Denmark faces further delays as EC weighs up tax dispute
Land-based gaming interests' challenge to tax rates could delay Danish opening beyond next summer, eGR understands.
Operators are in the dark over when the Danish market will open after it emerged the European Commission (EC) could take months to consider complaints by the Danish slot machine association and land-based casinos over proposed tax rates.
The Danish taxation minister told operators last month that the government was aiming for the law to come into force “before next summer” instead of the originally planned date of 1 January, but that he was confident the complaint could be solved quickly as the tax rates were in accordance with EU law.
eGaming Review, however, now understands that 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.
According to April Carr, senior associate in the EU & Competition Group at lawyers Olswang: “It is difficult to estimate how long the Commission will take to deal with this complaint because there is no applicable deadline. It could well take a matter of months if the Commission takes the allegations seriously.”
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.
Carr explained: “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. 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.”
Pontus Lindwall, chief executive of Betsson, said that although it was obvious “the legislative process in Denmark has run into some kind of problems in EU-related matters”, the company had “huge respect for the complexity in the task of creating national legislation which is in harmony with EU-law.”
Lindwall added: “We believe Denmark is doing the right thing as they seem to be trying to get all the bits and pieces together from the start. I hope the legislator also looks into the possibility of reforming gaming law in the cases of bingo and Lotto which would probably further take away risk [of delays] in the new gaming legislation.”
Thomas Petersen, chief operating officer of Bet24, said that although the company saw the delay as inevitable, given “the land based slot machine and casino operators had to lodge this complaint”, and that online operators could not get official information on how to apply for licences, Bet24 had hoped to have “a new date to aim for instead of the current statement of ‘hopefully before next summer'”.
Petersen, however, concurred with Lindwall’s view that it was important Danish authorities had sustainable legislation in place from the start of the market. “Unfortunately, such complaints could take a long time for the EU to consider, so I understand why the minister is not willing to announce a new deadline, which he might have to postpone again. It is of course also in the new licensees’, the Danish Gaming Authority and Danish consumers’ best interest that the new gaming legislation is fully approved by the EU from day one.”
Betsson is also known to have lodged a complaint over the proposed “black period”, requiring all applicant operators under the new legislation to cease all activity in the market until approved. The Danish authorities have yet to comment on this aspect of the legislation, eGR understands.