Saturday, February 1, 2014

By Joep Dahmen

He was furious. Andre Bolhuis, head of the sports association NOC* NSF just could not believe how the government mistreated his beloved sport. He said, that if the government plans go ahead, the sport will find it very difficult , and sport organizations may need to increase their contributions by a factor of four, five or six times in order to survive. Former Wimbledon champion Richard Krajicek shared his concerns. Kraijicek said in aspecially for this purpose prepared You Tube video. There is a government draft which proposes to seriously threaten”the contributions to sports, cultural affairs and other charities”.

It all happened in September last year at the time of the sporting opening of the parliamentary year in Binnenhof [where parliament is in session] Even then this was not the umpteenth lobby against the umpteenth cost cutting measures. The state secretary Fred Teeven (Justice, VVD) was the target of criticism from Bolhuis, Krajicek and other sports representatives. He had published a few months earlier a draft bill which had nothing to do with cuts, but never the less worked like a red flag for the sports lobby. And not only for sports. Many representatives for charities in the Netherlands – sports, culture, nature, social projects – were angry or critical. The fierce lobbying battle which erupted, will reach a new height this month.The offending draft bill aims to legalize gambling on the Internet. The present still somewhat murky world of online poker, blackjack, roulette and other games of chance with – based on rough estimates – some 800,000 participants, are to be removed from their illegal status. This was agreed by the Rutte-cabinet in the coalition agreement of 2012. Government wants to get a better grip on fraud and money laundering in the financial sector and at the same time prevent addiction to gambling. Estimates for the total number of actual addicts and players (at risk of becoming addicted), comes to around 115,000.

The subject will be tabled in the Council of Ministers in two weeks time. The draft bill by van Teeven, will impact large vested interests. This applies in particular to the three so-called Charity Lotteries (the National Post Code Lottery, the Bank Giro Lottery, and the Friends Lottery) as well as hundreds of organizations. They receive annually some 400 million euros from the lottery jackpot pool. Thus the Richard Krajicek Foundation for sporting activities in disadvantaged areas will receive about 3000 per year from the Friends Lottery.

Both the lotteries and charities claim to be affected by the draft bill. The lotteries fear that they will soon loose many clients and also income to foreign Internet giants like Betfair, Unibet, Bwin and Pokerstars. They have already built up a dominant position on the Internet and have ample funds at their disposal from major cash hoards. According to the draft bill from van Teeven, they are not obliged to contribute to charities, while the Secretary of State reserves the right to enforce this. The Charity Lotteries must contribute at least fifty percent of their takings to social organizations. Due to this disparity Online providers with much higher money prizes can out-compete the traditional Charity Lotteries, which is what the latter fear will happen.

A network of former politicians

Both for an behind the scene, the lotteries are doing everything in order to protect their position. In addition there is a wide network of advocates at their service, not only Bolhuis and Krajick. Among them are the necessary former politicians. So the former chairman of the chamber of deputies, Gerdi Verbeet (PvdA) is Chairman of the Supervisory Board of Novamedia, the company behind the Charitable Lotteries.

The former State Secretary Ben Knapen (CDA and former editor of NRC Handelsblad) is the manager of the Novamedia Foundation, the largest shareholder in Novamedia. Also Alexader Rinnooy (D66), a former SER chairman, is active as well as chairman for the Platform for Charity Organizations. Former Minister Cees Veerman (CDA), former Secretary of State Pieter van Geel (CDA), and former member of the chamber of deputies Laetitita Griffith (VVD) are commissioners of the National Lotteries Holding NV. Former Commissioner for the EEC and Social Democrat Margot Wallstrom is connected to the Swedish branch of the Charity Lotteries.

The entanglement between politicians and lotteries is explained by insiders for the reason why Secretary of State Teeven has been entrusted with the gambling dossier. Previously the task was handled by the Ministers of Justice – Donner and Hirsch Ballin. The current Minister Ivo Opstelten (VVD) was previous to becoming a Minister, the President and commissioner for the National Charity Lotteries, a position where he succeeded former VVD Minister Pieter Winsemius.

The lottery lobby considers the conflict of interest as a contest between good against evil: the public interest of charities versus the commercial interests from dark foreign forces who enter the Netherlands via the Internet. Read, for example, what the Postcode Lottery and other Lotteries wrote last summer in response to the proposal. They warned against”cowboys and poker peasants”in the gaming market, which operate from questionable locations such as the Channel Islands.

The Lottery Promotions Foundation for Public Health (SLV), funded by the Charity Lotteries, foresaw”major negative consequences as the International Gaming companies have no connection with Dutch Charities; they will use any means, including an exponential increase in advertising, to increase revenue and ultimately increase their own profits.”

The reaction of the ‘cowboys and poker peasants’ to this draft bill was, that enterprises such as Pokerstars, Betfair, Bwin and Unibet are subject to the supervision of numerous authorities abroad. One of their representatives in the Netherlands, former VVD politician Robin Linschoten, arranged for working visits for top civil servants from the Ministry of Justice to Malta, where a lot of providers operate. Linschoten said that the civil servants could observe first-hand how professional the supervision was handled there.

