The Dutch Gambling Authority has recently provided a general explanation of the conditions applicable to operators applying for an online gambling licence in the Netherlands. Furthermore, it recently became clear that the Dutch market will open for online gambling half a year later than expected. Lisette den Butter and Tessa van den Ende explore the licensing conditions applicable to online gambling and briefly elaborate on the consequences of the delay.

Introduction

 The Dutch Gambling Authority (Kansspelautoriteit) recently published a statement on its website setting out, in general terms, the conditions interested parties will need to meet in order to successfully submit a licence application. This statement is made in anticipation of the draft secondary legislation that will contain the conditions applicable to online gaming licences. According to the Dutch Gambling Authority, their explanation will enable potential applicants to prepare for the licencing process.

As the secondary legislation containing the conditions is not yet final, the Dutch Gambling Authority emphasises that the statement has been provided for information purposes only. The Dutch Gambling Authority states on its website that it cannot confirm the final conditions at this stage and, as such, changes may still occur.

Below, we briefly set out the new (provisional) licensing conditions. However, because it recently became clear that the Dutch market will open for online gambling half a year later than expected, we will, firstly, briefly elaborate on the consequences of this delay.

Licencing process delayed; consequences for the cooling-off period

The licencing process will commence as soon as the Remote (online) Gambling Bill (Wet Kansspelen op afstand) enters into force. The target date is now 1 January 2021. As soon as the Bill enters into force, applications for an online gambling licence can be submitted to the Dutch Gambling Authority. The Dutch Gambling Authority initially indicated that the market launch would be on 1 January 2021; however the plan is now for online gambling and games of chance to open on the Dutch market six months later. Hence a delay of six months.

The specific rules applicable to licensing, currently in draft, include a possible two-year ‘cooling-off’ period for operators that have targeted Dutch customers without a licence. As mentioned in our previous blogpost, it seems like this measure excludes operators who have previously directly targeted the Netherlands without a licence, from obtaining a licence for the following two years.

It is not yet clear whether the cooling-off period will be altered because of the above-mentioned delay of six months. If not, this is a very interesting development for some operators that have targeted Dutch customers without a licence.

Last week, a motion was submitted to parliament asking the government to ensure that past offenders are not among the first group of companies that are granted licences to provide online gambling in the Netherlands. The motion asks the government to ensure that the first licences will be provided to reliable, bona fide new entrants. Although this motion does not directly refer to (an extension of) the cooling-off period, it is expected to provide some clarity on this subject.

Licencing conditions explained

Types of online gambling

According to the Dutch Gambling Authority, under the amended Dutch Gambling Act, 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;
• Casino games where the players play against each other;
• Betting in relation to (the outcome of) sporting events; and
• Betting in relation to horse racing.

General conditions

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. The Dutch Gambling Authority has confirmed that 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 Dutch Gambling Authority (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.

Subjects 

The Dutch Gambling Authority has confirmed that the subjects below will be dealt with in the licence application:

Reliability

As the online gambling licence will be subject to strict reliability requirements, the applicant must be able to demonstrate that there are no criminal, administrative or tax law antecedents. This will not only concern the antecedents of the applicant itself, but, for example, also those of its (in)direct stakeholders, executive and non-executive direct directors and those of its (in)directly subordinate legal entities. All (legal) parties mentioned above must be identified.

In the context of testing reliability, questions will be asked about previously unlicenced offers of games of chance at a distance. The Dutch Gambling Authority has already published a draft policy rule (in Dutch), which can be found here.

Expertise

The applicant must have a policy plan setting out how it ensures that its 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 of the applicant’s organisation and player credit

The Dutch Gambling Authority will also assess the continuity of the applicant’s organisation when applying for a permit. The permit holder may not be in a state of bankruptcy or liquidation and there may be no question of a suspension of payments or the seizure of a substantial part of the applicant’s assets.

In addition, 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

As part of the licensing process, the applicant must have a representative in the field of addiction prevention present in the Netherlands. The applicant must also have an addiction prevention and training policy. 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 Dutch Gambling Authority must be informed of the applicant’s advertising and marketing policy. Such policy should, among other things, specify how it will prevent advertising from being misleading and aggressive and how to prevent advertising targeting vulnerable groups.

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 Dutch Gambling Authority 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

A licence holder may, in principle, outsource all its activities, but gambling-linked outsourcing must include a plan outlining the risks of outsourcing, describing how they 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

The Dutch Gambling Authority must be able to gain insight into how the applicant deals with integrity risks. Therefore, the applicant must ensure that an integrity policy is applied and maintained. 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 Remote Gambling Act in the form of a procedure description. This procedure description must at least set out:

• the primary payment process;
• how the primary payment process will be reported;
• how risk management is carried out;
• what is done in the event of an incident; and
• subsequently, how to prevent such an incident from occurring again.

Identification and verification

A game of chance provider must be able to establish that a player’s identity (surname, first name, date of birth, address and place of residence) corresponds to the player’s actual identity. The provider may only grant the player access after the provider has completed the verification process by supplying information, documentation or data from a reliable and independent source (e.g. a valid passport, identity card or driving licence).

Central Register Exclusion Game of Chance

The Dutch Gambling Authority announced that it will introduce a Central Exclusion Register soon. This register will list players who are not able to control their use of online gambling. The applicant must be able demonstrate by means of a connection test that it is able to check whether a player is registered, and that it is able to exclude the person in question if this appears to be case.

Control database

The Remote Gaming Act requires providers of online games of chance to have a control database to which the Dutch Gambling Authority has access. Via this database, the Dutch Gambling Authority can check whether gambling providers are meeting certain licence conditions. The Dutch Gambling Authority announced that the technical specifications will be clarified well before the application period starts.

Evidence

Supporting documents will be requested on all subjects. At a later stage, the Dutch Gambling Authority will communicate what specific evidence will be requested, whether supporting documents are subject to inspection and whether such inspection must be completed by an independent third party.

Next steps

The DGA announced that it will organise workshops for potential licence applicants and provide further information at a later date. The dates of these workshops will be dependent on the subordinate legislation being finalised. Following this, the Dutch Gambling Authority will be able to provide more detailed information regarding the application form.