Holland Debuts New Gaming Act

Justin Franssen of Amsterdam-based law firm Van Mens and Wisselink examines the proposed legislation and looks at how it may affect operators currently active in the Dutch market.

This article was published on gamblingcompliance (www.gamblingcompliance.com) on 13/08/2007.

On July 18, 2007, the Minister of Justice finally published the anticipated new Gaming Act (in Dutch ‘Wet op de kansspelen’). Revision of the current law was certainly overdue, as several amendments have been made over the years in response to changes in the Dutch gaming market. Illegal and new, riskier games have been introduced and, as a result, the legally available gambling services have been expanded in order to counteract illegal gambling. Different rules have been applied to different games, but these will now be harmonised under the proposed legislation. Online gambling is not covered by the Act but will instead be regulated by a separate piece of legislation, the Online Gaming Act. This Online Gaming Act is currently being debated in the Dutch Senate, ‘Eerste kamer’.

The wording of the bill suggests a tightening of Dutch policy on the offering of games of chance. Increased supervision and enforcement are the key elements in what appears to be a bid to establish a more restrictive gaming policy.

The most significant measure contained within the Gaming Act is the introduction of a new Gaming Authority to enforce the law. This article will examine the significance of this change as well as exploring what the main implications will be for current gaming operators in Holland. Finally, the proposed changes will be looked at from a European perspective, within the context of ongoing infringement and litigation proceedings brought against the Dutch government by the European Commission and private operators.

Gaming Authority

Compared to the current regulator (the Gaming Board) the new Gaming Authority will have greater powers and broader responsibilities. The Gaming Authority will be the body that issues, enforces and revokes licenses and supervises all Dutch licensees. Stricter measures of enforcement are also proposed by the Gaming Act. These are mostly administrative sanctions but some violations fall within the reach of penal law. The new legislation is far more specific than its predecessor as the language of the current legislation [which dates back to 1964] has been modernised and updated.

The Act makes a number of changes. License conditions and the reasons for which licenses can be revoked are harmonised. Direct intervention by the Minister of Justice is made possible in several circumstances. Quantitative and qualitative regulation of the marketing efforts of the gaming operators is also authorised. These marketing regulations are not yet an intrinsic part of the Act but they can be introduced if the current code of conduct on marketing fails to meet the Minister’s expectations.

The Act also defines for the first time precisely what is meant by the term ‘game of chance’. According to the definition it is “…competing for prizes, for which the determination of the winner occurs by chance, on which the participants generally cannot assert any effect.” Regarding the distinction between games of skill and games of chance, it is noteworthy that the Minister considered it wise to exclude, under certain conditions, science quizzes from gaming law.

The Gaming Authority will undertake executive, enforcement, and supervisory tasks concerning the gaming market in the Netherlands. The executive tasks relate mainly to licensing and the manufacturing of gaming machines. In addition, the Authority will provide education and counselling services to both the public and other authorities.

The Authority’s role as supervisor relates to ensuring that licensed gaming operators comply with the law and its regulations. It will have the power to enforce the legislation, however, by imposing administrative sanctions on non-compliant gaming licensees.

Furthermore, the new body will also be charged with suppressing illegal operators. It is noteworthy that in the explanatory statement of this proposed legislation, the Minister of Justice refers to a formal letter (TK 2005/2006, 29 849, nr. 30) proposing a choice of sanctioning systems. Given the fact that, over the past few years, the enforcement of the existing Gaming Law has been conducted primarily through civil litigation, this signifies a change in enforcement policy.

Appeals to the decisions of the Gaming Authority will have to be made to the District Court in Rotterdam, whose ruling can subsequently be appealed with the Trade and Industry Appeals Tribunal.

Implications for current licensees

The new legislation does not make any principal changes as to the type of gaming licenses that will be issued. These licenses cover the following games of chance: lotteries, scratch cards, incidental lotteries, sports and horserace betting, casinos, prize contests, free promotional games of chance, small games of chance and finally gaming machines. The terms and conditions of issuing the respective licenses, and the terms which with operators must comply, are, whenever possible, unchanged from the current regime.

