The Netherlands – Minster provides update on reform Dutch lottery market

On 5 July 2019, the Dutch Minister for Legal Protection issued a letter to the Dutch House of Representatives, elaborating on the future reform of the Dutch lottery market. In this letter, it was re-confirmed that the Dutch government wishes to modernize the Dutch lottery market. The Minister announced that the government wants to limit the risks associated with gambling, such not by means of limiting the amount of operators, but by means of setting rules and by supervision over compliance. Also, the  Minister expressed again that the government does not see organizing lotteries as a key government activity.

Current market

Currently, the Dutch lottery market is divided into three types of lotteries:

  1. Charity lotteries (including, currently, a mandatory 50 percent levy of the proceeds to be transferred to charity);
  2. the State Lottery (including a minimum amount of prize money and a mandatory levy on a percentage of the proceeds to be transferred the Dutch State); and
  3. Games of chance: the lotto and the instant lottery (including a minimum amount of prize money and a mandatory transfer of a percentage of the proceeds to be transferred to social causes/public interest).

The market for Charity lotteries is currently open to all operators; the other two markets are monopolized markets.

Principles for reform

In modernizing the Dutch lottery market, including the adoption of the Remote Gambling Act earlier this year, the Dutch government will take into account four principles in modernizing the Dutch lottery market.

Firstly, the societal and charitable function of lotteries will continue to exist. Consequently, the obligation to transfer a percentage of the proceeds to charities or other social causes will remain unchanged, although the exact percentage is subject to further research.

Secondly,  the Dutch government intends to safeguard a wide range of different types of lottery/game offerings, to be able to offer the public many choices and thus lowering the appeal of illegal lottery offerings.

Thirdly, the Dutch government will shift from an assessment of lottery games based on the type of games, to a risk-based assessment of lottery games, as it does not deem fit combining high-risk games (and higher risks for the public interest) with mandatory transfer of proceeds to charitable/social causes. The minimum age of 18 years for low-risk lottery games will remain in force.

Fourthly, research will be conducted as to the question whether there should be one common lottery market (possibly abolishing the three-way split of the current lottery market as described above), such in order to come to a level playing field.

The Minister announced that more news about the modernization of the Dutch gambling market will follow after further research has been. With respect to charity lotteries, the Minister already announced a concrete step.

Decrease of the levy for charity lotteries

In his letter, the Minster confirmed ­his earlier announcement that the mandatory levy of 50 percent of the proceeds for charity lotteries is envisaged to be decreased to 40 percent as of 1 January 2020. This decrease is subject to commitments from De Goede Loterijen –  the main operator in the field of charity lotteries – that the existing transfers to charities will maintain the same level.

Richard van Schaik and Sharif Ibrahim

The Netherlands: New fines for providing remote gambling services and the promotion thereof

On 24 June, The Netherlands Gambling Authority (Kansspelautoriteit or “KSA“) announced that it imposed fines of EUR 270,000 on Simbat Entertainment Systems Limited for providing remote gambling services (online gambling/games of chance) via at least eleven different websites, targeted at Dutch players. The KSA considered Spinity Limited as the promotional agent of Simbat and the KSA has also imposed a fine of EUR 100,000 on Spinity for promoting (advertising) Simbat’s remote gambling services.

The KSA took the official decision to impose these fines already in July 2017; both parties appealed this decision (and the publication thereof) at the administrative division of the The Hague Court. Pending the appeal, publication of the decision was postponed. Both appeals were dismissed by the administrative division on 6 June 2019, leading to publication of the decision earlier this week.

The offering (and advertising) of remote gambling is currently illegal in the Netherlands. However, as mentioned in our earlier posts, the legalization of online gambling in the Netherlands is currently an ongoing process with secondary legislation (inter alia including criteria for licensing) now under development. The current prognosis is that applications for obtaining a remote gambling licence will be possible as of 1 July 2020, with the first fully licensed operator up and running at the earliest as of 1 January 2021. Currently, 183 parties have expressed their interest in obtaining a licence. We do stress that the dates of 1 July 2020 and 1 January 2021 are the current prognosis and could be very well subject to change.

Offering remote gambling services without a licence will remain illegal in any case. We will keep you updated of the developments on this blog.

Sharif Ibrahim and Richard van Schaik

Prize Promotions Around the World: Launch of New Edition

The fourth edition of DLA Piper’s popular Prize Promotions Around the World online guide is now available.  The guide has been fully updated and also includes four new jurisdictions, to bring the total coverage to 39 jurisdictions.

Prize promotions (including promotional sweepstakes and skill competitions) remain a hugely popular marketing tool used globally by organisations to engage with customers. The internet and social media platforms make this an attractive, cost efficient means of reaching a large, multi-jurisdictional customer base; but it is not without its legal challenges.

