Mission Accomplished?

When translated into English, Kansspelautoriteit (KSA) simply means ‘gaming authority’, and it is a very apt translation given the KSA has been using its authority on gaming to drive the regulatory process in the Dutch gambling industry since it was first established in 2012. At the centre of the KSA’s mission are three distinct ongoing objectives: consumer protection; preventing the spread of gambling addiction; combatting illegal gambling and related crime.

The protection of consumers requires licensed operators to inform the public about all aspects of the games they offer and highlight any possible risks of addition. In turn, those who operate the games have a legal duty of care in preventing the spread of gambling addition as much as possible. The last objective, which is very relevant when considering the KSA’s recent past, allows the KSA to proscribe against illegal gambling sites as a way of offering consumers “the opportunity to participate in a game of chance in a reliable environment”.

So, when Marja Appelman, the CEO of the KSA, resigned almost a month ago saying that her mission as regulator was accomplished after almost five years in the role, many rightly questioned whether there is a point in a regulator’s life where they achieve the objectives – or whether they ever will.

Jan Suyver, chairman of the KSA, offers his insights into this perspective: “What Marja meant was that for her personally her job was done. She was a very important part of the growth and professionalisation of the Dutch Gambling Authority. As a regulatory organisation, we are very prepared for what the future brings.

“There are currently two legal proposals: The draft bill on Remote Gambling and its land-based equivalent which covers the modernisation of casinos. When adopted, they will change the gambling industry in the Netherlands and the work of the KSA profoundly. For the KSA it will be a new phase in its development, and, like I said, we are ready.”

Suyver is well placed to address the KSA’s readiness for change, because in the wake of Appelman’s departure, the KSA confirmed that the board of directors will assume all directorial duties from 1 August until 1 October when his terms and the terms of vice chair Henk Kesler expire. Following a review into the KSA’s activities in 2017, the authority will change its governance structure. The new chairman of the board will also be responsible for management of the KSA, so the CEO position will not ultimately be filled.

Addressing this change in direction, Suyver says: “The KSA is working in accordance with previously adopted plans and structures which are still in place. As of 1 October, my colleague Henk Kesler and I will leave but the third member of the board, Joop Pot, will stay on, so continuity is guaranteed. The KSA will do what it always has done – effectively safeguarding a safe and fair gambling market in which people can participate and where gambling addiction is combated.”

As we have seen with other regulators across Europe, the big issue when dealing with the departure of someone who has led a regulator strongly over several years is to recruit a professional with a similar disposition. For Suyver, his replacement must have “a strong personality” and be someone with the courage of their conviction that works for the benefit of the wider community.

The qualities of decisiveness and a strong personality will come in handy as the Dutch gambling industry approaches what could be its most turbulent period since the KSA was formed in 2012. For instance, proposals to give online gambling its own set of rules, distinct from the Betting and Gaming Act, have stuttered since the Dutch lower house initially approved the Remote Gaming Act in July 2016.

Getting regulation back into gear

Simply put, the Remote Gaming Act regulates online games of chance, in which hundreds of thousands of Dutch citizens currently partake without protection or monitoring. The bill forms the basis for a permit system, allowing Dutch players to participate safely and responsibly in online games of chance, while the Act allows the KSA to set strict requirements on those offering these games. Permit holders in the Netherlands will potentially pay 29% tax on games of chance, a 0.25% contribution to the addiction fund and a 1.5% contribution to the KSA on the gross results of the games.

Last month, a cross-party agreement was reached between three of the main Dutch political parties over a requirement in the Act for online operators to maintain a physical presence in the Netherlands, which had previously been a key stumbling block preventing its passage to debate stage. Under the terms of the agreement, gaming and betting companies based in the EU or in the EEA will not be required to establish Dutch offices in order to operate in the Netherlands. Yet those based outside the EU and EEA will be required to do so.

A central figure in the drive to get the Remote Gaming Act back on the legislative table is the Dutch minister of state for taxes, Sander Dekker, who has been motivating the debate in the States General [of the Netherlands] and is the author of the cross-party agreement concerning the removal of the physical presence clause in the Act. Following his letter and agreement in July, Dekker is due to speak again in parliament in September, and if his recent comments in calling the Dutch Betting and Gaming Act 1964 “obsolete” are anything to go by, egaming regulation has a strong advocate in parliament.

For Suvyer, it is a case of not soon enough for the process to begin: “For the last six years I have stated again and again that the KSA needs the new law on remote gambling urgently to combat the issue of illegal online gambling.  I am utterly convinced that gambling participants can only be protected by regulating the market. When this comes to pass, licences will only be issued to companies who have an effective prevention policy in place.”

