Market Focus: Belgium

Belgium’s regulatory framework for land-based and online gambling consists of several different legal acts each with its own impact on the industry. The key pieces of legislation for operators are the Lotteries Act (1851), the Gaming Act (1999) and the National Lottery Act (2002).

Of these, the Gaming Act is the most important piece of legislation for online operators because of amendments made to the act in 2010 to adopt a full licensing and regulatory regime for online gambling and sports betting. It is important to note that the Gaming Act does not apply to lottery-based gaming, which is covered under the Lotteries Act.

Gambling under the Gaming Act refers to games of chance. These are deemed to involve players committing stakes of any kind which can be lost to other players and the organisers of the game or which results in the player gaining a prize. In both cases, a minimal degree of chance must play a role in determining the winner of the activity or the gain payable.

A bet is defined as a game of chance where each player risks an amount on an uncertain event which does not depend on any action of the players. Any game which is completely free is not a game of chance under the Gaming Act because of the absence of a stake.

Games not defined as games of chance under the Belgian Gaming Act include sports games, card, board and parlour games which require limited stakes and can result in gains of low monetary value. This is defined as games played outside class I and II gambling establishments, amusements and occasional events organised by charities or not-for-profit organisations.

The Gaming Act does not carry a specific definition of online games of chance, however it does allow for games of chance to be offered through an “instrument of the information society”. This is defined as usage of electronic equipment for the “processing, including digital compression, and the storage of data, which are transmitted, conveyed and received by wire, by radio, by optical means or by other electromagnetic means”.

Lottery operators are also permitted to offer lottery-based gaming online using the instruments of the information society under the National Lottery Act.

[box title=”Belgium in numbers” box_color=”#EC6408″ title_color=”#333333″]

Population: 11,539,328

GDP per capita: $43,323.81

Internet penetration: 83.4%

Prime Minister: Charles Michel

Principal regulatory body: Belgium Gaming Commission [/box]

In the period between passage of the act in 1999 and the passage of amendments to the Gambling Act in 2011, online games of chance were unregulated. However, following passage of the amended act, a proper legal and regulatory framework was established, together with allowing the licensing of operators. To offer online games of chance and sports betting in Belgium, an operator must have both an additional online licence as well as a land-based licence.

In both cases the number of licences available is limited to a specific quantity.

The constitutionality of several provisions of the Belgian Gaming Act related to online gambling was called into question during a legal case heard in the Belgian Constitutional Court in 2010. During the case, plaintiffs claimed that the legislation violated EU freedom of service laws between member states as protected within Article 56 of the TFEU treaty.

However, in July 2011, the court dismissed these arguments claiming the legislation of online gambling services did not violate the supranational EU law. In November 2013, the European Commission sent a letter to Belgian authorities raising questions about transparency and the rules governing online gambling businesses. However, in the years since no further action has been taken by the EC due to its policy of non-interference in the right of member states to offer online gambling.

The regulator

The sole body responsible for the licensing and regulation of both the land-based and online gambling industry is the Belgian Gaming Commission (BGC). Under the Belgian Gaming Act, the duties of the BGC are separated into three areas: advisory, granting licences and supervisory.

In respect of its advisory objective, the BGC can provide advice about legislative or regulatory issues under the act if requested to do so by the Belgian parliament or any governmental minister. Its granting licences objective is fairly self-explanatory, while its final supervisory objective refers to the regulatory supervision of licensed operators to ensure operator compliance.

Licences

As previously iterated, all operators wishing to offer online gaming under an additional licence must first have the principal land-based licence, which is divided into 10 categories. However only three of these land-based licence categories, A (land-based casino), B (gaming arcades) and F1 (organisers of bets), can allow for the additional online licence.

There are nine available A+ online casino licences under Belgian legislation and as of June 2019, all these licences are now active. A total of 180 B+ licences for online gambling arcades are currently available but only 32 of these have been activated as of June 2019. Finally, there are 35 available F1+ licences for online sports betting, of which 24 are currently active as of June 2019.

Class A+ licences run for a 15-year period and require the operator to provide a financial warranty of €250,000. Class B+ licences run for a nine-year period and require a financial warranty of €75,000, while class F1+ licences run for a five-year period, requiring also a warranty of €75,000. In all cases, the licences are renewable, and operators are required to pay an annual licence fee.

In order to be eligible for a Belgian gaming licence, operators must satisfy several conditions including demonstrating its credit worthiness and fiscal obligations, the security of its payment transactions, its responsible gambling policies, its complaints procedure and its marketing policy. In addition, servers which the company uses for data storage and website administration must be in a permanent establishment in Belgium.

In its application process, the company must provide its name, corporate structure, the location of any servers hosting data storage and website administration, all points of contact and the party responsible for the administration. In addition, the applicant is responsible for establishing a permanent data connection between its website and the BGC. Under Belgian law, the BGC must process the application within six months.

Taxation

Responsibility for determination of applicable tax rates on both online and offline operators rests with the three regions the Walloon, Flemish and Brussels-Capital regions. At present the taxation rate for online is set at 11% of the gross margin, which is defined as the result of the total amount wagered minus the amount paid to players betting/staking.

Currently, both online and offline operators are exempt from paying VAT under the Belgian VAT code. A prior law had stipulated that online operators be required to pay a 21% VAT rate, however this was annulled by the Belgian Constitutional Court in March 2018.

Restrictions

The advertising of unlicensed online games of chance is prohibited under Belgian law. Any violation of this statute is a criminal offence. In the licensed arena, the advertising of all online casino companies has been prohibited since June 2019.