This guide is designed to equip DLA Piper’s clients with a useful tool to assist with the management of the early development stages of a promotion, and to bring attention to potentially problematic issues as early in the creation process as possible.  Issues covered include legal requirements for sweepstakes and skills competitions, regulation of judges and prizes, formal requirements such as registration and translations, and penalties for non-compliance.

New features and trends

In response to client demand, this new edition of the Guide has been expanded to cover 39 jurisdictions which are among the most significant for global businesses. The new jurisdictions are Denmark, Hungary, Nigeria and Turkey.

The guide’s interactive map has also been updated, and it confirms that the extent of regulation and sanctions in this area is on the rise, with the most noticeable change being brought about by the introduction of GDPR across the European Union. GDPR extends obligations around handling promotion entrants’ personal data (e.g. for winner publicity, use of promotions to generate marketing leads and use of UGC entries containing personal data), and introduces the possibility of huge fines for breaches of those obligations.

Approach to International Prize Promotions

Marketing and legal teams of international brands are frequently tasked with rolling out cross-jurisdictional promotions in short timescales, however the variety of legal requirements across jurisdictions can make this a complex and risky endeavor.

This guide does not replace legal advice but can help to identify key issues early on in the process. A proportionate approach which takes account of the differing legal requirements, budgets, potential exposure, and co-ordinates input from the affected jurisdictions must be adopted. The DLA Piper global advertising and marketing team is uniquely well-placed to handle complex, local and multi-jurisdictional compliance projects, including prize promotions.

Access DLA Piper’s Prize Promotions Around the World

The Netherlands – Update Remote Gambling Act

Last week, at the Gaming in Holland conference, chairman René Janssen of the Dutch Gambling Authority (Kansspelautoriteit or “KSA“) and Dennis van Breemen of the Ministry of Justice and Safety (Ministerie van Justitie en Veiligheid) provided new updates regarding the Dutch Remote Gambling Act (Wet online kansspelen op afstand, “RGA“).

  1. the envisaged timelines for the full implementation of the RGA;
  2. the status of the secondary legislation in relation to the RGA;
  3. the (additional) criteria which future licensees have to fulfill; and
  4. the updated form “I want a remote gambling licence“.

 

We provide you with a brief overview of those topics below.

 

  1. Envisaged timeline

The KSA has revealed its intention to have the RGA enter into force on July 1 2020. At that point, it should be possible to apply for a licence which the KSA then aims to provide within a six-month window up to 1 January 2021, provided that all licensing criteria are met. Actual opening of the market, in this respect is thus expected on 1 January 2021, at the earliest. We note that the KSA has heavily emphasized the fact that it aims for this timeline and that this is in no way a final timeline, as the (secondary) legislation is subject to review by Parliament, notification to the European Commission and advice from the Council of State.

 

  1. Status of secondary legislation

The KSA has explained that the secondary legislation is currently in development. A draft General Administrative Order (Algemene Maatregel van Bestuur, AMvB“) is expected to be sent to parliament before the end of summer. Furthermore, a Ministerial Order (Ministerieel Besluit, “MB“) is scheduled for public consultation at the end of June. We will of course keep you updated of the developments regarding the implementation of the AMvB and MB. We will be following these developments closely.

 

  1. Criteria for future licensees

The KSA discussed some further criteria applicable to future licencees. These are: a) participation in the Central Exclusion Register (“CRUKS“), b) participating in the Control Database (“CDB“), c) fulfilling the requirements to be included in the Duty of Care guideline (Leidraad Zorgplicht), d) meeting certain financial conditions and lastly e) being a reliable operator. We discuss these criteria below in more detail below:

participation in CRUKS is mandatory as this register will be used to exclude players from participating in remote gambling;

  1. the CDB is a catalog, setting out all types of games that an operator offers. The CDB is open to the KSA and enables the KSA to follow operators by means of monitoring the data included in the CDB;
  2. the Duty of Care Guideline contains several measures to prevent gambling addiction. The final version is intended to be published before the summer holidays;
  3. the financial conditions discussed by the KSA are (i) payment of gambling taxes, (ii) transferring gambling levies, (iii) paying a financial contribution to a gambling addiction prevention fund, (iv) licence application fees (EUR 45.000). Next to these financial covenants, operators should take into account that they must be able to provide financial guarantees and have the financial headspace to adjust or install IT systems to adapt to the RGA-system; and
  4. an operator must be reliable. Although not very clear yet, the KSA has indicated that this means, at least, that operators (i) may not breach current laws and regulations, (ii) may be expected to internalize prevailing regulations in the jurisdictions in which they operate or intend to operate, (iii) are financially and operationally sound and (iv) key personnel and key shareholders

Please note that these criteria are all to be further developed in secondary legislation and as such, the above is subject to change.

