Holland on track to reforming its gambling market regulations
While the Netherlands is distinguished for its democratic laws on a number of issues such as soft drugs, prostitution and some other ones, the country’s legislation on some gambling-related issues such as online gambling, taxation of games of chance, etc. is not so relaxed.
For over eight years, the Dutch gambling market has been undergoing a slow change from being a state-run monopoly towards market liberalization.
Gambling market landscape
Land-based casino gambling, lotteries and sports betting is legal throughout the Netherlands. Holland’s state lottery, – Staatsloterij, is one of the oldest in the world and has been operating since 1726. There are now some 16 land-based casino establishments located here including poker rooms and a few bingo halls.
Holland Casino has the legal monopoly over all the land-based casinos across the Netherlands. In 1974, the National Foundation for the Exploitation of Gambling was founded. The entity received a casino license from the Dutch government in December 1975. Since then the Foundation has retained the name Holland Casino. Holland Casino opened its first branch in Zandvoort on October 1, 1976,
Holland Casino’s gaming establishments offer a wide range of slot machines and table games including Black Jack, Punto Banco, American Roulette and others.
Grand Casino Amsterdam West encompasses over 500 modern slot machines connected to a progressive jackpot system, electronic roulette terminals, live bingo and popular table games. The slot machines are linked to the Mega Millions Jackpot system that offers 5-tier jackpots. The minimum jackpot of €1 can trigger a jackpot payout of up €75,000 and a bet of €5 can trigger a jackpot of more than €1 million. All jackpot payouts are tax-free.
For the first half of 2019, the Dutch gambling monopoly Holland Casino reported a €38m rise in revenue, which indicated a 12% year-on-year increase, bringing the total revenue to €354m. The gambling operator also reported 9% year-on-year increase in visitor numbers and a 3% increase in the average amounts spent per customer for the same period. The increase in visitors was partially attributed to the reopening of gambling facilities in Groningen and Amsterdam West-Sloterdijk as well as the launch of an innovative gaming Experience Zone in Utrecht in 2018. In 2018, Holland Casino reported a 3% annual increase in gross revenue to €656.5m.
Moving towards a more competitive market
Since 2018, Holland Casino has indicated significant upturn in its financial results reflecting the ongoing positive impact of the operator’s HC2020 initiative to reorganize its domain.
Since 2017 there have been several proposals by the Dutch government to open a state-owned Holland Casino company to privatization, however, to this day the Dutch Senate, withholding final approval, has stalled the process.
According to the recent proposal, ten of Holland Casino’s branches were intended to be sold to one private operator and would remain under the Holland Casino brand, whereas four branches were meant to be sold separately to private companies. On top of this, two more casino licenses under Holland Casino were planned to be issued to two new gambling establishments that opened recently. The government expected the privatization to generate €1 billion for its coffers.
Last February 2019, the Senate again postponed voting on privatizing the state-run Holland Casino Group after the majority of the chamber’s members raised concerns that privatized casinos might encourage problem gambling. In addition, in the wake of the introduction of online gambling permits, the Senate deemed it too precipitant to implement changes in land-based gambling at the same time.
Next voting session on privatizing Holland Casino could now occur only after the expiration period of the present government’s office term, which is March 2021.
Gearing up for a civilized online gambling market
Despite the fact that online gambling is still illegal in the Netherlands, the number of Dutch people partaking of illegal online gambling has been growing steadily over the last few years. According to various research statistics, 1.8 million Dutch people admitted to having participated in some form of online gambling at least once. Most of these gambling websites are registered in other countries such as Malta, Gibraltar, Isle of Man, etc., and provide their services to Dutch punters.
The first proposals on initiating the process of revamping the status of internet gambling in the Netherlands were submitted to the Dutch parliament in 2011 – almost a decade ago. In an attempt to follow through with the initiative, in 2012 the Netherland’s government established the Dutch Gambling Authority (Kansspelautoriteit – KSA). Almost ten years later, the legalization of online gambling is still pending implementation.
In February 2019, online gaming was finally legalized putting an end to the country’s outdated forty-plus-year-old gaming laws, and bringing them in line with EU open-market regulations. Holland’s Senate voted in favor of the Remote Gambling Act (RGA) more than two years after the House of Representatives had approved it. However, there is no set date when the Act is supposed to come in force.
The Dutch Gambling Authority indicated it would take six months to assess permit applications, and as of now, KSA is in the process of clarifying the requirements for permit applications to prospective applicants. On July 2020, KSA is expected to commence processing of applications from online operators. If everything goes smoothly, the estimated timeline for opening the Dutch market to online gaming operations is likely to be January 2021. However, this is so far only an estimation, as KSA on multiple occasions pointed out, that it was not a final timeline
KSA reported that there were over 180 operators expressing interest in applying for online gaming operations license, although it expected to issue approximately half of that number.
Along with the RGA, the Dutch Gambling Authority released Remote Games of Chance Decree, – a set of formal stipulations that the applicants must meet in order to qualify for getting the license. The main provisions of the Decree are concerned with responsible gambling, licensing and operators’ registration. For example:
Applying for a license will cost €40,000 ($45,417),
The applicant must be registered with the Central Exclusion Register (CRUKS) and have an addiction prevention representative in the Netherlands. Operators engaged in active illegal soliciting to the Dutch players will not be eligible for a license for two years after committing the offence.
In addition, KSA introduced big fines to discourage illegal operators who refuse to cooperate. On March 1, 2019, the smallest fine was increased from € 150,000 to € 200,000 Last year KSA imposed a total of €.1.7 in fines on several online operators for offering their unlicensed services to Dutch punters. Thus, Bwin and Unibet were fined € 350,000 and €.470, 000 respectively.
Among other requirements of the Dutch Remote Games of Chance Decree are the stipulations on operators’ presence/registration: licensees must be established in the EU or EEA, have a primary server set up in the EU or EEA with a control databank located in the Netherlands.
Land-based casino operators currently pay 30.1% tax on Gross Gaming Revenue (GGR). The tax is supposed to go down to 29% after online gambling comes into force. For all other land-based gambling types such as sports betting, the tax value depends on the value of the prize. If a gambling winning is over €454, and a player spends less than the value of the prize, a 29% tax is withheld on the winning. No tax is applied if the player spends more than he wins.
When RGA comes into effect, the tax for land-based sports betting will be applied on GGR.
Online gambling license holders in the Netherlands will be charged a 29% tax on GGR, contribute 0.25% of GGR to the addiction fund, and pay a 1.5% levy on the GGR to the Gambling Authority.