Dutch government delivers unlicensed market ultimatum

The Dutch government has ordered operators that are yet to apply for a licence to terminate all illegal gambling operations in the Netherlands by 1 October.

In a strongly worded letter of instruction to the Dutch Gambling Authority (KSA), Minister of Justice and Security Sander Dekker took aim at so-called “cowboy” illegal operators and ordered the regulator to intensify its enforcement activities.

“Illegal providers that actively and specifically target the Dutch market, and whom I referred to earlier as ‘cowboys’, must continue to be tackled in full and with priority, including through strict enforcement,” Dekker wrote.

“Providers that do not actively target the Dutch market without a licence but do serve Dutch players must also discontinue the illegal offer pursuant to the Games of Chance Act (Wok),” Dekker added.

Adopting a hardline approach, Dekker outlined his aim of stimulating channelisation to licensed Dutch operators when the market finally goes live on 1 October and denying large scale illegal gambling in future.

“The importance of a sufficiently attractive offer for channelling is paramount to me,” Dekker explained.

A recent report by the KSA suggested the country would achieve the government’s 80% channelisation target, although the regulator suggested there was still “more to do” to achieve this goal.

Dekker wrote: “I realise the legal offer may not yet be equally attractive to every player at the start of the market and that this may initially have an effect on the desired channelling.

“At the same time, I expect the intensification of enforcement after market opening to serve as a catalyst for accelerated use of legal supply and broad compliance in the near term,” the minister added.

At present, Dutch licensing for online gambling is subject to a “cooling-off period”, in which operators previously sanctioned by the KSA for unlicensed gambling are prevented from applying for a licence until their cooling-off period has expired.

Initially, this period was set at two years, but now stands at approximately two years eight months due to the delay in launching the legal market.

Any operator found to be actively targeting Dutch players risked being denied a licence, but with this latest instruction, the cooling-off period is effectively replaced with an ultimatum to cease all illegal operations with immediate effect.

Critics have suggested this will effectively result in the creation of a two-tier market, with those whiter-than-white licensed operators grabbing the lion’s share of players and revenue ahead of their previously sanctioned counterparts, which may have to wait for a licence to operate in the legal market.

Just 35 licences are expected to be issued by the KSA when the market goes live in October despite more than 100 operators registering interest.

Discussing the Dutch government’s latest stance on unlicensed operators, GLG Litigation attorney Bas Jongmans told EGR the enforcement tactics would be difficult to implement for the KSA.

“What is going to be the penalty if you keep targeting the Dutch market [illegally]?” asked Jongmans.

“You’re already in this cooling-off period so you’re not allowed to apply for a licence, even if you would like to abide by the regulations.

“If you continue targeting the Dutch market, the chances you get fined are slim,” he suggested.

Jongmans said the maximum enforceable penalty at present is €870,000, although he has rarely seen a punishment exceed the €500,000 mark.

“Although this amount may still seem substantial, it is hardly proportional to the vast profits to be earned from targeting the market without a licence. Keep in mind that profits shall substantially increase as the illegal market shall also not be paying the +30% gaming tax,” he added.

“Why would you stop targeting an illegal market when the maximum a government can do is fine you an amount of money which is a tiny fraction of the money you are going to lose if you stop targeting it altogether?

“It doesn’t make any sense. You’re basically inviting people to keep doing it,” Jongmans added.