unit (FIU Nederland). Whether a transaction is unusual must be assessed on the basis of objective (ie, transactions reported to the police) and subjective (ie, reason to assume a connection to money laundering) indicators.

The NGA is also the regulatory authority concerning advertisement for gambling offers. As noted in 6.3 Affiliates, the NGA has taken action against advertisements for unlicensed gambling offers on the basis of the BGA.

The Advertising Code Committee (Stichting Reclame Code) is responsible for enforcement on the basis of the self-regulatory Dutch Advertising Code (Nederlandse Reclame Code). Currently the Dutch Advertising Code only applies to incumbents. Following the entry into force of the amended BGA, the Advertising Code will be reviewed and the scope of the Code will be discussed with future remote gambling operators as well.

The BGA prohibits the “promotion” of unlicensed games of chance. This definition, according to parliamentary history and jurisprudence, captures a broad array of advertising activities, such as:

  • the placement of advertisements in newspapers;
  • the distribution of flyers; and
  • having advertisement materials in stock.

Since the Council of State decision on 22 January 2020 (Content Publishing Limited), it is clear that promotional texts on affiliate websites fall within the scope of the prohibition. Hyperlinks to an unlicensed operator’s website, and the use of banners also fall within the scope of the prohibition.

According to the BGA, secondary legislation, and the Dutch Advertising Code, advertisements for games of chance may not be misleading regarding:

  • the characteristics of the game of chance on offer;
  • the chances of winning; or
  • the commitment of the participants.

Furthermore, advertisements should improve responsible participation in gambling offers. These requirements will remain in place after 1 March 2021 and following the final version of the Policy Rule on Responsible Gambling.

Currently, land-based operators are permitted to carry out sponsorship activities in accordance with the provisions of the Dutch Advertising Code. Under the amended secondary legislation, remote gambling operators will be permitted to sponsor teams and individual athletes in return for the neutral mention or display of their name, trademark, figurative mark, or any other distinctive sign.

Currently, television gambling advertisements are prohibited from 9am to 7pm. The watershed for gambling advertisements on television will be extend to the period between 6am and 9pm, except for neutral messages concerning the sponsorship of a television programme.

Furthermore, advertising activities may not be aimed at minors, nor may these activities include the use of role models younger than 25 or role models with a substantial younger audience.

Advertisement activities during sporting contests for (live) bets on those specific contests will also be prohibited, except for advertisements on the licensee’s website.

As explained in 3.5 Key Offences, advertisement activities for locally unlicensed gambling offers fall within the prohibition on promoting unlicensed games of chance (Article 1(1)(b) BGA).

In January 2015, the Dutch Supreme Court decided that the advertisements by the State Lottery in the period 2000–2007, and once in 2008, were misleading. Statements from the State Lottery in advertising campaigns regarding the winning odds, the number of prizes won, and the prize money were incorrect.

As such, the Supreme Court found it plausible that most consumers would not have bought the lottery tickets if the State Lottery’s advertisements had been accurate. Following this decision, in 2020, the Court of Appeal in ‘s-Hertogenbosch decided that the State Lottery had to pay approximately EUR8,000 to one participant who bought lottery tickets between 2000 and 2008.

Generally speaking, the NGA issues cease and desist orders for the advertisement of locally unlicensed remote gambling offers. The responsible entities were granted a period of 48 hours to comply with the order. Failure to comply will result in a penalty of EUR1,500 for every day they remain non-compliant, with a maximum penalty of EUR21,000. Sanction decisions are also published on the NGA’s website.

Although substantive requirements for advertising by licensed providers of remote gambling will change as of 1 March 2021, penalties for advertising unlicensed offers will not change at the same time. These are set by reference to the Criminal Code, which is also the reference point for setting the level of fines and penalties for offering unlicensed games of chance.

All licence holders (both land-based licensees and future remote gambling licensees) must inform the NGA without delay of any relevant changes in the organisational structure of the company, and any relevant changes to the information provided in the context of the licence application.

The BGA, secondary legislation, and/or the applicable licence award decision identify several changes that must be notified by the relevant land-based or remote gambling licence holder to the NGA. These triggers include, but are not limited to:

  • changes in shareholders and ultimate beneficial owners;
  • the granting of suspension payments;
  • changes in management positions;
  • changes in the legal form of the licence holder;
  • the transfer of its seat; and
  • acquisitions.

As indicated in 4.6 Application Requirements, the remote gambling licence procedure contains a strict reliability assessment. In the event of mergers, splits, or changes of control, the NGA must be able to assess the reliability of the new shareholders and persons with effective control over the licence holder. Similar requirements exist for other licences.