Brave new world

A fully legalised Remote Gaming Act would give the KSA the regulatory presence that it needs to drive the present Dutch gambling industry forward, giving it the impetus to compete with its nearest neighbours, particularly France where the ARJEL regulatory regime is contributing to a sustained period of growth in the French market.

However, the Act creates the conditions to fulfil the three central regulatory objectives of the KSA, says Suvyer. “On the one hand the KSA will supervise these companies; on the other hand we will take action against those found to be offering online gambling without a licence with full force. For me, the bill on remote gambling is much more than legalising online gambling. For example, the proposed law enables the KSA to protect the Dutch consumers more effectively.”

Regardless of the physical presence debate in parliament, the proper regulation of Dutch egaming has exceeded the timescales provided when the Remote Gaming Act was first established. In a worldwide industry that relies on speed of offering and first-mover advantage, procrastination can be costly.

Addressing this lack of action on what is a very important subject for the KSA, Suvyer says: “My former colleague, Marja Appelman, summarised this issue in a very succinct way during her final interview as CEO of the KSA. She said: ‘The gambling market is relatively small, although a lot of money is involved. It is a complex, technical and politically charged dossier, with different interests. All in all, that makes it very complicated’. It is an analysis that I agree with and one which sums up the situation quite well.”

Harming the market?

Concrete regulation creates a stable environment for a jurisdiction, enabling it to draw a line in the sand. If you cross that line, you will be found out and punished. On the other side of the coin, it allows operators to know succinctly how to operate in a given jurisdiction, what is acceptable and what is not. It also gives a regulator the bedrock necessary to tackle illegal gambling, something which the KSA sadly lacks. That is not to say the KSA and the Dutch gambling market does not have existing codes and statutes; the problem is that without the rule of law to back them up these are reduced to mere guidelines rather than proper rules.

One such example of this lack of regulatory framework harming the online market is in the recent provisional criteria launched in 2017, which punishes online operators found to be using classic Dutch symbols such as tulips and windmills, and latterly fining unlicensed operators found to be using .nl web domains to target Dutch citizens. In September 2017, Betsson took legal action against the Netherlands by writing to the European Commission following what the operator described as a continued breach of EU law by the Dutch authorities over the implementation of these criteria.

The company purchased the Dutch-facing Oranje Casino and Kroon Casino in 2014 for a combined €100m, with both companies fully compliant and licensed to operate under the KSA’s previously loose regulatory regime. However, this changed with the new regulations, forcing it to consider selling off its investment. Betsson’s claim was later dismissed as inadmissible by a court in The Hague, but the company has since rethought its objectives in the Dutch market.

Although extremely unpopular with operators, Suyver believes the KSA is completely justified in pursuing this sort of restrictive agenda. “According to Dutch law it is illegal to offer gambling on the Dutch market without a licence. It is our job to act against operators who offer gambling specific to Dutch consumers.  Whether operators like it or not, we will keep on acting against online gambling targeted at Dutch consumers. Operators have to respect the Dutch law in this regard.”

The KSA, keen to stamp out unlicensed online operators, has also urged international gambling operators to block Dutch IP traffic from internet users and stop the processing of payment transactions from any Netherlands-based bank. It has also been forced to make arbitrary decisions regarding the treatment of loot boxes and child-friendly content, all independent of a centralised legal regime governing online gambling in the country.

As previous stated, the KSA lists three pillars central to its role as gambling regulator, yet Suyver stresses that it’s all about the players. “For the consumer, the Dutch Gambling Act is effectively safeguarding a safe and fair gambling market in which people can participate. Combatting criminality and counteracting illegal gambling and preventing gambling addiction is also in the best interest for the consumer.”

Swimming against the tide?

To an extent, the KSA’s hands are tied as much by the lack of regulation as by the ever-shifting make-up of the gambling industry in the country. For Suyver, it is a case of the KSA doing what it can with what it has: “Every regulator must perform its tasks as well as possible based on the national law and available legal instruments. Every country has different laws and a different ‘gambling culture’ that needs customisation. But, of course, we look at regulators in other countries, like Sweden, to learn how they cope with certain problems. We are also actively working together with other countries in GREF [Gaming Regulators European Forum].”

So, the fundamental question at the end of this debate is can a regulator function without a legal framework to back it up? As the experience of the KSA has proven, the answer is yes. But can it function effectively? Well, the results on this issue would have to be listed as inconclusive.

When outgoing KSA CEO Marja Appelman claimed that her mission was accomplished and that she had achieved the objectives set out by the regulator during its founding in six years ago, she was only half right. The three KSA objectives have been addressed, no one can dispute that, however they have not been addressed definitively because of the lack of concrete online gaming law. There is still much more to do before the KSA can claim that its mission is complete.