Existing state monopolies will remain intact for the state lottery, lotto, and casinos. Existing licensees retain their licenses and a legal justification for limiting the number of lottery licenses available is introduced.

This reasoning is a curious aspect of the legislation. Introducing a cap on the number of licenses may be incongruent with the overall aims of the gaming policy. The current state-owned monopolies will continue to transfer their net revenue to the state but the other licensees will no longer transfer their funds to specific charities, as is the case now. Instead, the net result of their operations will be donated to a ‘public interest’, defined as a non-private interest or a non-commercial interest. Under this new definition, the current implicit inclusion of the state treasury in the term ‘public interest’ is made explicit. It has been a historic characteristic of Dutch gaming policy to protect consumers by forbidding the ‘exploitation of the compulsion to gamble for private gain’. Because of this, the net result is transferred to the treasury or charities.

A duty of care is imposed upon gambling operators to take action to prevent excessive gambling. The Cabinet can make specific regulations regarding this duty. A provision is already incorporated in the law in case the realisation of this duty interferes with privacy laws. This appears to reflect a genuine effort to take action to prevent gambling addiction.

The accountability of gaming licensees on the transfer of funds to beneficiaries, and the application procedures for these funds, are further regulated and made more transparent.

The Act reflects a concern for the blurred distinction between arcades and casinos. A restriction is placed on the number of gaming machines allowed in casinos, and arcades will be prohibited from using the word casino in their name, as is the situation with many current operators.

Regarding the internet, the issuing of tickets via the web is explicitly permitted for licensees. However, the Act does not authorise operators to offer games themselves over the internet.

Conformity with European Law

Dutch gaming policy is currently being disputed by the European Commission and is being challenged in court by foreign gaming operators. The new legislation contains language reacting to the ongoing discussions being held on the conformity of Dutch gaming policy with the EC-Treaty, mainly by imposing restrictions upon licensees and instructing them to act in compliance with the official aims of Dutch gaming law.

Dutch policy has been criticised as being inconsistent with the government’s stated aims. One of the main arguments centres on the extensive marketing and advertising budgets that current licensees have had at their disposal over the past decade., with the three state gaming monopolies among the biggest advertising spenders in the Netherlands. In the new legislation, the Minister acknowledges that marketing activities should be in harmony with the prevention of gaming addiction and excessive gaming. These marketing efforts are currently being regulated by a code of conduct, but the new Gaming Act also imposes limitations and authorises the Minister to intervene if the code fails to satisfy his demands.

Currently, licensees can offer free, supplementary games to their customers, alongside the main game they operate. These games are crucial to operators’ marketing strategies but in accordance with the new law, they will only be able to offer a supplementary game once per week.

In response to the alleged inconsistency between the extensive marketing efforts of Dutch operators and the government’s stated aim of preventing gambling addiction, the Minister refers to Dutch and ECJ jurisprudence on gaming. The Minister claims that extensive marketing is permissible under European law, so long as the volume of regulated gaming remains small in comparison to the volume it would be without the regulations.

The Minister says that Dutch gaming policy is consistent with the EC-Treaty and that the policy is suitable to achieve its aims. It is noteworthy that the Minister does not refer to EFTA case law, as he has done previously. In the recent case between Ladbrokes and the Norwegian government, the EFTA Court ruled that the aim of preventing gambling from being a source of private profit could not be justified if a state-owned monopoly is allowed to offer a range of gambling opportunities.

European law is also relevant for operators who offer games other than that for which they specifically hold a licence in Holland, with operators’ sideline activities forbidden, except under special conditions. It is debatable whether these restrictions conform to European law on unfair competition, especially if the restriction affects the operators’ business outside the Netherlands.

Licensees are no longer allowed to participate in other companies with a purely financial aim but participation as a contractor is allowed. A limited participation, at a maximum of 5 percent, as a perpetuated partnership with a foreign gaming operator is also possible.

