The Netherlands – First charity lottery license granted

by Richard van Schaik and Róbin de Wit

Yesterday, the Dutch Gaming Authority (“KSA”) granted for the first time a license since the Amsterdam District Court forced the KSA to revise its current policy on lottery licensing and to open the market to new licensees. Lottovate Nederland B.V. has been granted a license, according to which 50% of the stake should be made available to charity.

Earlier this year, Lottovate successfully challenged the strict Dutch lottery licensing system, according to which only four licenses for so called charitable lotteries were granted up and until 31 December 2016 (see our blog about this case here). A license was denied to Lottavate when it initialy applied for it. However, Lottovate stated that the Dutch policy limits the freedom to provide services under the Treaty on the Functioning of the European Union. The Amsterdam District Court decided that KSA should have taken this account. As a result of this court case, KSA set policy rules, enabling operators to apply for a charity lottery license.

Lottovate’s license has now been granted for the period 22 November 2016 until 31 December 2016. On 31 December 2016 all existing charity lotteries licenses expire. Operators can already apply for licenses starting 1 January 2017. Guidelines about the requirements for a charity lottery license can be found here.

 

 

 

Unlawful prohibition of sports betting in Germany

The Federal Administrative Court of Germany (BVerwG) ruled in a recent decision that if the state monopoly for sports betting persists an administrative prohibition of sports betting without a German sports betting concession would be unlawful.

This decision ties in with a recent decision of the European Court of Justice (ECJ). There the ECJ ruled that a criminal prosecution of a sports betting intermediate is contrary to EU law if the licensing process for private sports betting organizers has been held to not conform with EU law by national courts.

Dr. Michael Stulz-Herrnstadt and Christoph Engelmann commented on the decision of the BVerwG in the German magazine “GRUR-Prax” 2016 p. 542. The article can be viewed here (in German, subscription based).

Polish Regulator publishes a new report on the gambling market in 2015

The Polish Regulator has published a new report on the implementation of the Polish Gambling Act in 2015. The report presents interesting statistical data and summarizes the most important court judgements.

The Polish version can be downloaded from the Regulator’s website: link.

The Netherlands: regulator reveals totalizator licensing procedure

By Richard van Schaik and Róbin de Wit

 

Today’s news issued by the Dutch games of chance authority (Kansspelautoriteit, “KSA”) marked the kickoff of a phased totalizator licensing procedure. The KSA announced a transparent process in which a single license for horse and harness racing bets will be granted to a new license holder in the period 2017 to 2022.

On November 29, the KSA will officially publish the licensing procedure and further information in that regard on its website. From the information currently available, it appears that the procedure will consist of two phases.

Phase 1

During the first phase, subscribed parties will be judged by the KSA on the basis of pre-defined criteria to assess whether they are suitable to provide a reliable totalizator. Those parties who expressed their interest to offer horse and harness racing bets and who submitted the required information in time, will be assessed by the KSA on the basis of so-called knock-out criteria.

Phase 2

Subsequently, the parties selected by the KSA will be invited to present how they will implement and execute the totalizator license. Again, parties will be judged by the KSA on the basis of pre-defined criteria, after which one licensee will be chosed.

Subscribing to the procedure

Interested parties can be admitted to the official licensing procedure as from November 29 by downloading, completing and submitting the appropriate form, to be made available on KSA’s website. On that same day, the KSA will disclose the knock-out criteria that are of crucial importance during the first phase.

In order to be eligible for admission to the procedure, interested parties should at least hold the following documents:

  • A recent (< 6 months) digital certified extract from the Commercial Register of the interested party (or similar document from an EU / EEA country);
  • A recent (< 6 months) statement of good conduct (verklaring omtrent gedrag) for legal entities (or similar document from an EU / EEA country). Dutch entities can request such statement here.

Further information about the licensing procedure and any criteria connected thereto will be published on this blog as soon as it becomes available.

New gambling law for Germany

By Dr. Michael Stulz-Herrnstadt and Christoph Engelmann

A few days after the prime minister conference decided on the amendment of the State Treaty on Gambling Germany has informed the EU commission about the proposed legislative changes.

