Holds a LL.M. in European Community Law from Dutch Leiden Uni-versity, and has been awarded his PhD from Tilburg University for research on the regulation of gambling and EU law. Alan writes for International Comparative Legal Guide – Gambling, has co-authored the chapter about the Netherlands in Thomson Reuter’s Law Gaming Global Guide and regulatory contributes to Ga-ming in Holland webinars and events. He also co-authored the EU study on enforcement in online gambling in 2018.
Presides the Portuguese Online Betting and Gambling Association APAJO for the fourth year. He co-founded and led as CEO the Portuguese licensed platform bet.pt, and he has successfully led the local industry through the deep waters of the pandemic in 2020. Gabino was member of the Board of Global Media where he was responsible for the digital business. In addition, he also founded the business angels venture Rising Ventures which focuses on investments in start-up tech companies.
Alan Littler, gaming lawyer and gambling expert, speaks with Gabino Oliveira, President of APAJO. Its SecGen, Anne-Marie Furtschegger, moderates the conversation.
Anne-Marie: Alan, after ten years of regulation, the Dutch regulator opens the application process by the beginning of April. Why did this last ten years?
Alan: Attempts to regulate remote gambling in the Netherlands have a long and difficult history. A bill to give the land-based casino monopolist, Holland Casino, a remote monopoly was rejected in 2008.
1 April 2021 will see the Remote Gambling Act (Wet kansspelen op afstand) finally enter into force, and the Gambling Authority (Kansspelautoriteit) will be able to commence with reviewing license applications. This is a full nine years after the authority came into being, and seven years the bill first saw the light of day. It was approved in July 2016, and only in February 2019 was it approved by the Senate. Whilst progress with the gambling dossier stalled with cabinets falling, strong opposition to regulating remote gambling has prevailed from some political quarters.
Every attempt was used to initiate written proceedings and table questions to a far greater extent than other legislative reforms.
Even once the primary legislation was through, energies were focused on the secondary legislation. And the land-based incumbents have been highly sceptical of the changes.
Gabino: Well, that explains of course a lot. Political turmoil seems to be a welcome partner of delay. In Portugal, we were lucky that more or less with one government of the at the time centre/right wing parties PSD and CDS/PP, the regulation could be completed although it was pushed under a socialist reign. The then Secretary of State for Sports, Laurentino Dias, from the PS announced a regulation for the first time in February 2010, and finally, in summer 2015, the law was adopted under the PSD - CDS/PP government. In the end, however, first licenses were granted only a year later; so we also needed a couple of years to get it done.
Anne-Marie: Alan, when I look at the last ten years, what is unique with Holland is that ahead of a regulation and an opening, the Dutch already kind of imposed restrictions on operators via the so called priority criteria, although against EU legislation. How can you explain that?
Alan: There were several things going on here. The lack of a transparent licensing process for the land-based sports-betting license was deemed to be in breach of EU law, but not the general prohibition on unlicensed games of chance as such. The Gambling Authority became operational in April 2012 and prioritized its enforcement efforts against those operators who were targeting the Netherlands (by using the Dutch language, .nl URLs and engaging in advertising targeting the Netherlands). Back when these criteria were introduced, the idea was that they would only be applicable during a relatively short transitional period, until a fully-fledged regulatory regime was introduced.
Unfortunately, for the reasons already given, this did not happen as quickly as was foreseen. These criteria were expanded in 2017, with one of the new elements effectively being the use of the payment method iDEAL, whilst another was the lack of geo-blocking measures.
"All of the prioritization criteria, save for the lack of geo-blocking measures, have been recycled and now constitute the cooling-off criteria."
Furthermore, a lack of appropriate age verification measures as of 31 December 2019 can also trigger enforcement, or endanger a license application, even though the absence of age verification measures does not demonstrate that an offer is targeting the Netherlands.
"Operators who have an existing unlicensed presence on the Dutch market will have to be able to demonstrate 33 months’ worth of compliance with the cooling-off criteria in order for their unlicensed market presence not to count against them."
However, the 33-month period must come to an end before 1 April 2022. Apply prematurely, and the Gambling Authority will reject the application on the grounds that the applicant is not sufficiently reliable. Apply after 1 April 2022, and an unlicensed presence on the market will entail that the applicant lacks the sufficient degree of reliability. This might seem harsh to some, but it is less draconian than a full “bad actor” based approach.
Gabino: Well, to me, this sounds a little bit as a new way to also frame the number of licensees. Portugal rather did that by its tax model and a very thorough licensing process. The original tax five years ago was set at progressive 8 – 16% on turnover for sports betting, and 15 to 25% on GGR for gambling. These amounts were revised, and since last year are now set at 8% on turnover for sports betting, and at 25% on GGR for gambling. We will see in which way these changes will have an impact on the number of operators.
Anne-Marie: Looking at the experience of some Member States made with a very high number of licensees, i.e. non-compliance with rules or aggressive advertising, which to me only seems logical if I have to compete with dozens and dozens of operators, such an approach seems to make sense. Gabino, we speak of how many licensees after five years?
