Turmoil in the Dutch gambling market

Over the last few days, two unrelated but equally disruptive events have made waves in the Dutch gambling environment which could have notable repercussions in the near future and not only to the Netherlands gambling industry.

A Dutch court, the Overijssel District Court, ruling on cases dating from 2006 to 2021, has mandated two very well-known operators to reimburse approximately €400,000 to individuals for grey market bets.

The players argued that the companies operating without a licence in the Netherlands’ grey market prior to the April 2021 regulated market, violated Dutch law. By upholding this argument, the court declared the agreements between the parties null.

This decision, subject to appeal but immediately enforceable, signals potential for a number of similar claims across Europe where lawyers are bringing cases forward setting a trend of gambling businesses being ordered to return player losses for unlicensed betting activities.

Many operators have opted to abide by the court orders while others have decided to challenge the rulings. Operators active on European grey markets rely on the EU’s free movement of services rules as legal cover for their operations. In particular last year’s Malta’s Bill 55, which seeks to protect operators from legal liability resulting from their MGA-licensed activities.

Several regulators deem the law at least controversial, if not incompatible with European law. The European Commission has put the law under scrutiny and has requested more information from the Malta authorities. The Court of Justice of the European Union is the authority with the final word on disputes between national and supranational law. The second event was the approval at the Kamer of motions to ban online gambling advertising and implement a further ban on ‘high risk’ online casino games.

Both motions were put forward as part of the Kamer’s ongoing revision of the Remote Gambling Act (KOA Act), the legislative framework adopted in October 2021 to regulate the Netherlands’ online gambling marketplace.

The first vote saw the Kamer favour imposing a blanket ban on all gambling advertisements. This new ban is understood to prohibit all forms of online advertising, including all targeted ads. This follows the Netherlands’ untargeted advertising ban effective since the 1st of July 2023 resulting in the prohibition of mass-advertising on radio, television, outdoor locations and written media were prohibited. Sports sponsorships are also included in the ban. However, a transitionary period is currently in place for existing sponsorship agreements. The Kamer then voted in favour of the second motion “banning online games with a demonstrably high risk” particularly online slots as a vertical in which players have “no control over the outcome.”

Further motions were approved to “tighten KOA permit controls”, authorise the gambling authority, the Kansspelautoriteit (KSA), to use fake IDs as licence inspection tools and to display games of chance risk profiles for customers. Although approved by the Kamer, motions are not guaranteed and must be converted into administrative law and approved by the Senate to become effective.

Inevitably, if such bans come into force, there will be significantly negative consequences for the regulated industry. Including the impact on state revenue and a return of the unregulated market, as in Germany, where over-regulation has led a surge in traffic to black market operators and an estimated three-quarters of online revenue is generated by the black market, resulting in hundreds of millions of euros in annual tax revenue lost by the state.

Interested in a chat about how operators in the Netherlands manage to stay compliant with the applicable rules and regulations? Speak to Lawrence Marchese (lawrence@chevron.group), Mel McElhatton (melissa@chevron.group) and Thees Buschmann (thees@chevron.group) from Chevron Group. Follow us on LinkedIn for more industry related news.