The draft of the “Second State Treaty Amending the State Treaty on Gambling” provides for a few changes of the German gambling regulation that try to answer criticism by the European Court of Justice. Sports betting concessions will not be issued on a quantitative but on a qualitative basis in the future. This includes lifting the limit of 20 sports betting concessions and even issuing preliminary concessions for the 35 operators that have been found to meet the requirements for a concession and that are listed in the draft. In addition the German state of Hesse will hand over its competence to issue the sports betting concessions to another German state.

Unfortunately the German states decided to leave it at these minimal changes. They are looking into strengthening the enforcement against unlicensed gambling and into amending the regulation of online casinos. But the draft does not included changes in this regard and it does not address the criticism of the Council of Games of Chance (Gluecksspielkollegium) and the advertising guidelines (Werberichtlinie).

The standstill period of the EU notification procedure lasts until February 2017. The German states aim at a ratification of the new law until 31 December 2017. This means that the amended State Treaty on Gambling will not enter into force before 1 January 2018 and that the interim measure of getting orders of approval for sports betting will become more relevant until the concession procedure is realigned by the new State Treaty.

How sharing liquidity will change the gaming market?

The debate on sharing liquidity in the online gaming market seems to finally move ahead, but what is the right approach? Read the rest of this entry »

Prime minister conference: amendment of the German State Treaty on Gambling

By Dr. Michael Stulz-Herrnstadt and Christoph Engelmann

Last week the German prime ministers reached an agreement on the amendment of the German State Treaty on Gambling (GlueStV). They decided to cancel the limitation of concessions for sports betting. With the 2012 GlueStV the German states wanted to allow up to 20 licenses for private sports betting operators. However, none of the licenses has been issued. This led to criticism by the European Court of Justice (ECJ) and court decisions that even ordered the gambling authorities to issue sports betting licenses for operators. In the future the concessions shall not be limited to the amount of 20 but be assigned on the basis of minimum standards.

In addition to this the prime ministers ask the gambling authorities to consider the possibilities of improving the enforcement against illegal online gambling (especially unlicensed lotteries, sports betting and online casino games) possibly by founding a public-law institution with centralized responsibility. While evaluating the GlueStV the authorities shall also consider the simplification of identification and authentication of players and the substitution of the monthly stake-limit of 1.000 Euro with a loss-limit in the same amount. At last the prime ministers ask the gambling authorities to examine which regulatory measures could improve the regulation of online casinos considering the experience in other European countries. This decision hints in the direction that even licensing of online casinos might be possible in the future.

However, this is just the first decision of the prime ministers. After the criticism by the ECJ a new gambling regulation is needed in Germany and this decision of the prime ministers will hopefully lead to an amendment of the GlueStV in the near future. While the prime ministers of the 16 German states are discussing those amendments the authorities are working on a process to align the sports betting regulation with EU law. They reached an agreement to give out orders of approval for sports betting operators in the meantime. These orders allow (online) sports betting in Germany if certain requirements are met. However, the operator needs an order of approval in every single German state and not every state has an approval process in place.

How should the Polish Gambling Games Act be amended?

In connection with on-going work on the amendment of the Polish Gambling Games Act (the “Act”), numerous press articles have been published, presenting the planned amendments and assessing their impact. Meanwhile, it is worth analysing which provisions of the present Act, not necessarily those covered by the draft amendment, should be changed in order to achieve postulated market opening or extension of the catalogue of gambling games that are licensed in Poland. There is no doubt that only such opening and the consequent extension of the scope of licensed gambling, especially – the group of entities entitled under relevant concessions or licenses to provide online gambling services, can guarantee meeting the primary objectives of user protection, ring-fencing the market and reducing the grey market. Read the rest of this entry »

The Netherlands: gambling apps successfully banned

By Richard van Schaik and Róbin de Wit

Following its announcement that gambling apps would be taken under investigations, the Dutch Gaming Authority (Kansspelautoriteit, “KSA”) now succeeded to remove these apps from online stores.

The KSA took action against gambling apps with cash deposit and payments, the so-called “real money gambling apps”. In total, 55 of such apps were identified by KSA and can no longer be downloaded from Dutch accounts. Nonetheless, some gambling apps that were previously downloaded by Dutch users can still be used. The KSA declared that such use will be further monitored over the coming period.

Although the action against gambling apps was supposed to be a temporary task, the KSA announced that the monitoring of gambling apps is now a standard task of the KSA as part of its supervisory activities.

