In the past few months a lot has happened in the legislative process regarding remote gambling. Just last week, the Dutch Gambling Authority (Kansspelauthoriteit) (the “KSA”) published another set of draft policy rules for consultation. To bring you up to speed of all the recent developments, we will first elaborate on the rules set out in the latest legislative instruments (Decree and the Regulation) (covering, amongst others, advertising restrictions) and the draft policy rules, which provide further substance on these new rules in respect of advertising and the prevention of gambling addiction, discuss the next steps for the entry into force on 1 March 2021 and we will also briefly set out how to prepare for the application procedure in the meantime.

Introduction

In February 2019, the Dutch Senate adopted the Remote Gambling Bill (Wet Kansspelen op afstand) (the “Bill”). This Bill modernizes the Betting and Gaming Act (Wet op de kansspelen), legalising online gambling in the Netherlands and regulating services provided to gambling operators, including advertising and payment services. So, with the entry into force of the Bill it will become possible to obtain a license for both ‘offline’ (landbased) and online games of chance in the Netherlands. Until recently, the aim was that (prospective) remote gambling operators would be able to submit applications for remote gambling licences to the KSA as of 1 January 2021, with the first licences being issued on 1 July 2021. However, earlier this year the Dutch Ministry of Justice and Security already indicated that a short delay was to be expected due to COVID-19 interruptions and that it would soon announce a new date for entry into force.

On 4 September, the Ministry did just that, publishing a letter in which it announced that 1 March 2021 would be the new entry into force date, with the first licences being issued on 1 September 2021. In that letter, the Ministry also confirmed that the cooling-off period would be extended to 2 years and 8 months to cover for the additional delay.

Before the confirmation of the new timelines, the Dutch government published the latest versions of the Remote Gambling Decree (Besluit kansspelen op afstand) (the “Decree”) and the Regulation on Remote Gambling (Regeling kansspelen op afstand) (the “Regulation”), which is a major step toward the establishment of a full regulatory regime for the new regulated online gambling market. These gambling regulations are both pieces of secondary legislation that belong to the Bill and concern the implementation and further interpretation of the Bill. The first part of the secondary legislation, being the Decree, further specifies the licensing system for remote gambling and lays down rules for recruitment, advertising and addiction prevention. Among other aspects, requirements for the system of licence holders, the prevention of money laundering and match-fixing are provided, together with requirements for the registration and safe storage of data. These requirements are further specified in the Regulation. All consultations and commitments arising from parliamentary debates over the last half year have been incorporated into the latest version of the Decree and the Regulation,

The Decree explained

As indicated above, the Decree contains proposed regulations for the implementation of the Bill. In short, the Decree contains concrete regulations for:

• the license (chapter 2): which includes the organisation of online gambling activities, in particular with regard to the license itself and the gambling services on offer;
• the licensee and its reliability (chapter 3);
• the organisation of remote gambling (chapter 4): which includes (i) the representation in the Netherlands for the purpose of preventing addiction and separate product offerings, (ii) the licensee’s integrity policy, (iii) the entry and registration of players, (iv) payment transactions, (v) consumer protection, (vi) the gambling system and (vii) the testing thereof; and
• compliance supervision and enforcement (chapter 5): which includes obligations to register and report data, to maintain a Dutch control database and to provide financial security.

Further advertising restrictions

In addition, the Decree also amends the Decree on Recruitment, Advertising and Addiction Prevention (Besluit werving, reclame en verslavingspreventie kansspelen) (chapter 6), which contains requirements for licence holders with regard to their recruitment and advertising activities and their policy on combating addiction to games of chance. Through amending the latter, the Decree introduces further measures on advertising restrictions. The Decree also introduces requirements for the licensee’s policy on addiction prevention, the knowledge and skills of the licensee’s personnel, the analysis of the gambling services on offer, the registration and analysis of the gambling behaviour of players and interventions for such gambling behaviour.

The Regulation explained

The Regulation further specifies the regulations set out in the Decree and will govern the following:

• remote gambling licensing and operations (chapter 2);
• the organisation of remote gambling (chapter 3): which includes the licensee’s integrity policy, access to remote gambling and management of gambling credits, consumer protection, the gambling system and the inspection of the gambling system; and
• compliance supervision and enforcement (chapter 4): which includes, recording and reporting requirements and a datasafe (control database) for monitoring purposes.

The Regulation further lays down rules with regard to gambling advertising restrictions to protect socially vulnerable groups through amending the Decree on Recruitment, Advertising and Addiction Prevention (chapter 5).

Restriction on use of athletes or other role models in advertising

It is interesting that the Regulation stipulates that the licensee may not in any case use professional athletes for recruitment and advertising purposes, even though the Dutch national lotteries are allowed to do so. The licensee is also prohibited from using other role models to the extent that such role models (i) are under 25 years of age; or (ii) have substantial reach among minors or young adults.