Conclusion

This proposed legislation is partially a reaction to recent criticism of Dutch gaming policy at a European level. It shows awareness that the current Dutch gaming law is vulnerable. The main points of criticism have been the extensive marketing efforts of gaming operators, and consumer and player protection. All of these subjects are referred to in the proposal, and several restrictive measures are taken. At this moment, several institutions are being consulted and given an opportunity to make remarks. The date when the proposed legislation will become effective is yet uncertain.

Dutch Banks Reluctant Players In Payments Ban

The Dutch Banking Association is unlikely to co-operate with any rules put forward for blocking payments to online operators unless they see evidence of a criminal conviction of an operator, according to lawyers close to the situation.

Justin Franssen, gaming lawyer with Van Mens & Wesselink, was commenting during the second day of the European Gambling Briefing (EGB) in Amsterdam. His comments follow further suggestions at the weekend from the Dutch Ministry of Justice [2] that the government was considering the possibility of going down the route of attempting to block financial payments to offshore online operators.

Franssen said any action would unlikely be a new law and would more likely be an addition to the current gaming law. However he added that, before they could gain cooperation from the Dutch Banks (Nedelandse Vereniging van Banken, or NVB [3].) the Dutch authorities would find themselves having to pursue and eventually attempt to arrest online operators such as Unibet.

He added that in the case of Unibet, this as something that the Maltese authorities, where Unibet is licensed, would be unlikely to comply with.

Franssen also suggested that the current infringement proceedings begun by the European Commission against the Dutch government in relation to protection of its monopoly lottery and casino operators would be destined to end in the European Court of Justice. He said that a key sticking point was the Dutch system of proposing single licenses but then refusing to open even this license up to an open tender process. He said the process should be “non-discriminatory”.

He also pointed out that though the government and Holland Casino were still confident that a provision for the monopoly operator be awarded an exclusive three-year licence to provide online gaming might be included once again in the Gambling Act proposed for the summer, he believed their hopes would be in vain.

Such a proposal was recently defeated in the Dutch senate [4], and Franssen believes a majority against the proposal continues to exist. “My thinking is it won’t happen,” he said. “The votes are against it.” He added that the only chance it might have would be if the government awarded multiple licenses and opened up the process to competition.

Elsewhere at the EGB, Bartosz Andruszaniec an associate at Allen & Overy in Poland, delivered the message that despite the suggestion for the minister of finance that the Polish government would look at the possibility of opening up the online market, there had yet to be any sign of legislative proposals. “Any future legislation is yet to be presented,” he said. However, he added a hopeful note. “The government is trying to find as much money as possible,” he said.

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The author of this article is Scott Longley. This article was previously published on GamblingCompliance.com (http://www.gamblingcompliance.com)

© Gambling Compliance Ltd 2006

Dutch Court Verdict Gives Hope To Private Operators

Drawing heavily on the ECJ’s recent Placanica decision, Holland’s highest court has raised severe doubts over the compatibility with European law of the country’s system for licensing domestic lottery operators. According to one observer, the precedent also bodes well for operators hoping to secure access to the Dutch betting market.

On July 18, the Dutch Council of State delivered its judgment on a case brought against the Ministry of Justice by an operator whose application for a Dutch lottery licence had been denied by the Ministry. The operator in question, Schindler, applied for a licence to act as an intermediary for foreign lottery companies within Holland, as well as a licence to offer its own lottery games within the country. The Council of State’s decision last week means that the Ministry of Justice will now have to review Schindler’s application in accordance with the Council’s recommendations.

There are currently three licensed lotteries in Holland and licences are renewable on a five-year basis. As Justin Franssen, partner at Amsterdam-based law firm Van Mens and Wisselink, explains, in reality these licences are “semi-permanent” as they are continually renewed and are not opened to a tendering process once they expire. The Ministry of Justice, in rejecting Schindler’s application, stated that there was no particular need for a fourth licensee as lottery demand in Holland was already being satisfied by the three operators and issuing a licence to Schindler would cause the Dutch government to “loosen its grip” on the market.