Italy: Corporate Criminal Liability for Gaming Operators

The potential corporate criminal liability of gaming operators/suppliers is a hot topic at the moment in Italy for both Italian and foreign gambling entities. Read the rest of this entry »

Italy – The € 500m contribution still in a limbo

The never ending story around the € 500 million contribution paid by Italian AWP and VLT licensees in 2015 has not reached an end yet. Read the rest of this entry »

Hungary: New enforcement powers approved to combat illegal gambling

The Hungarian parliament yesterday adopted legislative amendments which provide for more severe penalties and enforcement measures to tackle unlicensed online gambling. Read the rest of this entry »

When eSports is social gaming, gambling or prize promotion?

eSports is facing a considerable growth, but its qualification as gambling, social gaming or prize promotion is based on a detailed review of the features of the game.   Read the rest of this entry »

Spain: 2016 Q2 Report now available

The Spanish General Directorate of Gaming (“DGOJ”) has published the 2Q Report analyzing the online gaming Spanish market covering the period April-June 2016 (“Report“).

The increase of the amounts played as well as the decrease of the Gross Gaming Revenue (meaning the amounts used for the game, deducting net bonuses and prizes satisfied by operators to participants) seems to be the most important conclusions of the Report. Regarding the number of players, the report concludes that there has been an increase of registered users. In connection with the amounts played in each type of game, the Report highlights its improvement in Betting and Casino while the amounts played in Bingo, Poker and Competitions have slightly decrease.

In any case, the total amount engaged in Betting continues to be the most important figure, followed by Casino, Poker, Bingo and Competitions.

UK: Tax treatment of freeplays

Following the March UK Budget announcement, HMRC has released a consultation paper on its proposal to impose remote gaming duty on freeplays, to bring the RGD rules into line with the GBD rules.

The proposal is that freeplays (as widely defined) are, when used, attributed a value for RGD purposes and only cash prizes resulting from freeplays, are deductible. Freeplays given as a prize, and vouchers exchanged for a freeplay, will not be deductible. The consultation paper also confirms that operators cannot even now deduct freeplays given as incentives rather than winnings.

Closing date for comments on the consultation is 17th October 2016 . There is no comment on when the changes are due to become law but the original proposal was 1st August 2017.

View the consultation paper.

For further information please contact Richard Woolich, UK Head of Tax.

Bill on the Amendment to the Polish Gambling Act adopted

At a meeting of the Council of Ministers on 19 July 2016, the Bill on the Amendment to the Gambling Games Act and Certain Other Acts, tabled by the Ministry of Finance, was adopted. The Ministry stressed that its main objective was to limit the so-called “grey zone”, protect players against the negative consequences of gambling and increase social awareness of the risks associated with illegal gambling. Read the rest of this entry »

UK: Placing digital adverts responsibly – new licence condition

Following the conclusion of the industry consulation, the Gambling Commisson has confirmed the new licence condition wording on placing digital adverts responsibly, as follows;

Licensees must:

a) ensure that they do not place digital advertisements on websites providing unauthorised access to copyrighted content.

b) take all reasonable steps to ensure that third parties with whom they contract for the provision of any aspect of their business related to the licensed activities do not place digital advertisements on websites providing unauthorised access to copyrighted content.

c) ensure that the terms upon which they contract with such third parties enable them, subject to compliance with any dispute resolution provisions, to terminate the third party’s contract promptly if, in the Licensee’s reasonable opinion, the third party has been responsible for placing digital advertisements for the licensed activities on such websites.

The Commission’s response to the consultation can be read in full here.

BREAKING NEWS: Dutch Remote Gaming Act adopted by Parliament

By Richard van Schaik & Róbin de Wit

 

Today, the Dutch parliament finally passed the bill on remote gaming, enabling interested operators to obtain a long-awaited license to enter the Dutch market.

One of the hot topics in Parliament was the tax rate. Eventually Parliament agreed upon a 29% tax rate, which rate is also applicable to land based gaming.

The bill creates the basis for a license, so that Dutch players can safely and responsibly participate in online gaming. Strict license requirements will apply, which will better protect players against, amongst other things, gambling addiction.

Still, the bill had to pass the Senate. If the Senate approves the bill, it is expected that a license for remote gaming can be obtained as from Q2 2017.

More details will follow soon.