Further advertising restrictions

Besides this prohibition on advertising for professional athletes, the Regulation introduces a prohibition on advertising when providing addiction prevention information and a prohibition on providing bonusses after responsible gambling measures have been taken. In respect of gambling advertising restrictions, the Regulation also lays down requirements in respect of (i) the licensee’s policy on addiction prevention and the creation and implementation thereof, (ii) the information obligation towards players, (iii) the recording and analysis of players’ gambling behaviour and the intervention in that gambling behaviour, (iv) the recording and reporting with regard to addiction prevention, (v) the register for excluding players (the so-called “CRUKS” also see our blogpost in respect hereof) and (vi) personal data protection. Finally, the Regulation also provides for a use-related levy to cover the costs associated with (the prevention of) gambling addiction.

Draft Policy Rules

Last week the KSA published the draft “Policy rules on responsible playing” (the “Policy Rules”) for consultation. These Policy Rules further specify the new obligations for both ‘offline’ and online games of chance set out in the Bill and will govern advertising and the prevention of gambling addiction. For example, the KSA has defined concepts such as “experts in the field of addiction care” and “experts by experience”. In addition, existing concepts such as “misleading advertising” are further elaborated upon.

Under the Policy Rules, advertising by a provider of games of chance is seen as misleading if it creates an unrealistic or an inaccurate imagine of the product or service. Advertising is also misleading if conditions are being attached to a one-time free participation in a game of chance or if consumers are wrongly given the impression that they can improve their game results by attending a training, study or (online) course.

As the Bill will introduce a whole new legal regime for advertising and the prevention of addiction, the Policy Rules will replace the previous guidelines as soon as the Bill enters into force.

The KSA also announced that it will soon publish another set of policy rules specifically designated for online games of chance. These policy rules will cover all subjects that are discussed when applying for an online gaming licence and contain rules for the granting of such licences.

Next steps

Before the proposed text of the secondary legislation becomes final, the text has to be approved by the European Commission (the “Commission”) and therefore the notification procedure of the Technical Regulation Information System (the “TRIS”) will have to be completed.

According to the Single Market Transparency Directive (EU) 2015/153 Member States must inform the Commission of any draft technical regulation concerning products and information society services, prior to adopting it into its legislation. The purpose of this procedure is to prevent regulatory barriers arising in the internal market to the free movement of goods or to the free provision of Information Society services or to EU secondary legislation. The Bill, the Decree and the Regulation all fall within this system.

The first step of this process has already been taken, as the Decree was notified to the Commission on 8 July 2020 together with the Bill itself. The Regulation has been notified to the Commission on 12 August 2020.

The so-called “standstill period” of, in principle, three months started from the date of notification of the draft. Therefore, for the Bill and Decree, this period ended on 9 October 2020, and for the Regulation it will end on 13 November 2020. During this period, the Commission and other Member States assess the national draft technical regulation in light of EU rules and the legislation cannot be adopted. If the Commission and/or any other Member State identify a potential barrier to the principles of free movement of goods and services, they can respond and address any concerns that they may have. This means that the relevant provisions could still change as the Commission and other Member States will still have to assess the national draft technical regulation in light of EU rules.

In order to keep the new entry into force date and not to delay even further, apart from the completion of the TRIS notification procedure, the Dutch Council of State will still have to provide its opinion on the Decree. Prior to the entry into force of the Bill, the Ministry will officially publish the final versions of the Decree and the Regulations. The KSA will then have to transpose the Bill and the secondary legislation into licensing conditions and introduce a licence allocation procedure for granting remote gambling licences.

How to prepare for the application procedure

As previously mentioned, the licence allocation procedure will commence with the entry into force of the Bill, with the first licences being issued six months afterwards. Potential applicants for an online gambling licence must comply with stringent conditions in order to be eligible. The KSA already published a statement (in Dutch only) on its website setting out, in general terms, the conditions interested parties will need to meet and the required documents applicants will need to submit for a successful licence application.

Below we elaborate on the licencing conditions. As the secondary legislation containing the conditions is not yet final, we emphasise that the below conditions cannot be confirmed yet and changes may still occur.

Licensing conditions explained: types of online gambling

It will be possible to apply for a licence to organise four different types of online gambling:

• Casino games where the players play against the licence holder (roulette and blackjack, for example);
• Casino games where the players play against each other (poker, for example);
• Betting in relation to (the outcome of) sporting events; and
• Betting in relation to horse racing and harness racing.

The licence application will consist of several subjects and will only be considered if the application is completed in full. The identity of the applicant must be clear and a payment of €45,000.00 must be made: rejected applications will not be eligible for a refund. Consequently, it is highly recommended to strictly adhere to the final licensing conditions.

