Dutch regulation: What happens next?

Members of the Dutch parliament voted yesterday to legalise and regulate egaming in the Netherlands for the first time in the country’s history. But while many will be cheering, the hard work has only just begun.

Based on preliminary estimates, the Dutch market could be up and running by 2021 at best and 2022 at worst.

So, what’s next on the agenda for Dutch regulators?

The problem for Dutch legislators now becomes passing the secondary legislation, e.g. the actual regulations that will govern the new market. As with the Remote Gaming Act (RGA), the legislation must first pass through a consultation phase, and if the delays in passing the RGA are any indication, this process could take some time. Indeed, once the secondary legislation has been approved, it will pass to the European Commission to give its approval, adding more time to the process. At the same time, the legislation must also be reviewed by the Dutch Council of State to ascertain if it is written in a manner consistent with the Dutch constitution. During this process, a review of the legislation is drafted by the council’s Advisory Division.

Who are the “illegal” operators?

A key part of the legislation brought up during the debate was the treatment of so-called “illegal” operators – those deemed to be targeting the Dutch market illegally (via the prioritisation criteria) and most importantly, those which have already been found to be doing so, receiving sanctions from the KSA.

During the debate, Dutch Minister of Justice Sander Dekker confirmed that a two-year “cooling off” period would apply to any operator which had previously been deemed to violate the criteria or had received a sanction. In this two-year period, said operator would have to prove it was “reliable” before it could successfully apply for a licence. Details of the reliability test have yet to be published, and will be revealed by the KSA in policy documentation to be released at a later date.

However Justin Franssen, partner in Dutch legal firm Kalff Katz & Franssen, said it was a common misconception that the cooling off period is a “blackout” period, by which operators must withdraw from the market. “ In reality is that these operators are not barred from operating over the next two years, they are just not allowed to market their products to Dutch players,” Franssen adds.

Players will still be able to access the sites of any previously sanctioned operator due to the absence of any ISP blocking regime in the Netherlands. Indeed, a motion to provide the KSA with the tools to block unlicensed operators was voted down in the Dutch senate. Pontus Lindwall, CEO of Betsson, which itself was sanctioned by the KSA in 2018, said the operator would “continue to make certain adjustments to their offering to best handle the impact of the cooling-off period as well as put themselves into a good position for the licensing process”.

When does the cooling off period begin?

If it begins with the passage of the legislation, then there may be issues further down the line for the licensing process. When pressed on this issue, Franssen says this could potentially begin with the publication of the Remote Gaming Act in the official Dutch Gazette, although this has yet to be confirmed.

Franssen believes that the so-called “whiter than white” operators could be licensed within 18-21 months, giving them up to a six-month head-start before the sanctioned operators can apply for licences. A prolonged licensing period for the first batch of licensees would reduce this head-start, so it is in the interests of these operators to provide the KSA with all relevant documentation in a timely fashion and preserve their advantage.

Is there an ad ban coming?

The Dutch Senate confirmed it would investigate the possibility of implementing a complete ban on gambling advertising after a three-year evaluation period. Willem Van Oort of Gaming In Holland told EGR: “Advertising restrictions should be implemented as was requested in the motion, but should not endanger the channeling objectives because there is a need to channel people away from the unlicensed illegal operators to the licensed legal offering.”

At the end of the day, it is in the interests of both the KSA and the Dutch government to channelize individuals towards the licensed regulated offering and a potential ban on advertising would only make this harder to do.

So for those taking yesterday’s news at face value, it may seem like the start of a golden age for the Dutch market, but as Franssen quite rightly states, “the devil is in the detail”.

Here’s what the industry had to say about yesterday’s vote:

Willem van Oort, founder of Gaming in Holland

“Today is a milestone for the Dutch market. Regulated and controlled offering will now be possible from end of 2020/beginning of 2021. However, we need to closely look at the cooling-off criteria that the Senate accepted in a motion presented during the debate. Sanctioned operators must wait and see how the new motions will have an effect on them, and its too early to say what the exact impact will be.”

“Looking ahead, advertising restrictions should be implemented as was requested in the motion but should not endanger the channelling objectives.”

Maarten Haijer, Secretary General, European Gaming and Betting Association (EGBA)

“For the new law to be a success, it must be supported by a licensing system which attracts enough companies to meet consumer demand and a tax regime that ensures that the regulated market remains competitive and attractive for Dutch players.  We now look forward to working with the Dutch Gambling Commission, De Kansspelautoriteit, to ensure an effective implementation of the new rules in a timely and consumer-friendly way.”

Richard Williams, partner and joint head of the gambling, licensing & regulatory team at Joelson 

“Whilst the passing of the much-delayed Remote Gaming Bill is to be applauded, the 2-year cooling off period will be concerning to those operators who have previously been fined by the KSA, who risk being locked out of the Dutch market at the outset.  It will be interesting to see what happens between now and 2022 as there could be a 3-year period where offering remote gambling in Holland remains illegal, pending the new legislation coming into force.  Operators must weigh up the risks of continuing to operate in Holland and risk having to serve the cooling-off period or stay out of the market altogether until they can obtain a licence.”

Julian Buhagiar, co-founder, RB Capital

“Authorities have wised up to the fact at least 10% of the Dutch population has been gambling to-date via grey and black-market sites, and they are keen to create a legislation that supports these activities and not to drive them further underground. Whilst the tax is not among the lowest in the market (almost at 30% gross revenue), it is expected that over the two-year grace period, operators will look to efficiently structure their Dutch operations and thus be ready to embrace the legislation in mid-2020.

“What’s less certain is the proposal to ban advertising. European operators derive between 35% and 60% of their gross gaming revenues from online advertising, and most of this comes from affiliates. If passed, this motion will seriously limit affiliate marketing to (licensed) Dutch operators, making their acquisition channels significantly more expensive whilst affiliates look elsewhere to more lucrative (and less risky) pastures.”