Under the rules, which were first released in October 2018, holders of online casino and slots licences are only allowed to advertise on their respective websites and are barred from advertising on TV, in print or via any online site other than their own.

In all cases, online casino operators will only be allowed to advertise on their sites if they meet certain criteria outlined by the Belgian government in its Royal Decree. Advertising of online sports betting during live sporting events has been totally banned, while all other sports betting advertising can only take place after the 8pm watershed. Online sports betting ads are limited to one commercial break and will not be allowed 15 minutes before the start and 15 minutes after the end of programmes that specifically target children.

All gambling adverts are required to include warnings about problem gambling, with authorities now being given powers to fine operators for failing to comply. Likewise, all operator websites are now required to ensure players have access to its responsible gambling provisions.

In addition, all gambling operators are barred from awarding players bonuses of more than €275 (£241) per month. Licensees are obliged to impose mandatory playing limits of €500 a week or less. Online casino firms are prohibited from using athletes or celebrities as part of their marketing materials and from targeting platforms or media accessible by minors.

Local expert view

Pieter Paepe is an attorney at the Brussels bar. His practice focuses on Belgian and European business law, competition law and regulatory matters. Within his areas of expertise He advises clients across a diverse range of sectors, including the gaming industry. Since numerous years Pieter assists gaming companies and sector federations with Belgian regulatory, commercial and competition law aspects. Paepe represents companies and public authorities in proceedings before Belgian courts and authorities, the European Commission and EU courts. He recently and successfully represented the Kingdom of Belgium in a landmark case before the Court of Justice dealing with fraudulent constructions involving posted workers. Here, Paepe shares his insight on the Belgian market.

Pieter Paepe, lawyer, Astraea Advocates

EGR Compliance: In your opinion, where are the biggest opportunities for operators entering the Belgian market?

Pieter Paepe (PP): Various reports confirm that the Belgian gaming market is flourishing. The Gaming Commission’s annual report of 2018, which has just been published, confirms that online and land-based casinos generated a total GGR of around €251m, which was an increase of 19.57% compared to the previous year. The 2018 GGR generated by online and offline bets was around €289m, an increase of 14.61%. The GGR generated with online bets in 2017 has increased with 25.55% compared to the previous year.

EGR Compliance: Where are the biggest deficiencies in Belgian regulation and how would you address them?

PP: One of the biggest deficiencies is the fact that the regulatory framework for online games of chance is still incomplete. This creates regulatory uncertainty for the licensed operators. There is also an increasing willingness of operators to challenge the lawfulness of new regulations, gaming licences and certain market practices – creating even further regulatory uncertainty. One of the ongoing discussions concerns the question whether online operators can offer on one and the same website different categories of games of chance (‘multi-product websites’).

EGR Compliance: Is the Belgian Gaming Commission doing a good job of regulating the Belgian market?

PP: It is first and foremost the task of the Belgian legislator to regulate the Belgian gaming market. The Gaming Commission has a duty to enforce the rules which can be found in the Gaming Act and its executive royal decrees. There are several recent judgments of the Council of State emphasising that the Gaming Commission cannot impose additional regulations, especially in those cases where the regulatory power has been reserved to the executive power. That being said, the Gaming Commission provides further guidance on issues which have been left unregulated (for example, live casino games, live betting, etc).

EGR Compliance: How would you describe the attitude of the BGC to operators?

PP: The Gaming Commission’s attitude is one of strict enforcement. The Gaming Commission publishes on its website a list of illegal websites (blacklist). Most Belgian ISP’s block access to the blacklisted websites. The Gaming Commission’s latest report shows that in 2018 a total amount of around EUR56,000 administrative fines has been imposed on licensed operators, which is a sharp drop compared to the previous five years. In 2018 16 administrative fines were been imposed, which is substantially lower than in previous years. In 2015, for example, the Gaming Commission issued 177 administrative fines.

EGR Compliance: In your opinion, is the 15% taxation rate hampering the development of the Belgian market?

PP: For online games of chance and bets, the tax rate is 11% on GGR. The three Belgian federated regions (Flemish Region, Region of Brussels Capital and Walloon Region) have the power to determine the tax rate applicable to online games of chance. The three regions have all decided to apply the same tax rate to online games of chance – 11%. This tax rate is widely considered as business-friendly, especially compared to the online tax rates applicable in other EU jurisdictions.

The Flemish government recently announced its plan to raise the online gambling tax from 11% to 15% on GGR. The Flemish government also suggested that there was agreement with the other regions to adopt a similar tax increase.

EGR Compliance: Would Belgium benefit from a wholesale reform of its gambling regulations?

PP: A wholesale reform of Belgian gambling law is unlikely in the coming years, as it would imply that the Belgian federal parliament has to amend (again) the Gaming Act. One should know that the Gaming Act has been substantially amended very recently (in 2019) and that, in the same year, the royal decree concerning the conditions to exploit online games of chance and bets entered into force. We therefore do not expect that the Belgian legislature will enact substantial amendments to the Gaming Act in the coming years.

EGR Compliance: How is the BGC’s advertising restrictions affecting the Belgian online gambling market?

PP: The royal decree of 25 October 2018, which contains the advertising restrictions on online games of chance, only entered into force on 1 June 2019. An assessment of the effects of these new rules on the Belgian online gambling market cannot yet be made. The wording of the new rules is sometimes imprecise and creates regulatory uncertainty. Certain companies have brought annulment proceedings against (certain provisions of) this royal decree. At the same time, the Gaming Commission is preparing further guidance on how the advertising restrictions should be understood and applied.