The Council of State, the Netherlands’ highest administrative court, has ordered the Netherlands Gaming Authority to revisit its earlier decision to grant only a single numbers lottery (lotto) license, while such a restriction does not apply to operators of (largely similar) charity lotteries.
The Council of State’s ruling means that current license holder Lotto BV may lose its numbers lottery monopoly.
Sports betting and instant lotteries
The Council of State also ruled on the sports betting (horseracing excluded) and instant lottery monopolies currently enjoyed by De Lotto.
In these cases, the granting of sole licenses can be justified, the Council of State found, in order to further the permissible interests of the prevention of problem gambling, consumer protection, and countering crime.
In a further blow to Betfair, Betclic, Unibet, and the European Gaming and Betting Association (EGBA), the parties that originally objected to De Lotto’s gambling monopolies, the Council of State also ruled that the Netherlands Gaming Authority was justified in granting the sports betting and instant lottery licenses directly and non-transparently to current license holder De Lotto.
As the Ministry of Justice and Security appoints two members to De Lotto’s supervisory board, who are able to influence and carry out checks on the operators’ policy, it is permissible under EU law to exclude other candidates from its licensing process, the Council of State found.
Niels Onkenhout, CEO of Nederlandse Loterij (which owns the Lotto brand, as well as the sole Dutch sports betting and instant lottery licenses) largely welcomed the ruling of the Council of State:
We have taken notice of the ruling of the Council of State regarding our licenses and note that the sole-license system can continue to exist. This was explicitly confirmed by the Council of State with regard to both sports betting and scratch cards. The Netherlands Gaming Authority will have to substantiate this further with regard to our numbers lottery license. We are confident that the regulator will succeed in this.
As an aside, we naturally find it undesirable that foreign parties (often unlicensed online operators) attempt to bring about changes in Dutch gambling regulations through an ongoing series of legal procedures.
Having said this, the current Gambling Act (1964) is in urgent need of modernization. At this point, the most important step that needs to be taken is the quick enactment of the Remote Gaming Bill, which has been stalled in the Senate for over a year. The Netherlands is the last EU country where remote gaming has not yet been regulated.
At present, between 300,000 and 500,000 inhabitants of the Netherlands gamble online with unlicensed operators, spending an estimated €500m annually. These consumers are currently not being protected in accordance with Dutch regulations. No gambling taxes on online games of chance are being collected. In contrast to Nederlandse Loterij, Holland Casino, and licensed charity lotteries, the revenues being generated by unlicensed online operators in no way benefit Dutch civil society.
The political process needs to start moving!
Other industry reactions
Frank Tolboom, gaming lawyer at Kalff Katz & Franssen, offered the following comment on the Council of State's ruling:
The Council of State clearly stressed today that the overall regulatory regime should satisfy the requirements of the fundamental EU legal principle of horizontal consistency. As there are hardly any differences between lotto games and charity lotteries, it is evidently difficult for the KSA to justify that a monopoly should apply to lotto games whilst charity lotteries are subject to an open licensing model.
In terms of sports betting, it is disappointing that the Council of State has refrained from taking into account the forthcoming opening of the remote sports betting market (the contested decisions were issued before the bill passed the Lower House). Otherwise, it would equally be very difficult for the KSA to justify why a monopoly should apply to the offline sports betting market and an open licensing model will in the future apply to the remote sports betting market.
Delays in the legislative process result in fragmentation and inconsistencies in the overall regulatory regime. Hence, it is important that the pending regulatory reforms will be adopted as soon as possible.
Secretary General Maarten Haijer of the European Gaming and Betting Association (EGBA) said that "today's ruling [...] underlines the need for the modernization of Dutch gambling laws and the regulation of the online gambling market, which is unaffected by the Councils' ruling." EGBA's full press release is available here.
Sanne Muijser, General Secretary of trade association VAN, concurred: "The ruling indicates that a full modernization of Dutch gaming policy is urgently needed. Despite today's ruling, there is still no certainty for operators."
Former Lotto CEO Tjeerd Veenstra remarked that the verdict reached by the Council of State could have a major impact on De Lotto. Veenstra also said that since the Council of State left intact the possibilities of sole licenses, the Remote Gaming Bill, which allows for an unlimited number of sports betting and casino licenses, might have to be reconsidered.
Decisions of the Council of State can only be appealed at the Court of Justice of the European Union (CJEU).