The Court found that the absence of any tendering procedure to renew licences “…cannot, in light of principles of necessity and proportionality established by the ECJ […], be justified by merely referring to the objective of keeping a grip on the market.” According to the Court, granting Schindler access to a licensing process would not cause the government to ‘lose its grip’ as all operators would still be obliged to comply with any regulations set by the government under the terms of that process.

Although Dutch courts have traditionally upheld the Dutch system to be in line with European law, the latest Council of State decision suggests that the ECJ’s Placanica verdict in March has led to something of a re-evaluation.

“The Dutch government says that it has large discretion within European law to determine national policy on gaming. The Council of State has now said that on the basis of Placanica this is not true,” says Franssen.

“In its decision, the Council of State is critical of the Dutch policy on the basis of Placanica and Gambelli and argues that if there is to be a limited amount of licences available there has to be a more transparent mechanism to determine how those licences are issued or renewed.”

According to Franssen, such a transparent process should grant foreign, or at least EU-based, operators access to any lottery licence bidding process. The precedent set by the Council of State’s decision could however have an impact upon the sports betting and horse racing markets where long-standing licences are renewed on a similar basis to the lottery market. “This decision could mean that all [lottery, horse racing and betting] licences will become subject to tender. If we stretch the Council of State’s decision to these other licences it means that no operator in Holland, aside from Holland Casinos and the state lottery, is safe,” says Franssen.

For Franssen, the verdict is especially significant given the fact that betting operators, Ladbrokes and Betfair in particular, have challenged the government’s decisions to exclude them from the Dutch market on similar grounds to Schindler. “After all the judgments against foreign operators [3] recently, I would say that this new decision is in a way groundbreaking,” he says. “The Dutch government has taken the view that it has the right to exclude operators from a licensing process – in accordance with this decision it cannot do that anymore.”

Gamblingcompliance.com understands that the Council of State will rule on the Betfair case on August 30.

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The author of this article is James Kilsby. This article was published on 25/07/2007 on GamblingCompliance.com (http://www.gamblingcompliance.com)

© Gambling Compliance Ltd 2006

Source URL: http://www.gamblingcompliance.com/node/7239

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New Regulator But Familiar Policies Expected In Holland

According to new legislation promulgated last week, the task of issuing gaming and betting permits and enforcing compliance will soon fall outside of the Ministry of Justice. However, while the Act is not without significance, observers suggest that Dutch policy on gambling will remain substantively the same.

The Betting and Gaming Act, sent out for consultation by Justice Minister Ernst Hirsch Ballin last Thursday, proposes the establishment of an independent regulatory body, the Betting and Gaming Authority, which will be charged with issuing licences and acting in the event of any licence breaches. Once the new legislation comes into force, the Netherlands Gaming Control Board, which currently advises the Minister who then issues licences accordingly, will cease to exist. The Ministry of Finance will continue to oversee the National Lottery (Staatsloterij) and the activities of Holland Casinos.

According to Justin Franssen, partner at Amsterdam-based law firm Van Mens and Wisselink, the administrative change is an interesting development. “The new Act signifies a change from the current system in that there will be a new entity which establishes a clear distinction between the Minister and the licences [that are issued],” he told Gamblingcompliance.com.

However, Franssen agrees with those who argue that the new Act heralds more of a perpetuation of the Dutch Government’s restrictive policy on gambling than a signal of impending change. Although the current licensing system has been subject to criticism from both the European Commission and, most recently, the Dutch Council of State, some observers believe the new law will do little more than update the 1964 Act.

For example, Gamblingcompliance.com understands that there is nothing in the Act to suggest that existing lottery and sports betting permits will be opened to tender once they expire. On the contrary,accompanying explanatory notes suggest that the current licensing system will be maintained as far as is possible. “The new system will be largely the same as the old one. The Act contains no radical changes,” Franssen says.

Whilst it may be a different regulator that oversees the Dutch market and issues or renews licences, the Ministry of Justice will maintain ultimate responsibility for instigating overall gambling policy. A press release from the Ministry read: “The new Betting and Gaming Act will make it possible to annul decisions by the Authority when they pose considerable risks to the restrictive games-of-chance policy in the Netherlands.”

