Dutch remote gaming: major hurdle cleared

Licensed iGaming in the Netherlands moved one step closer on 7 July when the lower house of the Dutch parliament passed the remote gaming bill. Alan Littler of Kalff Katz & Franssen Attorneys at Law looks at what was left in and out of the bill after the lower house debated a raft of proposed amendments and motions.

The introduction of a licensing regime for remote gaming in the Netherlands has taken a major step forwards, after years of coughing and spluttering along.

This article briefly overviews the developments which very nearly did not take place during the early days of July 2016 and looks ahead to what can be expected during the next 12 months. Currently, the prognosis is that the licensing of remote gaming will commence on 1 July, 2017.

A remote gaming bill to amend existing primary legislation (Wet op de kansspelen 1964) was initially published for consultation in May 2013, and an amended version thereof submitted to the Lower House of parliament (Tweede Kamer) in July 2014.

After several rounds of written proceedings between the competent parliamentary committee and the Ministry of Security & Justice, it became increasingly evident that the plenary debate would take place after Easter 2016.

It was key that it should take place before the summer recess starting on 8 July, 2016 for, with a general election scheduled in March 2017, the likelihood of the bill otherwise being kicked into the long grass was high.

For a time, it was becoming an all-too-familiar occurrence to see the bill vanish from the upcoming week’s parliamentary schedule, as summer crept closer. Fortunately there was a push to get the bill through and avoid this parliament’s sluggish efforts succumbing to pre-election disruptions.

The plenary debate
The plenary debate took place in two stages. 23 June, 2016 saw the first stage, in which the various parliamentary parties were able to express their views and question the State Secretary of Security & Justice.

The debate continued a week later on 30 June, 2016, with responses from the State Secretary, along with further questioning. A few amendments to the bill had been proposed, but these, along with motions, picked up in number ahead of the full Lower House voting on the bill.

5 July saw the Lower House vote on the amendments and motions and, in the parliamentary last chance saloon, the bill was passed on 7 July.

Whilst it was expected that some amendments would be adopted, there were also successful and unsuccessful latecomers to the race. The same can be said for parliamentary motions, of which there was a flurry in the closing days. 

A motion does not change the text of the bill, but merely calls upon the government to take action. Nevertheless, government cannot simply ignore the voice of parliament, and should it decide not to follow a motion, it must give its reasons.

During the debates, some voices attempted to garner support for substantial changes to the bill, and changes that would have necessitated the government making several U-turns.

Fortunately, such calls for a cap on the number of licences available and the need for licence holders to be established in the Netherlands fell on deaf ears.

Similarly, amendments were suggested which would have slowed down the pace of legislative reform through promoting the idea that the tabled amendments and the (to be) amended bill would once again be submitted to the Council of State (Raad van State) for review.

In addition, a handful of amendments calling for various pieces of secondary legislation to be submitted to parliament were likewise unsuccessful. This would have threatened to slow down the adoption of the legislative regime, and at the very least, rendered regulation less flexible for reform in the future.

Parliament approves higher tax
One of the earliest amendments to be submitted was that introduced in January 2016 calling for remote gaming to be taxed at 29% GGR, instead of 20% as proposed, so as to put it on a par with the prevailing land-based rate.

Despite the protestations of the government on this point, in particular because such a rate will undermine goals set in terms of capturing the market with offers licensed in The Hague, parliament favoured hiking up the tax rate.

Advertising, marketing and sponsorship
Many proposed amendments related to the advertising of remote gambling, with the amendment calling for a prohibition on gambling on public television broadcasters being successful.

However, those calling for gambling advertising to be regulated in a manner comparable to the advertising of alcohol and, in another amendment, for the watershed for
television based advertising to be brought forward from 9pm to 6pm, were unsuccessful.

In terms of advertising-related motions, those calling for the prohibition of advertising live-betting and for online advertising to be subject to a time slot (along the lines of TV based advertising) passed parliament’s muster.

Although bonuses proved a contentious point during debate the motion calling for the prohibition thereof failed to attract sufficient votes.

One particular amendment seeks to tie the hands of incumbent operators when marketing their new remote gaming services, as it prevents licence holders using customer databases to advertise remote gaming services when customer details have been collected pursuant to another form of gaming under the 1964 Act.

According to the explanatory memorandum the raison d’être behind the measure is consumer protection. It explains that a lottery operator will be prevented from marketing its remote gaming products to existing lottery customers because remote products are far more addictive than lottery products.

That said, this will not prevent incumbent operators from advertising their new products in a more generic manner but relates to the use of customer databases accrued under the current version of the primary legislation.

Alongside advertising, amendments and motions were introduced with regards to sports sponsorship. One particular amendment sought to prohibit licensed operators from taking bets on the outcome of a competition involving a sports club, team or one or more individuals when the operator is the sponsor of the club, team or individual(s) in question.

This amendment failed to gain sufficient support, in contrast to a motion calling for a prohibition on the sponsorship of individual sportsmen and women by gambling operators to be included in secondary legislation.

Continuing the sport related theme, one amendment will require sports-betting licence holders to report suspicious betting patterns to the Gaming Authority (Kansspelautoriteit) in a manner inspired by the Sports Betting Intelligence Unit in the UK.

No ISP blocking
Interestingly, in terms of enforcement, the Gaming Authority will not have the power to seek the blocking or filtering of internet traffic as a means to hinder access to a locally unlicensed website.

As tabled by the government, the remote gaming bill contains such a proposal but this met with stiff opposition in parliament. Not only because of the questionable effectiveness of such approaches in practice , but also because of the threat it would pose to the functioning of the internet overall.

As indicated, a point which came in for much criticism was the absence of secondary legislation. Not only did the MPs have to consider the bill with reduced visibility, the situation still prevails for all corners of the sector.

This should change come September/October this year when it is expected that the Ministry will publish draft texts for public consultation. In early October the Upper House of parliament (Eerste Kamer) will start its consideration of the bill which, in essence, will result in the bill being accepted or rejected.

It should not be forgotten that the Gaming Authority has previously indicated that it also intends to run a consultation procedure in relation to the remote gaming licensing process. Whilst recently there has been no fresh news on this front, the consultation will at least provide an indication as to the direction the Gaming Authority is thinking of in terms of the licensing process.

Next steps
In contrast to the narrow majority which the cabinet enjoys in the Lower House, the same cannot be said for the Upper House. That said, should the various parliamentary fractions in the Upper House remain loyal to the position of their counterparts in the Lower House, then the bill should pass.

In line with what constitutes usual practice it is expected that the bill will enter into law on 1 January or 1 July, 2017. Currently it is anticipated that the starting gate for remote gaming licensing will open on 1 July, 2017; this being in light of previous indications by the Gaming Authority.

Dr Alan Littler is a gaming lawyer at Kalff Katz & Franssen Attorneys at Law in Amsterdam, where he works in the Gaming Practice.