As indicated in 3.6 Penalties for Unlawful Gambling, enforcement takes place primarily via administrative law. The NGA generally issues administrative fines against operators and cease and desist orders against affiliates. We are also aware of instances in which the NGA has attempted to take action via SIDN, the entity managing the registration of .nl domain names, to ensure that content relating to unlicensed remote gambling offers was no longer available in the Netherlands.

As noted in 3.5 Key Offences, the scope of the prohibition on promoting games of chance will be expanded following the entry into force of the amended BGA. Following this amendment, the NGA will be able to use its enforcement capabilities against the payment service providers and other intermediaries.

After the amended BGA enters into force, the NGA will be able issue binding instructions. Binding instructions will allow the NGA to demand from entities that they cease certain activities, providing payment or advertising services to locally unlicensed operators, for example. Following an amendment to the remote gambling bill in 2016, this binding instruction cannot be used against internet service providers.

Sanctions can effectively be enforced against:

  • legal entities based in the Netherlands;
  • foreign legal entities with assets in the Netherlands; and
  • employees or contractors carrying out work in the Netherlands.

Enforcement of administrative sanctions can take place without a court order. Enforcement against operators and persons established abroad, or persons passing through the Netherlands, is more difficult as no general international law instrument exists for the cross-border enforcement of administrative sanctions.

Financial penalties can be enforced by the NGA on the basis of administrative law, without a court order. As noted in 11.2 Sanctions, the cross-border enforcement of administrative sanctions (including financial penalties) is more difficult. If a foreign entity is unwilling to pay, the NGA will hand financial penalties over to a bailiff/debt collection agency in order to pressure operators to pay. The NGA will also publish the refusal to pay on its website.

According to the NGA’s Market Vision 2020, social casino games that do not offer any prizes but only offer the opportunity to play longer, fall outside the scope of the BGA.

After entry into force of the amended BGA, esports betting will only be allowed when the underlying esports contest is organised by, or under the auspices of, the national sports organisations recognised by the Netherlands Olympic Committee (NOC*NSF) or by a comparable international sports organisations. At the time of writing there are no esports competitions that fulfil these criteria. As such, it is not expected that a licensed esports betting offer will be available on the Dutch market directly after the first remote gambling licences are awarded.

Bets on fantasy sports may be offered after the entry into force of the amended BGA but are subject to the same restrictions affecting esports betting.

Skill games do not qualify as a game of chance. Therefore, skill games fall outside the scope of the BGA and are thus unregulated.

Under the remote gambling regime, only payment transactions which have been issued by a credit institution or payment service provider – with a licence as referred to in Directive 2013/36/EU or Directive (EU) 2015/2366, respectively – will be permitted. Furthermore, operators may only allow the use of those instruments that can be unambiguously traced to the individual player as a person. Therefore, it is our understanding that payment instruments that use blockchain technology cannot be used by gambling operators.

As referred to in the above, the one big reform that currently hangs over the Dutch gambling market, is the introduction of the remote gambling licensing regime. The first licences are expected to be awarded in September 2021. Furthermore, the NGA’s Market Vision 2020 and pending litigation may signal the beginning of another approach towards land-based monopolies. However, significant changes are not expected very soon.

Currently, land-based games of chance are taxed at a rate of 30.1%. The tax rate will drop to 29% six months after the amended BGA enters into force.

Gambling tax is based upon GGR for slot machines and casino gambling. For other licensed offers, the prizes that can be won constitutes the tax base. However, gambling tax is only due on prizes greater than EUR449. As such, incumbent licence holders are, in practice, subject to a very low effective rate of taxation. This tax-free threshold will no longer apply to land-based sports betting and horse race betting after 1 March 2021.

Taxes for future remote gambling licensees will amount to 29% of GGR (with the additional aforementioned gambling levy on top).

Kalff Katz & Franssen

Concertgebouwplein 9
1071 LL Amsterdam
The Netherlands

+31 (0)20 6760780

+31 (0)20 67527640

gaming@kalffkatzfranssen.nl www.kalffkatzfranssen.nl/en/
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Law and Practice in Netherlands

Authors



Kalff Katz & Franssen is the only law firm in the Netherlands with a dedicated practice which specifically focuses on the national and international gaming and gambling sector, and related areas. The gaming and gambling practice group adopts a multidisciplinary approach to advise clients on a range of subjects, such as licensing, compliance, litigation, contracts, public affairs, and privacy and data protections. Kalff Katz & Franssen’s clients include listed B2C and B2B operators, software developers, inspection bodies, financial institutions, payment service providers, private equity investors, media companies, hosting companies and public authorities. The gaming and gambling practice group consists of nine members. Various members are affiliated with the International Masters of Gaming Law (IMGL) and the International Association of Gaming Advisors (IAGA). Furthermore, the practice group often provides speakers and moderators for conferences and events around the world, as well as regularly writing for sector-specific publications.