Gabino: Currently, we have 15 licensees in Portugal holding a total of 25 licenses. Over half of them are meanwhile international companies, but we also still have seven purely Portuguese operators among which all major casinos.
"So, the approach helped secure also a local representation and the possibility for all to generate winnings. In addition, the market growth after five years continues to be between 30 – 50% in average, a sign for a very healthy development."
Alan: The first locally licensed operators will be coming online as of October 2021. These will be those who do not have any issues under the cooling-off criteria, and will predominantly consist of the land-based incumbents as well as international operators who have steered clear of the Dutch market. Should their applications be submitted by 15 April, then they can expect to have a license by October 2021. Other than this, there are no licensing windows as such. Those operators who must cool-off, will have to apply before 1 April 2022.
"The Gambling Authority will have six months to assess an application, with the possibility of extending this by another half year. Our expectations are that the vast majority of international operators will enter the market in a staggered manner, mostly during the course of 2022."
One of the key challenges, for all operators who apply after 15 April 2021, is that they will have to their systems fully tested and certified by the time that they apply for the licence. Yet another real key challenge is that, as of the time of writing in mid-February 2021, the Gambling Authority has only very recently released the final versions of key policy documents, in light of the publication of the final versions of secondary legislation by the Ministry of Justice & Security at the start of February. With six weeks to go, the licence application form has not seen the light of day, and some technical documents are still only available in draft. Even where documentation is final, there are many points which are open to interpretation, or quite simply, it is unclear what is expected of licence applicants. A fluid exchange of information with the Authority is necessary, so as to avoid needless challenges arising.
"It is difficult to say how many applicants will eventually make it onto the newly regulated market, once all those who are cooling-off have trickled through. Perhaps the relatively wide estimate of 50-75 is not unreasonable."
Anne-Marie: And when it comes to the final legal framework, what are the key topics Holland solved differently to other countries, in your view?
Alan: As in Portugal, the identity of the player will have to be verified before they are able to commence play. There will also be a central database of excluded players, which all remote operators must connect to, as well as the land-based casino and slot machine halls. The Netherlands is not unique in having to grapple with the question of how best to address operators who have had an unlicensed presence on the market ahead of reforms entering into force, but the aforementioned 33-month cooling-off period is somewhat different than elsewhere.
"One of the key differences with other European jurisdictions is that an operator will have to have an “addiction prevention representative” available for the Dutch market. This individual will have to be available to interface with the Gambling Authority and other stakeholders in the Netherlands on behalf of the operator, having a good understanding not only of gambling addiction but also the Dutch healthcare landscape."
Originally, the legislative proposals did not foresee such a position, but this arose in response to continued efforts by those who opposed the new regime, as they sought to require operators to have a physical presence in the Netherlands. There will be other fairly a-typical requirements around responsible gambling too, including the need to perform a risk analysis, from the perspective of the potential for addiction, on an operator’s product offering.
"Another point which may mark the Netherlands out from elsewhere, will be the need for an applicant/operator to conduct due diligence on its B2B suppliers in terms of their compliance with Dutch law. Requirements around outsourcing are one area which operators should not neglect when preparing their applications."
Gabino: As Alan, said, we have already the immediate ID verification in place for five years now, as well as a centrally coordinated self-exclusion system which is kind of a dual system, i.e. on the one hand, players register with the regulator which then communicates the info to the operators, and on the other operators provide the service and then report back to the regulator. The latter works well and is quite used by customers which shows a high degree of responsibility on the customer side. The immediate ID verification, contrary to other jurisdictions, is why we also never had issues with minor gambling, as a recent study, realized by IPSOS, found out. But also the control of the data by the regulator and the server structure behind is very thorough in Portugal.
In addition to what we have in common, I’d still mention the pre-agreed betting line-up since only France also disposes of such controls. And last but not least, Portugal wrote down the obligation to revise the law within two years, which was also unique back in 2015.
Anne-Marie: But Gabino, we still have an Achilles heel, when it comes to the illicit offer and advertising, right?
Gabino: Indeed, this is an ongoing challenge, but I’d say we are on a good way towards mitigating this threat. The figures released this year by the regulator prove it.
"A study we commissioned on player behaviour shows that over 70% of the interrogated say they feel safer with the licensed offer. The licensed offer might have some less good odds and some fewer bets, but customers are well aware that their rights are also untouched with locally regulated operators, and they have a guarantee to get their winnings paid."
In addition, we are confident we will see soon stricter enforcement rules as the ones we already have like IP/DNS blocking and criminal proceedings. This is by the way a very important element of the law since it allows operators to sue for instance those Portuguese who advertise illicit contents for a loss of revenues. It also allows us to lodge criminal proceedings against such entities or individuals. But we need to do more, without any doubt. Key will be to work with financial institutions.
Alan: There has long been a considerable locally unlicensed, de facto, market in the Netherlands.
"Timely compliance with the cooling-off criteria will enable those with an unlicensed presence to demonstrate their willingness to comply with local laws and regulations."
