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MediaWrites

By the Media, Entertainment & Sport group of Bird & Bird

| 5 minute read

Update on online gambling in the Netherlands: licence holders will not be allowed to use their existing Dutch customer databases

Recently, the Minister’s answers to the latest round of questions in respect of the Remote Gambling Decree were sent to the Dutch parliament. Roelien van Neck and Tessa van den Ende elaborate on the updates that were vested in those answers and discuss in particular the announcement that applicants who are granted an online licence (“licence holders’’) will not be allowed to use any existing Dutch customer databases.

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On 7 May 2020, the Dutch Minister of Justice responsible for online gambling policy sent the answers to the latest round of questions from the Dutch Parliament’s lower chamber, the House of Representatives, in respect of the Remote Gambling Decree (Besluit kansspelen op afstand) (the “Decree”). No new major subjects were addressed, as many of the questions were reiterations of previous concerns in respect of money laundering, fraud and prevention of addiction, and many of the answers therefore addressed those concerns. However, throughout the political debate, there were some interesting updates that are worth discussing. The most interesting and important update was the announcement that licence holders will not be allowed to use their existing Dutch customer databases. The Minister clarified that this will mean that all online gambling providers who have been active in the Dutch grey market as well as any new entrants to the Dutch online gambling market must build their Dutch customer database up from scratch. The Minister furthermore defended that licence holders and their responsible gambling representative, a person to be designated to prevent addiction by each gambling provider, do not need to be based in the Netherlands and also confirmed that there could be delays due to the COVID-19 pandemic. Below, we shall briefly elaborate further on these updates.

Existing Dutch customer databases may not be used

In the latest round of questions, the first question that was raised related to the circa 1 million Dutch nationals who are currently gambling on the internet via an unlicensed online provider and which measures the Minister is going to take to ensure that existing online providers cannot use their existing Dutch customer base if that was built without an online gambling licence under the Dutch Betting and Gambling Act (Wet op Kansspelen) once licences are issued.

The Minister confirmed that there are indeed many Dutch players currently gambling online with unlicensed providers. He explained that in general unlicensed online gambling weighs particularly heavily as a contraindication for an applicant to qualify for a Dutch online gambling licence in the comprehensive reliability assessment by the Dutch Gambling Authority (Kansspelautoriteit). If the applicant is refused for that reason, the Dutch Gambling Authority will also take measures against the online gambling provider and those parties assisting it, which will also deny the applicant as much as possible of the useful effect of its previously built up customer base.

However, in the interests of a successful transition to the regulation of remote games of chance, the Dutch Gambling Authority temporarily shall assign less weight to any previously unlicensed offer, provided that the concerned provider has refrained from offering online games of chance specifically aimed at Dutch consumers during a period of at least 30 months prior to the licence application, and has demonstrably verified the age of players at the time of registration as from 1 January 2020.

Providers who offered remote games of chance in the Netherlands without a licence prior to the entry into force of the Remote (online) Gambling Bill (Wet Kansspelen op afstand), and who are nevertheless in possession of an online gaming licence after the comprehensive reliability assessment, are thus not permitted to use their Dutch customer database. The reasoning behind this restriction is that such customer bases were built up during a period in which remote games of chance were not regulated in the Netherlands and without the new strict requirements being observed, such as requirements in respect of gambling advertising and the recruitment of players, the selection of players upon registration and with regard to addiction prevention. To start up their Dutch customer database in accordance with these new rules, all online gambling providers who have been active in the Dutch grey market, as well as any new entrants to the Dutch online gambling market, must build their Dutch customer database from scratch.

License holders and their responsible gambling representative do not need to be based in the Netherlands

In the political debate it has been argued that licence holders should be required to be based in the Netherlands. Some political parties pressured the Minister to ensure that the Dutch online gambling system would replicate Belgium, where only land-based casinos can hold an online gambling licence. In this round of questions and answers, the Minister firmly rejected the idea of replicating the Belgian regime and he explained that in light of the established case law of the Court of Justice of the European Union, requiring licence holders to be established in the Netherlands would most likely be in breach of EU law. The court will most likely consider the requirement of establishment to be contrary to the free movement of services and the Treaty on the Functioning of the European Union, with the result that the requirement would be declared non-binding or inapplicable, making it impossible to enforce. In addition, there is a very real risk of claims for damages, for example from licence holders who have had to incur costs in order to open an establishment in the Netherlands. In that case, the State would be liable for the damage caused by issuing and enforcing non-binding regulations.

The Minister furthermore explained that the mere fact that a measure is applied in another Member State, such as Belgium, and the European Commission does not take enforcement action there, this does not mean that this measure is justified in the Dutch context. The condition that a licence holder must be established in the Netherlands must be assessed within the overall context of the Dutch system in force and the objectives pursued by the Netherlands. In light of the measures taken within the Dutch licensing system, such as the choice of an addiction prevention representative, who applicants must assign as part of the licensing progress (also see our previous blogpost in respect thereof), financial security and the control database in the Netherlands, he does not consider the Belgian system to be tenable for the Netherlands, as less far-reaching measures are available to achieve the objectives of addiction and crime prevention.

The choice of an addiction prevention representative and the requirements imposed are therefore the most far-reaching that he considers possible within the boundaries of European law.

In respect of the addiction prevention representative, the Minister clarified that this person does not actually need to be based in the Netherlands but needs to be close enough to carry out its function without delay. He clarified that the representative could for example also be based in Germany or Belgium. Finally, the Minister also clarified that there is no formal requirement for the representative to speak Dutch, but that it is required that the representative can actually communicate in a language that consumers understand. In practice, this means that the representative should be able to speak Dutch only in so far as necessary for effective communication.

Possible delays due to COVID-19

As for the next steps, the aim of the legislator is to have the Remote Gambling Act into force on January 1, 2021, with the first licences issued six months later. However, the Minister admitted that he cannot rule out any delay in the implementation process as a result of the measures taken to fight COVID-19.

The Minister indicated that although the Dutch Gambling Authority had to cancel the information meeting to discuss the upcoming self-exclusion project CRUKS that was planned for March 2020, the Dutch Gambling Authority did provide the information via the internet in April 2020. This way stakeholders still have the opportunity to ask questions. The Minister furthermore indicated that technical connection sessions are also expected to be delayed by one month.

Tags

netherlands, gambling