Another lobbyist, former D66 member of the chamber Bert Bakker, disseminated in the media the, in his view, sobering figures. The feared reduction in income would be manageable. Abroad, as well as in England and Sweden the income after imposition of the regulations for the on line market had in fact gone up?”By regulating, more providers and lottery models come to the market”Bakker, employed by the lobbying office of Meines Holla & Partners, explains.”The pie will become bigger for everyone. There will be more income and therefore more contributions to Charities.”

But to win the public relations battle the newcomers needed more: for instance more social respectability. Linschoten and other lobbyists for on-line providers repeatedly emphasized in interviews the charities this industry has in the past supported. They range from sponsoring a football team in Spain and emergency relief to earthquake-stricken Haiti in 2010 , to the payment for new boats for the Royal Dutch Rescue Organization. Among the online providers the idea has been considered to launch a alternative Good Money Gala. This would compete with the current annual festive events organized by Charity Lotteries.

A welcome Public Relation news item for the online providers was, that tennis star Rafael Nadal would provide televison advertising from 2012 for Pokerstars. There are more sport stars who are doing this. Former hockey international Fatima Moreira del Mello was for the past five years part of the Team Pokerstars Sports Pro.

Behind the PR battle a tough political fight is going on between both lobbies. Simply put, this involves Brussels versus the Hague. Newcomers refer to judgements of the European Court and the European Commission in 2010, that permits for lotteries should be issued in a much more transparent manner.”Since that time the monopolies for Lotto and other lotteries are in an uncertain state”, was how the lawyer Justin Franssen expressed it. He was successful for the online gaming operator litigation of Betfair before the European Court and the Council of State.

Equally important for the lobbying battle was the arrival of an adult supervisor in 2012. The Gaming Authority, the regulator, began to actively promote better monitoring of, among others, the lotteries. This was noticed by the directors of the lotteries and Novamedia.

A real money machine

The main man behind the Charity Lotteries, Boudewijn Poelmann, has earned a lot of respect and admiration since the nineties. The lotteries which he helped to design, developed into real money machines for social organizations: 5.5 billion Euro since 1989. In addition there was also a significant revenue stream to Poelmanns company Novamedia.

In December 2012 the Gaming Authority started asking questions. Was the compensation which the Novamedia directors received for the work on the Lotteries, ‘reasonable’? The results from the investigation are expected sooThe interest of the Gaming Authority is in the private income of the Gaming Lotteries, and increasingly stresses the public interest they are to serve, which is helpful to the lobbyists for online gambling. Robin Linschoten can well imagine the interest in private income by Poelmann and other Novamedia directors.”Poelmann is an extraordinarily successful entrepreneur”Linschoten said,”who very much likes to earn a lot of money for his company. There is nothing wrong with that, but he should be open about that.”

There were more developments which the competitors of the Charity Lotteries followed with great interest. A foreign subsidiary of Novamedia was doing things which were formally illegal. In order to prepare for the inevitable advent of the online market, the British outpost of Novamedia was experimenting with online games. The web site of People’s Postcode Lottery offers bingo games and games which very much resemble blackjack (Postcode Scratch), a legal activity in the United Kingdom. However, Dutch people from the Netherlands could participate. And that was illegal. The players received encouragement, in the form of emails in the Dutch language and could make payment through a Dutch banking service (Ideal). This was, according to Novamedia, part of the standard software from the foreign supplier, which Novamedia claimed not to have asked for.

The existing Dutch law on gambling prohibits this type of activity from abroad. In addition the sending of emails in the Dutch language according to the Gaming Authority (but not by Novamedia) is against the rules under which the regulator operates in transition to the new legislation.”We will, however, not take any action”, is what to the spokesperson of the Gaming Authority, informed us,”because the ability to join the play from the Netherlands has in the meantime been stopped.”This happened in the middle of January, shortly after the ‘leak’ was discovered by an outsider.

The advocates for the charities may be defensive, however, this does not mean that the ‘cowboys’ have already won. In cabinet a hard fight has started about the legalization, according to sources in the Hague. The Ministers Schippers (Health and Sport, VVD) and Liliane Ploumen (Development, PvdA) are pursuing Teeven. They demand guarantees for the income of ‘their’ sectors, for example the estimated 30 million Euro in an additional gaming tax to be added after the online providers join.

The outcome of this battle is uncertain. Maybe the online businesses end up with legislation to deal with additional requirements: Possibly a higher charge for social contributions than the currently agreed 20 percent tax. Another possibility is that the Charity Lotteries manage to arrange a transition period before the market is opened.

Perhaps the Prime Minister Mark Rutte will lift a corner of the veil. He will be the Guest of Honor on Tuesday, together with the South African Bishop Desmond Tutu at the Good Money Gala of Lotteries.

Foto: Flickr