The Netherlands: important updates lottery market

By Richard van Schaik, Róbin de Wit, Cees Plaizier

 

A judgment rendered by the Amsterdam District Court in May this year prompted the Netherlands Gaming Authority (“KSA”) to revise its current policy on lottery licensing. Under this policy, the KSA applied a restricted regime: only four licenses for so called charitable lotteries were granted up and until 31 December 2016. Therefore, applications of lottery services providers that fell outside the scope of these current four license holders were always rejected by the KSA.

 

Background judgment

Lottovate Netherlands, a Dutch charitable lottery applicant, was left empty handed after KSA’s lottery license rejection. Lottovate did not give up: it challenged the Dutch restricted regime in court, arguing that the lottery policy limits the freedom to provide services under the Treaty on the Functioning of the European Union. The Amsterdam District Court declared Lottovate’s position well-founded, ruling that the KSA did not sufficiently examine Lottovate’s license application in view of the Treaty. In addition, a sufficient justification for maintaining a restricted regime and the subsequent rejection of Lottovate’s application was lacking.

Hence, the license application of Lottovate will be taken into reconsideration by the KSA. Also, other newcomers who wish to operate a charitable lottery in the Netherlands can apply for a license. If such license(s) is/are granted, the term of the license will be equal to the current four licenses granted, i.e. up and until 31 December 2016.

 

New lottery regime and consultation

As from 1 January 2017, a revised lottery regime will enter into force and new charitable lottery licenses will be in place. Although it is still unknown how the regime will look like, the KSA is currently preparing itself for the granting of licenses commencing 1 January 2017. In order to enable prospective lottery providers to prepare for operating a charitable lottery in the Netherlands, the KSA launched a public consultation concerning the application process for licenses that will be part of the new lottery regime. Two documents are presented in the consultation: a draft lottery license application form and a draft model license. A response to the content thereof can be send up and until 19 July. Please click here for more information on the website of the KSA.

The KSA committed itself to take a final decision with respect to all applications for licenses commencing next year by 1 October 2016. This means that the KSA will handle such applications by August 2016.

 

Opportunities for newcomers

The aforementioned developments offer interesting opportunities to lottery services providers seeking to enter the Dutch market. By taking part in the public consultation, influence could be exerted on the new licensing procedure and the scope and implementation of license provisions. Also, future providers can start organizing their application and their lottery business pending the new regime. The State Secretary for Security and Justice announced that further details of the upcoming charitable lottery regime – taking the Lottovate judgment into account – will be presented in due course.

How Brexit might impact gambling in Germany

By Dr. Michael Stulz-Herrnstadt and Christoph Engelmann

The UK’s vote to leave the European Union in a so-called Brexit Referendum might also impact companies that provide gambling services in Germany.

Three of the main consequences of Brexit for gambling companies might be:

  1. Companies applying for a German gambling license need a registered office in a member state of the European Union or a state that is a party to the Treaty on the European Economic Area. The UK, Gibraltar and the Isle of Man might not fulfill this requirement anymore after an exit depending on the content of the contracts they will negotiate with the EU in the future. So it might be necessary to move the registered office to another EU country.
  2. Gambling companies with licenses from the UK, Gibraltar and/or the Isle of Man might not be able to refer to the single market and the EU’s freedom to provide services any more if those states are not able to negotiate participation at the single market with the EU. This becomes relevant in court proceedings where EU licensed gambling companies argue that they are allowed to operate in Germany with the non-German but EU license.
  3. In the event of exit companies that collect sporting bets on behalf of UK-licensed operators in Germany will not be able to defend their business with the recent ECJ decision that ruled that EU law may preclude the imposition of penalties in respect of the unauthorised cross-border intermediation of sporting bets carried out in Germany. One strategy against those impacts (2. and 3.) might be to switch from a UK or Gibraltar license to a license from another EU country.

There is still time to look out for the possible changes and adapt the business accordingly. For the moment EU law remains valid and enforceable in the UK and there is no immediate loss of protection. There will be a two year period to negotiate the terms of UK’s exit from the EU, which starts from the date the UK Government officially notifies the EU of its intention to leave. The negotiations need to be completed within two years, although this period can be extended if the negotiations are on-going and if all 28 EU member states agree. We will continue to post updates on developments in this matter here as they arise.

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