Questions from the member, Van Oosten (VVD) , to the Secretary of State for Security and Justice about the consequences of legalizing online gambling (submitted September 20, 2013 )

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1. Have you taken note of the article ‘ Gambling online Strong hit to charity, lotteries fear a loss in revenue ? ‘

Response to question 1.

Yes

2. Do you share the concern expressed in the newspaper article by the director of the charity lotteries, that by opening the market for the offering of online gambling, that payments to charity will be substantially reduced?

If not, why not ?

3. Has an investigation been conducted regarding the practical implications on payments to charity if online gambling is to be legalized? If not, are you prepared to have this looked into later on?

Answers to questions 2 and 3.

No, I do not share this fear. There is no reason to expect that contributions to charities and sports will be substantially reduced by regulating online gambling. Several studies show that substitution between online gambling and lotteries cannot be demonstrated

[foot note 1]

There is in fact already a Dutch market for on line gambling which has been going on for years. Hundreds of thousands of Dutch citizens are currently actually participating in unregulated online gambling.

Players who play the lottery are usually a different type of player than those who take part in online gambling. From, among others, the APE review, it was shown that there are differences in the demographic characteristics between online and offline players.

Further it appears from comparative studies that the regulation of online gambling in a number of other countries has shown that the proceeds from lotteries did not drop due to the regulations, but have gone up.

The charity lotteries in the Netherlands have seen an increase in revenue in the past years, despite the advent of online gambling, this can be seen from their annual reports and from market research done by the office H2 Gambling Capital.[footnote 1.] Furthermore these reports suggest an expected growth in the future participation in online gambling for all segments of the market, even for charity lotteries.

A chart showing the revenue development for the charity lotteries as well as the market for online gambling is listed in the attachment.

At the same time I realize that no guarantee can be given that no substitution will occur. The continuity of contributions of income to charity lotteries and sports is, however, important to society. For this reason as well, the regulation of online gambling will be prepared with the necessary safeguards. In the proposed bill regarding online gambling, there will be, among others, a clear distinction made between lottery products and products from online gambling promoters, who may soon offer those products. The online gambling bill includes the option to obligate licensees to contribute to charities or sports. Given the nature of these games, where a large part of the funds deposited is paid out in prizes, one should not expect a large income to the public interest. This leads to the fundamental question to be made about the limited income, or of a clear separation between commercial gambling and socially oriented games of chance and lotteries. The provision is included in the bill with an eye on the possible future development which could occur.

4. How can one ensure that charities will benefit from the regulation of online gambling ?

Answer to question 4.

The purpose of regulating gambling is to protect players from the risk of addiction, deception and crime. Contributions to charity and sports will be a beneficial side affect, but are not the primary goal. Thus  Dutch lotteries have an obligation to make payments, but with the regulations of slot machines in the past, no payment obligation was imposed. All online licensees are at liberty to present themselves as contributors to charity and sports, provided this is correctly disclosed to the consumer.

Licensed lotteries will also be given the opportunity to apply for a license for online gambling, and to develop their own range of offerings to complement their current ones. This will allow players through their manner of playing, also be (partially) guided to contribute to charity or sport with online service providers who do not have a commercial objective, but allow the proceeds to accrue to the benefit charities and sport instead of  the shareholder.

Foot note

1)  Telegraaf,  14th September, 2013

2)   This newspaper article refers to an annual amount of at least 150 million euro

Attachment: Development of total profit from games for charity and sport and the market for online gambling.

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It is standard practice to express the amount of revenue in the gaming market in gross revenues, or the difference between the deposit and the prize money paid out.

Sources:  Annual reports from charitable lotteries and the report “H2 Netherlands 14-11-2013” from market research office H2 Gambling Capital. This report is available for inspection at the Clerk of the House of Representatives.

Link to the original document (Dutch) http://www.tweedekamer.nl/kamerstukken/kamervragen/detail.jsp?id=2013D48067&did=2013D48067

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