On Friday February 1, the fifteenth edition of the Annual Gaming Industry Event, organized as always by gaming lawyer Justin Franssen and his team at Kalff Katz & Franssen and co-hosted with the International Masters of Gaming Law (IMGL), took place at the Koninklijke Industrieele Groote Club in Amsterdam.

Attempts to regulate online gambling in the Netherlands have moved at a snail’s pace. The first proposals that formed the basis of the current Remote Gaming Bill were published in March 2011, almost exactly eight years ago. “Not much” happened in all the intervening years, host Justin Franssen observed with justified exasperation, while bemoaning the striking lack of decisiveness exhibited by Dutch politicians.

However, the end of the road looks to be in sight, as the Dutch Senate will finally debate both the Remote Gaming Bill and Casino Reform Bill later this week on Tuesday February 5, with a final vote expected during the subsequent on February 12.

The 2019 edition of the Annual Gaming Industry Event thus offered a final opportunity to look ahead as the moment of truth for gambling modernization in the Netherlands approaches.

New KSA chairman makes first public appearance

The new Executive Chairman of the Netherlands Gambling Authority (KSA), René Jansen, made his first public appearance the Annual Gaming Industry Event. As could be expected, considering the controversial nature of the issue of gambling reform and the close timing of the upcoming Senate debate, Jansen mostly limited himself to making a number of fairly generic remarks. (His full speech is available here.)

Jansen stressed the importance of cooperation and mutual trust between operators and the Gambling Authority, adding, however, that “without a watchful eye, the market may spin out control.”

On a more positive note, Jansen also promised that oversight would be based on risk analysis rather than being applied indiscriminately.

The only nugget of somewhat more substantial news was that – provided the Senate adopts the Remote Gaming Bill – a public consultation on the regulator’s licensing process for online operators can be expected to open before the summer.

Lessons from Spain

The other speaker at the Annual Gaming Industry Event, Juan Espinosa García, Director General of Spanish regulator DGOJ, offered a number of important insights derived from the successful regulation of the Spanish online market.

Between 2013 and 2018, the Spanish online market tripled in size as player channeling rates (i.e. the percentage of players “channeled” toward licensed operators) increased to 82%, while problem gambling rates remained constant at a low 0.3% of the adult population.

According to Espinosa, an important factor in the successful regulation of the Spanish online market was the controversial decision to forego bad actor clauses and blackout periods for unlicensed operators who had been previously active in the Spanish online market.

Previously unlicensed operators were also allowed to make use of the player databases they had built up in earlier years. While perhaps not entirely fair from an economic perspective, this decision, in hindsight, contributed immensely to a relatively high player channeling rate, Espinosa said.

A second controversial issue was the DGOJ’s decision to advise the Spanish government to lower its most common tax gambling rate from 25% of GGR to 20% of GGR – a change that came into effect in July 2018.

Games that had been effectively taxed at over 30% of GGR almost completely disappeared from the licensed market, the DGOJ observed, further supporting the observation that high tax rates have a negative impact on player channeling rates.

While it is common for operators and industry associations to claim that bad actor clauses and gambling tax rates higher than 20% of GGR will have an adverse effect on player channeling, it is not yet an everyday occurrence for regulators to wholeheartedly support these contentions.

Hopefully, other regulators, as well as their political masters, will take note.