Gambling products and lotteries have been present in the Netherlands for many years. In fact, one of the oldest lotteries in the world, the national state lottery, Staatsloterij, has been around since 1726.
The Netherlands has always been strict towards the gambling industry in order to protect all citizens. The gambling market of the Netherlands is mainly dominated by big national operators such as the Staatsloterij, Postcode Loterij, Lotto and Holland Casino. With the new gambling law, everything is about to change in the gambling industry. Holland Casino which is the biggest dominator in the industry and owns most of the casinos in the country is becoming a private company and online gambling is set to be legal.
With the world and technology changing and improving at rapid speed it is vital for the Netherlands to make a change. The online gambling industry has grown massively over the last couple of years and with players flocking to online sites, by implementing new gambling regulations the country can make millions in revenue from both Dutch and international casinos.
Netherlands Gaming Authority
An independent governing body known as the College van Toezicht op Kansspelen was founded in 1996 to regulate and control gambling in the Netherlands. Their main task was to enforce and ensure that licensees comply with the Dutch Gambling Law. The body was lifted and replaced with the Dutch Gambling Authority in April 2012.
The Dutch Gambling Authority is mainly focused on protecting Dutch players from all illegal and criminal forms of gambling and any possible false or misleading advertisements.
They also stand guard for the safety and reliability of gambling products and activities Netherland has on offer. The independent governing body goes to great length to prevent gambling addictions and protect minors and vulnerable citizens from exposure to gambling. One of its biggest functions is to put sanctions in place that will protect the players.
The build-up to legalisation
It seems that the biggest concern of the Netherlands governing body is to keep profits in-house. The Remote Gambling Bill was penned in 2014 but was only passed in the lower house court in 2016. It is yet to be approved by the state senate.
Many believe that the hold-up and prolonging of the legalisation is a strategic play from the government. Holland Casino basically has a state-granted monopoly on gambling in the Netherlands and provides the biggest income due to its 14 casinos operating in the Netherlands. The profits from the Holland Casino chain go directly to the Dutch Treasury. There have been speculations that the Dutch government is looking to sell the company which will mean that gambling will soon become a private sector. While the privatization of the gambling industry is not a main priority it has been on the list since early 2011.
Stricter laws for unlicensed and offshore casinos
The new Online Gambling Bill will impose stricter laws on unlicensed offshore casinos. These illegal operators targeting Dutch citizens will be heavily fined although players won’t be prosecuted. The new regulatory regime that arose in December 2016 states that wrongdoers will receive severe punishments from here on forth. According to the Kansspelaanbieders, those iGaming operators providing illegal gambling services to Dutch players will receive a hefty fine of up to €820,000. The amount of the fine will depend on the seriousness of their violation and the aim is to put a stop to any illegal gambling in the Netherlands.
Taxing online gambling winnings
In 2011, there was no taxing on casino winnings but there was some on lottery winnings. Casinos were expected to pay 40.85% tax on net gaming revenue. Lottery winnings of more than €454 will be taxed with 29%.
One of the biggest problems of the proposed Online Gambling Bill is the gaming taxes of 29% that will be added to the gross gaming revenue (GGR). This tax rate is extremely high and can be argued to be counterproductive seeing as the main aim of the bill is to channel all online gambling funds into the country and not out of it. The reason for the high tax rate is to protect the current monopoly operator, Holland Casino, from the possible competition. It is also considered reasonably fair seeing as it is the same tax that is levied on land-based casinos. Some good news is that the government plans to lower the tax rate by 3% over the course of the next three years.
The fall before the rise
It is quite possible that the high tax rates could potentially destroy the market before it has been completely established. Not only will the higher cost of the regulated market provide unlicensed and offshore operators with a price advantage, but it could alienate prospective customers. The reason for this being that the higher tax rate on operators will be passed on to players meaning there will be lower bonuses, benefits and higher costs involved in online gambling.
According to the German economic and legal research consultancy, Academicon, the tax level is most important and should carefully be considered as it has the potential to destroy the market. This was stated in a report, estimating the potential size of the Netherlands market, released in September 2014.
Legal online gambling
While the new Online Gambling Bill was finally passed by the Dutch Lower House in 2016, it might be quite some time to go before online gambling is completely legal in the Netherlands. The bill has gotten a lot of support in the country’s Lower House but it still needs to pass a Senate vote which will only happen once the senate reconvenes in autumn. However, with the pressure put on lawmakers from the European Commission, iGaming will likely become a regulated market in 2017.
According to the Netherlands Gaming Commission, operators could possibly wait until 2018 to obtain licenses to enter the regulated Dutch online market. Netherlands Gaming Authority spokesperson, Marja Appelman revealed that the opening date for the regulated market is set to be at the start of 2018.