It also enables the Gambling Authority to capture international operators who are key for obtaining the objective of channelling 80% of the market to the locally licensed offer within three years. Had a strict “bad actor” approach prevailed, then this would have endangered the channelization objective.
"Once all of those who can rely on the cooling-off criteria have applied by the cut-off date of 1 April 2022, it is widely expected that the enforcement activities of the Gambling Authority will increase."
I was part of the team which conducted research for the European Commission on enforcement and remote gambling, for which the final report was published in January 2019 as Evaluation of Regulatory Tools for Enforcing Online Gambling Rules and Channelling Demand towards Controlled Offers. One of the key findings was that having an array of different enforcement measures was key for a Member State to be able to tackle locally unlicensed offers.
"Payment blocking measures were identified as one of the key mechanisms in this regard, or at least the ability of national authorities to disrupt the flow of payments."
With the upcoming reforms, the Gambling Authority will have a clear legal basis upon which to take enforcement action against payment providers, and it will also be able to issue binding instructions on them, as well as other intermediaries. Such techniques will compliment enforcement measures being taken directly against operators. Once the fog of uncertainty lifts after the first twelve months of the regime, it will be clear to the Authority which operators are “in” and which are “out”. An increase in enforcement can then be expected, but action against those who clearly cannot cool-off on time might already have begun.
Anne-Marie: This year, we will see a couple of changes also in third countries such as the UK, or Germany and Spain. And responsible behaviour, as important as it has always been, becomes even still more important. Is there a risk of over-regulation due to the voices raised by activity groups on behalf of addiction institutions?
Alan: Policies should be rooted in research and data, rather than rhetoric. Let’s not forget that the European Commission’s July 2014 Recommendation on principles for the protection of consumers and players of online gambling services invited Member States to deliver annual data around the actual use of responsible gambling measures in practice. This never happened to my knowledge.
Of course, the industry should be well-regulated with the level of regulation set at an appropriate level. And there will always be a discussion as to what is “appropriate”, as is the case in many walks of life. But let’s be clear, legislators and regulators should not buy into regulating the sector out of existence, under the pretence of particular policy concerns, merely because some stakeholders have an inherent dislike of gambling as an activity. Regulations and policies should be proportionate, and evidence based.
Notwithstanding the fact that EU Member States are competent to regulate gambling as they see fit at the national level, as long as EU law is respected, it is time to have a harmonized, or at least aligned, approach to data collection across the EU. Undoubtedly, there are some forms of gambling or patterns of consumption which prevail more in one Member State than another, but again, gambling can hardly be unique in that regard compared to other goods and services. A cross-border approach to research on addiction prevention, responsible gambling and patterns of consumption, and possibly other elements too, would provide comparable data for an informed discussion.
Gabino: I could not agree more. But we cannot wait. We need to act now. APAJO, for instance, is currently bringing together stakeholders to start analysing data on a structured, systematic and ongoing basis so to lay the ground for informed decisions based on evidence. But we are more than happy to join a European project anytime. And of course to also share the local results and let them peer review.
Anne-Marie: We could still speak for hours, I feel. But we have to come to an end. Last topic: The half-life for online gambling regulations is extremely short due to ever increased technological progress. We have heard that the Dutch law was mainly drafted in 2014 with some amendments introduced in the course of the last six years. Can such a law still have some validity by now? And Gabino, although we will see this year a revision in Portugal, wouldn’t it be already high time to develop a new concept of online gambling regulation, i.e. move the primary law to decree level and impose a yearly upgrade process?
Alan: The Dutch legislation will be up for evaluation three years after April 2021. By then we will have encountered, and hopefully solved, the teething problems around its introduction. Challenges generated by technological progress should have been addressed, or otherwise it will have become apparent that legislative change is necessary to accommodate them. This also applies for developments which have perhaps gathered pace after the bill was first introduced; the regime does not explicitly acknowledge cloud-based services for example. There again, the lack of speed has meant that forms of gambling, which were not recognised early on, have been included in secondary legislation, such as live casino gaming, esports betting and daily fantasy sports.
Gabino: Well, first of all, I have to clarify that the online gambling regime is already regulated in a decree-law in Portugal which made it relatively quick to get it approved. In addition, and here, I have to say we are lucky to have a very experienced regulator, we saw already regular revisions in between, for instance in regard to poker, technical provisions, or the tax issue. Also, when it comes to the betting line-up and its limitations, the regulator shows to be responsive.
"Last but not least, we saw a couple of adaptations when it comes to responsible gambling and advertising. I would like to mention the Code of Conduct for Advertising introduced last April, or adaptation when it comes to bonuses."
Anne-Marie: I thank you both for this lively exchange of facts and thoughts. If I may conclude with my personal view on the current situation, I’d say we have to be aware of the risk of global oligopolies in the online sector with the current M&As going on since this will stall the added value of competition for the sake of the consumer. And we need to indeed reform the legislative processes and make it even more agile. This is not only valid for online gambling but for all forms of e-commerce.
I hope we can speak again in fall where you, Alan, can tell already more about how the licensing process worked, and you, Gabino, how the revision of the law in Portugal.