Based on the licence application, the board of directors of the KSA (the “Board’’) will make an overall assessment to determine whether a licence will be granted. The Board will only grant a licence if the games offered are organised in a “responsible, reliable and verifiable manner”. In order to determine whether this is the case, the Board will assess the relevant licence application against legislation and regulations. The regulator indicated that policy rules will follow if needed and will be published well in advance of the start of the licensing procedure.

Licensing conditions explained: subjects

The KSA has indicated that the application procedure for a licence for online games of chance will at least comprise the following subjects:

• Reliability: licences will only be granted to reliable parties. The administrative-law, criminal-law and tax-law past history, of the applicant and natural persons and legal entities affiliated to it, will be examined. In the context of testing reliability, questions will be asked about previously unlicenced offers of games of chance at a distance. The KSA has already published a draft policy rule (in Dutch), which can be found here (in Dutch only).
• Expertise: the applicant must have a certain degree of expertise. The applicant must have a plan detailing how it ensures that employees have and maintain “appropriate expertise” in the field of games of chance. This includes expertise of the relevant laws and regulations, addiction prevention, consumer protection and financial regulations.
• Continuity: the KSA must have sufficient confidence that the continuity of the applicant is guaranteed. In any event, the applicant must ensure that players’ credits are segregated from the working capital of the applicant.  An exit plan, including the statement the applicant is able to repay players’ credits, must also be provided.
• Addiction prevention: the applicant must have a representative in the Netherlands regarding addiction prevention. In addition, the applicant must also have an addiction prevention and training policy in place. This policy should specify, amongst other things, how the applicant will protect players from gambling addiction and what extra protection will be provided for players aged 18 to 24 years.
• Advertising and marketing: the applicant’s advertising and marketing policy must comply with the applicable legislation.
• Consumer protection: the applicant must be able demonstrate how the legal provisions relating to customer service and the complaints procedures have been implemented and must show that its customer service and complaints procedure are functional. Additionality, there are also requirements regarding the provision of certain information about the gambling system.
• Match fixing: sports-betting operators will be required to report suspicious gambling patterns to the KSA and show how it manages match-fixing risks. This, inter alia, entails that, the operators must have systems and associated processes in place to detect and report signals that may indicate match fixing.
• Compliance with applicable laws: the applicant must demonstrate that it is compliant with all the provisions laid down in the Dutch Prevention of Money-Laundering and Terrorist Financing Act (Wet ter voorkoming van witwassen en financieren van terrorisme) and the Dutch Sanctions Act (Sanctiewet).
• Outsourcing: gambling-linked outsourcing must include a plan outlining the risks of outsourcing, describing how risks are prevented and how the occurrence of risks is monitored. Furthermore, the licence holder should be able to demonstrate that the supplier is qualified and reliable and how this has been determined by the licence holder. The licence holder must have a compliance officer who supervises the outsourced activities. Finally, the outsourcing process must be controlled by and must not affect compliance with statutory requirements.
• Integrity: an integrity policy must be in place. The policy must be aimed at, among other things, recognising and preventing fraud and abuse. There must be an up-to-date and systematic inventory, analysis and evaluation of integrity risks (including the reliability of managers and key personnel).
• Payment transactions: the applicant must demonstrate that it meets the requirements for payment transactions set out in the Act in the form of a procedure description.
• Identification and verification: the game of chance provider must be able to establish that a player’s identity corresponds to the player’s actual identity before granting access to the gambling offer.
• Cruks: applicants must be affiliated with the Central Register for Exclusion from Games of Chance (Register Uitsluiting Kansspelen) (the “Cruks”). This register is created to prevent gambling addiction as players can be registered in Cruks – either voluntarily or involuntarily – so that they are precluded from participating in any form of online betting and gambling for a specific period of time. Both online providers as well as land-based providers will be obliged to verify whether their customers are registered with Cruks before letting them participate in any form of online and offline games of chance. If a customer is registered with Cruks, the gambling providers must refuse the customer access. Since July 2020, it is already possible for land-based providers to test the connection to the Cruks. (Please also see our blogpost covering this).
• Control database: finally, applicants must have a control database (the “CDB”) in which the KSA has access to certain digital data to verify whether the providers are meeting certain licence conditions.

Licensing conditions explained: timeline

Recently, the KSA published a helpful tool to prepare for the coming info force of the Bill: a calendar for stakeholders, land-based providers and one for potential online providers setting out all conditions that should be fulfilled prior to the entry into force. The calendars run from September 2020 until February 2021 and can be found here (in Dutch).

Below you can find a short English version of the calendar for potential online providers. Please note that the dates are not carved in stone yet.