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This article is written by James Kilsby and was published on 07/08/2007 on www.gamblingcompliance.com.

Placanica Fallout – Will Dutch Gambling Monopolies Hold?

Placanica decision has placed Europe’s state gambling monopolies under added scrutiny. Despite increased confidence amongst private operators, however, observers remain unsure as to whether Holland will now open up its restricted market.

It seems as though Placanica decision has been met with roars of approval from all sides. On the one hand, state operators such as Deutscher Lotto- und Toto-block have stated that the ECJ’s decision reinforces the validity of state gambling monopolies. On the other, leading online bookmakers proclaim that the ruling proves that state gambling monopolies are an anachronism that contravenes European law. Evidently the Placanica judgement is open to interpretation.

“Since the judgement there has been a lot of empty rhetoric from both monopolies and the private sector,” notes leading Amsterdam-based gambling lawyer Justin Franssen of the firm Van Mens & Wisselink. “In this respect Placanica is very much comparable to Gambelli.” Franssen does not share the optimism of those operators such as bwin, Ladbrokes and Unibet who were quick to proclaim the death of state monopolies in Placanica’s wake: “It is very clear that the ECJ grants member states considerable discretion to limit gambling operators within their countries,” he says.

Does this mean, then, that the Dutch monopoly is likely to go unchallenged? “What was interesting about the Placanica judgement was the references it made to the tendering and licensing processes,” Franssen states. “The Dutch situation regarding the licensing of sports betting clearly has to be re-thought.”

At present the licence to develop sports betting in Holland is awarded on a renewable five year basis but, in reality, as Franssen attests, it is “semi-permanent” and international operators such as Ladbrokes (forced to cease all its Dutch operations by a court decision in 2003) and Betfair have been prohibited from even bidding for that licence.

Operators should not necessarily expect a wide-scale liberalisation, however, or even a partial opening such as that set to take place in neighbouring Belgium later this year. “Placanica may not have that great an effect,” says Franssen. “The sports betting system [limited to one exclusive licensee] is backed up strongly by the civil courts in Holland which have consistently ruled the system to be compliant with Articles 67 and 69 of the 2003 Gambelli judgement.”

Even if Holland does not open up its sports betting market to allow multiple licensees, the Placanica ruling means that the tendering process must be made more open and transparent as excluding EU-licensed companies from entering the bidding process contravenes European law.

However, Holland Casinos’ monopoly of the Dutch casino market is coming under increasing pressure. A decision is due later this week in the Dutch Council of State in a case brought against Holland Casinos’ monopoly on behalf of the French casino group Tranchant. And a ruling against Holland Casinos could be just the start of several challenges brought to the group.

Private operators will no doubt be emboldened by the Placanica decision to scrutinise the legitimacy of last year’s awarding of an exclusive licence to Holland Casinos to develop online casino gaming for the Dutch market.

Another European gaming expert, Jan Gerard Rodrigo – who worked for Holland Casinos for 17 years prior to 2002, is more confident than Franssen that the Dutch monopolies are unsustainable. “Eventually there will be a liberalisation,” he says. “The Dutch monopoly is like a house of cards that is going to fall – it’s just a question of when.”

Interestingly, according to Rodigo, a liberalised Dutch gambling market may not be such an unpalatable reality for Holland Casinos. If restrictions were lifted then Holland Casinos would also be freed from the shackles of its own monopoly and would be free to expand throughout Europe – in the manner of Casinos Austria, for example.

“Holland Casinos does not see the point in monopolies,” notes Rodigo. “Its knowledge of the casino gambling market is like a bottle of squash – it’s so concentrated. You could take that knowledge and operate fifty casinos.”

© Gambling Compliance Ltd 2006

The author of this article is James Kilsby. This article was published on 14/03/2007 on GamblingCompliance.com (http://www.gamblingcompliance.com)

Source URL: http://www.gamblingcompliance.com/node/7345

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