Dutch Online Gambling Bill Beginning to Move

It appears that a bill which would legalize online gambling in the Netherlands has been gaining support and may very well become law soon, according to numerous reports. Originally introduced two years ago, the bill was finally debated by the Dutch Lower House last week. That debate is set to continue today, June 30th, with a likely vote next week.

According to GaminginHolland.com, the bill should pass the Lower House because it has the support of the majority coalition. The bigger question is whether or not it can pass muster in the Senate, as the two coalition parties – the People’s Party for Freedom and Democracy (VVD) and the Labour Party (PvdA) – only account for 22 of the 75 total votes when 38 are needed for the bill to succeed.

GaminginHolland did report, though, that the opposition parties – Democrats 66 (D66) and Party for Freedom (PVV) – agree with the bill “in principle” and will likely give their support, even if they are not as gung-ho about it as the VVD and PvdA. Thus, if all of them vote in the affirmative, there is a good chance that their counterparts in the Senate will, as well.

Currently, Dutch law considers online gambling illegal, but unlike in the United States, where most online operators have withdrawn from the market despite online gambling, particularly poker, landing in a legal grey area in most jurisdictions, online operators have continued to accept Dutch customers without much trouble.

Operators have had to tread lightly in the Netherlands, though. In February, the Netherlands Gaming Authority (Kansspelautoriteit), issued updated guidelines for gambling advertising, warning that it was only permissible for licensed gambling operators to market their services in the country. Currently, Holland Casino has a legal monopoly on land-based gambling in the Netherlands, with more than a dozen venues. Online sports betting is also available, with De Lotto licensed by the government to operate sportsbooks and Scientific Games Racing to operate horse racing sites. Aside from those companies, though, nobody else is licensed to offer gambling, land-based or online, in the Netherlands.

That said, online poker rooms and other gambling sites still accept Dutch customers. They just have to be careful not to advertise to them. Essentially, the customers have to find the sites. Sites are not permitted to “actively promote players’ participation in games of chance” nor can ancillary or even unrelated companies issue things like press releases touting sponsorship deals or marketing partnerships. It’s like the first rule of Fight Club: “You do not talk about Fight Club.”

Thus, online poker operators have avoided advertising to the Dutch directly. The Kansspelautoriteit is said to not have much in the way of teeth, which is why poker sites continue to take customers from the Netherlands and the Dutch keep playing, but operators have kept an arms-length distance because of one big reason: future licensing. Similar to how PokerStars has been getting out of grey markets in an effort to keep its image squeaky clean for regulators in the United States, online gaming operators have been willing to avoid advertising in the Netherlands so that they don’t already have a black mark against them when they apply for a license if and when online gambling becomes legalized.

Back to the bill, one of the reasons it has taken so long to get to this point even though it was introduced two years ago is that Dutch legislators have submitted over 500 questions on it, all of which needed to be addressed in some form or another. Nearly 30 amendments have already been proposed, as well.

One of the amendments that has caused the most consternation has to do with the gaming tax rate. One proposal was to have separate tax rates for online and land-based operators (presumably a higher rate for internet operators), but that didn’t happen. The plan that will likely be approved is a flat 29 percent (yes, that high) on gross gaming revenue. It is supported by the majority parties. Online operators are not thrilled with this, though, and not just because it a lofty rate. As GaminginHolland succinctly tells it:

But remote operators have criticised a lower tax rate which currently applies to lotteries, which will also be allowed to enter the online market when the new reforms enter in force.

Lottery operators are paying effectively 8 to 10 percent on lottery revenue and the differential tax appears set to continue. In Portugal, where the online gambling market was opened in June last year, a differential tax system has prompted online firms to file a state aid case with the European Commission.

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