Danish land-based complaints will fail, predicts Danske Spil chief
Danish monopoly chairman believes 41% tax rate paid by Danish land-based operators will remain, while announcing restructure ahead of regulation in summer 2011.
The existing 41% taxation of land-based operators in Denmark will not be brought in line with the proposed online gaming levy of 20%, the chairman and chief executive of Danish monopoly Danske Spil has predicted.
“Never in the history of Denmark have we seen taxation lowered,” Hans Christian Madsen told eGaming Review earlier today, while also announcing that the monopoly has split into three separate divisions ahead of the proposed market opening next year.
On 15 December eGaming Review reported that the European Commission (EC) launched a formal investigation into whether Denmark’s proposed tax rate for egaming operators would give them an unfair competitive advantage over land-based casinos in the country.
Last month it was revealed that the market opening, originally scheduled for 1 January 2011, was unlikely to happen until next summer at the earliest given complaints lodged by the Danish land-based casinos and slot machine association, despite the claims of the Danish Taxation Minister that the dispute could be solved quickly.
“We don’t support their complaints,” Madsen added. “We think [taxation] should be different for land-based casinos. We want a well-balanced [form of taxation] and support the new proposed laws.”
The complaint by the Danish slot machine association and land-based casinos that the proposed online gaming tax rate of 20% on gross win compared to the 41% they pay amounts to unfair competition could take months to resolve, further delaying the opening beyond next summer, lawyers have said.
April Carr, senior associate in the EU & Competition Group at lawyers Olswang told eGaming Review earlier this month that while EU Member States have the discretion to implement taxes and tax rates within their territories; these are “subject to State aid rules which can apply if taxation levels are seen to give preferential treatment to certain commercial competitors”.
“The land-based operators are likely to argue that proposed tax rate for online gambling operators is a form of State aid, which is illegal if implemented without the Commission’s prior approval,” she said. “The likely outcome is that Denmark will not implement this tax rate, as part of the proposed gambling legislation reforms, until the Commission has dealt with the complaint and determined whether or not the tax rate is a form of State aid.”
Organisational restructure
Danske Spil has also split the business in three announcing a raft of senior appointments as part of its organisational restructure and in preparation for the country’s liberalisation of online gaming next summer.
Madsen told eGaming Review the strategic move was done ahead of new regulation that has been delayed until the middle of 2011 due largely to a tax dispute between existing land-based and prospective online operators.
Danske Spil’s three divisions will include a “liberalised market” division that will specifically focus on sports betting, poker and casino, a division that will concentrate purely on the monopoly market and include lottery, scratch games, horse racing and bingo, and a third that will focus on its 5,000 video lottery terminals (VLT) business. Madsen refused to reveal which service provider the company had entered into an agreement with to supply its casino and poker software.
“We have tried to use the time gaps [delays] in a positive way and adjusted the organisation to prepare it and train our staff ahead of the partial liberalisation of the gaming market in Denmark, which is expected to become reality in mid-2011,” Madsen said.
“The preparations have included, among other measures, the appointment of two managing directors of two newly established subsidiaries, which are going to offer games in both the liberalised and the monopoly market.”
The liberalised market company will be known as Danske Licens Spil with Jens Aaløse appointed as managing director, while the monopoly company will be known as Danske Lotteri Spil and will be headed up by Mette Dyhr.
Other appointments include Søren Kofoed Weeke as IT development director; Dennis Kilian as chief financial officer replacing Allan Wahlstrøm, who retired earlier this year; Lars K. Runov who has been promoted from manager of online at Danske Spil to become customer and sales director of Danske Licens Spil; and Nina Uldal, who has been promoted from manager of dealer sales at Danske Spil to become sales manager of Danske Lotteri Spil. Uldal will be acting managing director of the company until 1 January, on which date Dyhr will take up her new role.
The company added that in connection with restructure, the position of marketing director has been made redundant, and Klaus B. Lohse has chosen, “by mutual agreement, to seek new challenges outside Danske Spil”.