The long journey toward regulation in the Netherlands

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Several operators – including many of the major players – have been eagerly awaiting the issuance of iGaming licences in the Netherlands for years, but it finally looks like the arduous journey could be coming to an end, writes Global Betting & Gaming Consultants (GBGC) director Lorien Pilling.


[dropcap]“[/dropcap]The process of regulating internet gambling in the Netherlands makes the saga in Germany look fast and efficient. It was back in 2009 that the Jansen Commission was set up to assess the regulation of internet gambling in the Netherlands.

As with other EU member states the protection of existing monopolies has been a key consideration in the Dutch process. The Jansen Commission reported in 2010, recommending that only internet poker should be opened up to competition. Sports betting and other activities would remain under monopoly control.

Betfair first asked for a betting exchange licence in the Netherlands back in 2004 and both Betfair and Ladbrokes were involved in long-running battles in the European Court of Justice over the last decade because of the Netherlands’ restrictive regulation.

Several firms have voluntarily ceased taking business from the Netherlands in anticipation of being able to apply for a licence but they have been waiting several years. In December 2014 operators were able to “pre-apply” for a licence but it could well be 2017 before any new licence-holders actually launch their operations. The whole process has not been helped by the political instability in the country over the last few years with periods of minority and coalition governments hampering the passage of new regulation.

A tax rate of 20 percent has become the “norm” across many European markets but there has been discussion in the Netherlands that the remote gambling rate should match the land-based tax rate of 29 percent.

A rate of 29 percent would be too high if the government’s aim is to capture as much of the market as possible and minimise offshore revenues. It would also be too high for operators’ profitability. The profitability of many e-gaming firms is already under pressure for a variety of reasons: regulatory compliance, increased taxation and social responsibility requirements.

But in some regards the European e-gaming sector has brought some of the woes on itself. Going back five or six years some operators stated at conferences that they welcomed the chance to be regulated and pay tax. The regulators listened and have offered licences and duly taxed them.

According to research for GBGC’s Interactive Gambling Report 2016 the amount of gross win in Western European markets earned under local licence (as opposed to offshore) has increased from 49 percent in 2008 to 79 percent in 2015. It is forecast to rise to 87 percent by 2019.

Bwin and PartyGaming were two of those companies that said they wanted to be regulated. The fact they were recently acquired by GVC Holdings, a company that stuck to the original offshore model, demonstrates what worked best for the European e-gaming sector. Further regulation was perhaps inevitable as European governments eventually caught up with e-gaming but it has not necessarily been the most profitable move for certain individual operators who have merged or been taken over.”

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