Economic consequences of the modernized Dutch Gaming Act

In the coalition agreement of 2012 the VVD and the PvdA (political parties in the Netherlands) decided to modernize the current Gaming Act of 1964. By a new Gaming act it will be possible for online gaming operators to apply for a license to operate on the Dutch gaming market. The sports sector expects to experience economic consequences of the new Dutch Gaming Act. The Sports Economic Research Centre of the HAN University of Applied Sciences in Nijmegen did a study into the influence of gaming policy on the economics of sports in the Netherlands. In particular an economic effect is expected for the tax revenues of the government, the sponsor income of the football clubs and the media rights of the sports associations. 

By: Jeroen Schep


jeroen schep

 

 

 

 

 

 

 

 

 

The study was conducted by interviewing six participants from the gaming market and the sports sector. They were asked about their expectations for the financial flows to the sports sector, when the current gaming act from 1964 is modernized from a prohibition to a regulation of online gaming activities.

This study shows that there is an uncertainty about the size of the gaming market. This is mainly due to the ambiguity if there will be a substitution or an additional growth for the gaming market. Substitution means that consumers exchange their bets from offline gaming operators to online gaming operators. When there is a substitution, the expectation is that the current offline gaming market will shrink as a consequence of the increased competition between offline and online gaming operators. When there is an additional growth, the online gaming operators will create a new interest of consumers in gaming activities, which means that the whole gaming market will grow. This will also signify higher payments to the sports sector of the current offline gaming operators when there are additional growth and lower payments when there is substitution. Based on regulations of online gaming markets abroad an additional growth is the most obvious. This appears from figures from the United Kingdom, Denmark, France and Italy, where regulations did not have a negative impact on the existing offline gaming operators.[1]

Distribution of funds chart

 

The financial flows to the sports sector in the Netherlands were the main theme of the study (figure).[2]    The modernized Gaming Act will cause changes, especially for the sponsor income of the football clubs and the media rights for the sports associations. The increase of the sponsor income of the football clubs is mainly caused by new partnerships with online gaming operators. However, there are also opportunities for sports associations, sports clubs and amateur clubs.  With regard to the media rights, the sports associations are most likely to benefit. There could arise a new media platform for sports with the arrival of online gaming operators, which are interested in the media rights of the sports. For the football clubs there are no expected changes, because the media rights are still at FOX Sports as a result of the long-term deal.

The financial flows of the provinces and the municipalities were not correlated with the regulation of online gaming activities in the opinion of the participants. Neither the sports clubs nor the amateur clubs are expected to have changes in the financial flows from the government. For NOC*NSF(National Sports Federation) the income of a gaming operator will not change as long as De Lotto (lottery organization in the Netherlands) is their partner. This is because of the branch exclusivity that belongs to the current deal. The tax revenues are expected to increase, because in the current situation the online gaming operators do not pay taxes to the Dutch government.

Partly because of the negative reaction of the Raad van State (Counsel of State) in response to the modernized Gaming Act, it is still unclear when the modernized Gaming Act will come into force. However, it is essential that football clubs have their shared revenue models ready for sustainable partnerships with online gaming operators, when the modernized gaming act will come into force. A shared revenue model means that an online gaming operator not only is sponsoring, but even can make money through the football club by consumers who register via the football club. Sports associations could prepare by thinking of relevant media rights for online gaming operators that they can sell to an online gaming operator.          Especially livestreaming of competitions or events that are interesting for costumers to place their bets will be interesting for online gaming operators. For the sponsoring and media rights, a good proposition and a complete list of members with a good opt-in or opt-out system is of a great importance. Such a system should protect members against an overload of gaming advertisements without their permission. At the end, for the sports sector it is meaningful to take into account different scenarios for the economic consequences of the modernized Gaming Act, because of the uncertainty of the exact interpretation.

Jeroen Schep is a junior researcher at the Sports Economics Research Centre of the HAN University of Applied Sciences. For more information about this study you can contact Jelle Schoemaker via www.han.nl/sporteconomie

 

[1] Meines & Partners/Kalff Katz & Franssen. (2013). Opgehaald van Meines Holla & Partners:

http://www.meinesholla.nl/meinespartners-nl/download/common/factsheet-geensubstitutie-op-de-kansspelmarkt-sport.pdf#search=”kansspel

[2] Sports Economics Research Centre (2014). Waar liggen de kansen voor de sportsector in Nederland?

 

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