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Minister orders Dutch regulator to shut down unlicensed operators during cooling-off period

Today, Minister for Legal Protection Sander Dekker informed the Dutch Lower House that he instructed the Netherlands Gambling Authority to ensure that unlicensed operators subject to the cooling-off period will gradually cease offering their services to Dutch consumers from the moment that the regulated online market opens on October 1.

Dekker's decision came as a major shock as his decision undermines one of the primary principles behind the previously declared cooling-off period. The new enforcement policy, however, will severely limit the competition faced by the first batch of Netherlands-licensed online operators, including the country's (previously) land-based incumbents.

Cooling-off period & player channelization The cooling-off period was originally devised in response to the so-called Motie Postema, in order to ensure that unlicensed operators who previously offered their services to Dutch consumers would have to refrain from “actively targeting” the Dutch market for a period of (eventually) up to 33 months before they would become eligible to apply for a Dutch remote license.

This motion was further developed into an officially published policy rule (specifically: art. 3.8 1c). Along with the original motion, this policy rule only prohibits the “active” targeting of Dutch consumers. Passive offers (i.e., games not offered on a .nl website, in the Dutch language, etc.) would not provide the regulator grounds to deny a remote license to an applicant otherwise deemed reliable.

The idea behind both the motion and the policy rule was twofold:

  1. To make it harder, for the time being, for these operators to acquire new customers from the Netherlands, which would provide newly licensed market entrants (such as the Dutch incumbents) with a level playing field.

  2. To ensure that existing customers could continue to play with an operator who (more likely than not) would eventually acquire a Dutch license – thus promoting long-term market channelization, as well as overall levels of player protection.

The new enforcement directive, however, explicitly abandons the second policy goal. In his letter, Minister Dekker warns that “initial channelization levels” could thus be lower than previously expected. A policy U-turn: Player protection takes backseat to incumbents’ economic interests The new enforcement policy thus fatally undermines at least one of the goals of the Parliament-approved cooling-off period. Moreover, the government hardly appears to be consistent in the implementation of its stated policies: while at one point, i.e., as late as March 2021, passive gambling offers were deemed acceptable, now they are not.

In his letter, Minister Dekker attempts to square this circle by claiming that while operators who offer their services passively continue to be entitled to apply for a license, they are not automatically protected against enforcement measures and sanctions.

Yet, if any such new enforcement measures jeopardize operators' future license applications, the cooling-off period, as previously defined, is now effectively without purpose.

In fact, the major beneficiaries of this new enforcement policy are operators who never previously targeted the Dutch online market, including, first and foremost, the country's land-based incumbents.

A (very) brief transition period?

Operators currently subject to the cooling-off period will be given a limited time to cease operations in the Netherlands, allowing existing customers to withdraw funds and switch to licensed alternatives. At present, no further details on the duration of this transition period have been announced.

It seems obvious, however, that – if the government's abrupt policy change is not challenged in court – unlicensed operators will only have a set period of time, from October 1 onwards, to wrap up their ongoing operations if they wish to remain eligible for a Dutch remote license in the future.

The only question mark at this point is the intended length of the transition period. It will be up to the Netherlands Gambling Authority to translate Dekker's enforcement directive into specific policies. Perhaps, as the Dutch saying goes, the soup is allowed to cool down before it gets eaten, but the current outlook for online operators currently active in the Netherlands is, to say the last, not good.

More information at next week's Gaming in Holland Conference

If you would like to learn more about the expected impact of the new enforcement directive, please consider joining us at next week's Gaming in Holland Conference, featuring a keynote speech by Netherlands Gambling Authority Chair René Jansen. See you September 28 in Amsterdam! Register today!

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