In today’s newsletter we will be mainly looking back at last week’s Annual Gaming Industry Event organized by Kalff Katz & Franssen, co-hosted this year with the International Masters of Gaming Law (IMGL). An obvious hot topic was the recently tabled amendment to the remote gaming bill to implement a uniform tax rate of 29% of GGR.
Holland Casino Likely to Be Sold Next Year
Before addressing the Kalff Katz & Franssen / IMGL event in depth, we would first like to inform you of the news that the Dutch minister of Finance is currently expecting that the sale and privatization of state-owned Holland Casino will be concluded during the second half of 2017.
From the same document we also learned that the Dutch state, in its capacity of sole shareholder of Holland Casino, rejected certain non-disclosed investment plans drawn up by the casino company in 2015. What could these have been?
Unibet Signs Sponsorship Deal Worth €7m with Royal Dutch Cycling Union
Also of special note was today’s news that betting operator Unibet signed a provisional sponsorship deal with the Royal Dutch Cycling Union (KNWU). The deal, however, is conditional on the adoption of a 20% tax rate on online gaming – which would be contrary to a recent amendment to the remote gaming bill to introduce a (nominally) uniform tax rate of 29% on all forms of gambling.
We are planning on sending out a special edition of our newsletter on the Unibet-KNWU sponsorship deal on Friday. Stay tuned for more!
Looking Back at Kalff Katz & Franssen / IMGL Annual Gaming Industry Event
On Friday, January 22, 2016, law firm Kalff Katz & Franssen hosted its Annual Gaming Industry Event. The 2016 edition was co-hosted with the International Masters of Gaming Law. With over 150 attendees from all over the world representing the online and land-based gaming industry, as well as consultants, regulators, and policy makers, the event was a huge success. Click here to watch a video summary of the event.
In light of recent amendments to the remote gaming bill to implement a uniform tax rate of 29%, this year’s Annual Gaming Industry Event focused on taxation and enforcement with regard to remote gaming in the Netherlands.
One of the MPs who tabled the amendments, MP Jeroen van Wijngaarden spoke at the event. Other highly esteemed speakers were Marja Appelman, CEO at the Netherlands Gaming Authority, Fatima Moreiro de Melo, former field hockey star and current poker professional, and Dr. Jörg Hofmann, senior partner at Melchers law and former president of the IMGL.
A Uniform Tax Rate?
Earlier this month, parliamentarians of the ruling government coalition proposed a series of amendments to the pending remote gaming bill to introduce a uniform tax rate for both online and land-based gaming of 29% of GGR, which could potentially be lowered to 25% after three years.
According to the original bill, online operators would only have been taxed at 20% of GGR in order to encourage Dutch punters to seek out licensed operators instead of more cost-competitive, unlicensed alternatives. With already one million Dutch online punters participating in the offshore market, a low tax rate was seen as necessary by the both the Ministry and independent market analysts to “channel” players toward licensed operators.
Further complicating the legislators’ (understandable, if perhaps impracticable) desire for a uniform gaming tax rate is the recent finding by the Netherlands Gaming Authority that under current regulation Dutch lotteries are paying an effective tax rate far lower than 29%.
“Low, Simple, Clear” (and Politically Viable)
In response to these obvious objections to a uniform tax rate of 29%, Jeroen van Wijngaarden, MP of the conservative party VVD, defended the present proposals by stating that they were necessary in order for the bill to be adopted in parliament. Van Wijngaarden also said that in his opinion taxes should be “low, simple, and clear,” meaning that a uniform gambling tax rate (which is to be lowered “as soon as possible”) is at present the only politically viable option.
Van Wijngaarden further noted that he is not concerned that the higher tax rate would decrease player channelization and expressed his willingness to rely on strong enforcement measures. In response to critical questions, Van Wijngaarden said that the proposed legislation would give the Netherlands Gaming Authority “the powers it needs,” adding that “we have a good track record with regard to enforcement.”
“Enforcement Very Expensive”
Marja Appelman, CEO at the Netherlands Gaming Authority, appeared critical of the proposed tax rate of 29% on online gaming, fearing that too high a tax rate would push players toward the unregulated market. She also emphasized that players’ preferences should be awarded a central role in the forthcoming regulatory regime. “Many factors decide the attractiveness [of an operator],” she said, “but I have been told the payout ratio may be the most important.”
Importantly, Appelman also responded to Van Wijngaarden’s claims that strict enforcement would (or even could) offset the negative consequences of a higher tax rate: “It is not sustainable to put that much effort in enforcement. Enforcement is very expensive.”
“If You See Something Wrong, There is Always an Opportunity to Change It”
Justin Franssen, partner at Kalff Katz & Franssen and session moderator, responded to questions regarding the likelihood of the online sector ending up with a 29% tax rate, by saying that in his opinion a tax rate of 29% on online gaming is both impracticable and unsustainable.
Dr. Jörg Hofmann, senior partner at Melchers law and former president of the IMGL, added that “If you see something wrong, there is always an opportunity to change it.”
“Tax Revenue before Player Protection”
Frank Tolboom, lawyer at Kalff Katz & Franssen, commented: “It has become clear that the recently proposed amendments put the generation of tax revenue before achieving consumer protection, as well as the previously stated player channelization objective. This is not just contradictory to the position of the Ministry advanced in previous years. It must also be noted that it is longstanding EU case-law that restrictions on the freedom to provide services cannot be justified on account of purely financial motives.”
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