Furthermore, we note that KSA has indicated that only operators that have not (i) actively targeted the Dutch market for (ii) an unbroken period for at least two years are eligible for a licence. The definition of both terms is to be further clarified. It is expected

 

  1. Updated showing interest form

The KSA has uploaded a new form in which operators that are interested in acquiring a remote gambling licenses can indicate their interest. Please note that this form is more elaborate than the form that was previously posted on the KSA’s site. The KSA asks interested parties to submit this form by 21 June 2019. Please note that this form is geared to those operators that are very concretely exploring applying for a licence. The form can be found here. Of course, we are happy to assist you with this form or advise you on the preparations for the RGA. However, not filling in this form – which form requires much more information to be provided than the previous interest form –  doesn’t prevent operators to apply for a license at a later stage.

Sharif Ibrahim and Richard van Schaik

 

Top 5 takeaways from the Games Industry Law Summit

Significant insights came out from the discussions on the present and future of video gaming law at the Games Law Industry Summit in Vilnius. Read the rest of this entry »

DLA Piper eSports law booklet is now published!

The eSports law booklet from the Italian IPT team of DLA Piper covers a number of current and upcoming legal issues of eSports and how to deal with them. Read the rest of this entry »

Renewal of online casino licences in Schleswig-Holstein

The governing coalition of Schleswig-Holstein has signed a draft law that is intended to renew the online casino licences that have recently expired.

This draft law is one step further than the draft of an amendment to the German State Treaty on Gambling that will only allow new sports betting licences but sticks to the ban on online casinos.

The new law of Schleswig-Holstein is expected to be passed in May and the new online casino licences are to be valid until 30 June 2021. For the period after June 2021, it is intended to develop a new regulatory framework which, according to the wishes of Schleswig-Holstein, will also allow issuing online casino licences in the other German states.

New sports betting licences in Germany

By Dr. Michael Stulz-Herrnstadt and Christoph Engelmann

The draft of an amendment to the German State Treaty on Gambling has been published. The amendment is intended to allow issuing new (online and offline) sports betting licences. This includes:

  • Extending the so-called experimental phase for sports betting from 30 June 2019 to 30 June 2021 with the possibility to extend up to 30 June 2024.
  • Removing the quota system for sports betting licences to allow issuing more than just 20 licences.
  • Entry into force on 1 January 2020 if all participating German states ratify the treaty until 31 December 2019.

With these amendments the German states want to provide clarity for sports betting operators and involved third parties, including payment service providers, the media and sports clubs. The gambling authority of Hesse is expected to start the licensing procedure as soon as possible in order to ensure issuing the licenses in January 2020. At the same time with issuing new licences, the gambling authorities will be instructed to prohibit unlicensed sports betting nationwide. This includes revoking a licence if the operator offers any unlicensed gambling next to the licensed sports betting.

The prime ministers of the 16 German states will discuss the draft on their conference on 21 March 2019 and are expected to sign the new State Treaty afterwards. The State Treaty will then have to be ratified by all participating states until the end of the year.

The draft is a welcome development for sports betting operators that want to be licensed in Germany. Unfortunately, the draft does not mention online casinos. But the prime ministers are discussing an option for Schleswig-Holstein to extend previous online casino licences until 30 June 2021 for their territory. A further amendment of the State Treaty is envisaged for the period after 30 June 2021.

eSports – Advergaming and the new frontier of advertising law and image rights

Advertising law issues for eSports are increasing with the growth of advergaming and the esploitation of image rights.

This is an article from my colleague, Laura Gastaldi, initially published on DLA Piper IPTItaly blog, I hope you will enjoy it!

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The Netherlands – Euro 400K fine for addressing Dutch market

Today, the Dutch Gambling Authority (“KSA”) announced that on 4 January 2019, it imposed a fine of EUR 400,000  on 1x Corp N.V. and Exinvest Limited, companies vested in Curacao and Cyprus.

The companies were  offering gambling services to Dutch consumers via several websites, such by means of having the websites (partially) in Dutch, using iDeal as payment method, etc., all such without having  licenses.

Both companies have appealed KSA’s decision.

 

Richard van Schaik

 

 

New AML guidelines for gambling in Germany

The highest gambling supervisory authorities of the German states have recently published new guidelines on the interpretation and implementation of the German Anti-Money Laundering (AML) Act. Gambling operators and intermediaries have been waiting for an update of the guidelines since the new AML Act that transposes the 4th AML Directive came into force in June 2017. Although the guidelines are not binding for German courts of law, they give valuable insight into how the German gambling authorities would like the AML Act to be applied by gambling operators and intermediaries that are offering their services in Germany. One particular focus of the guidelines is on recommendations for sports betting operators on how to comply with their regulatory anti-money laundering obligations.

Finland: Finnish Competition Authority to conduct an extensive assessment on the legitimacy of the Finnish state operated gambling monopoly in 2019

As for background, Finland has traditionally had one of the most stringent gambling regimes in the EU with a legal monopoly in place under the Lottery Act (2001/1047). The legal monopoly for the execution and marketing of physical and remote games resides with Veikkaus Oy Ab, a legal entity owned fully by the Finnish government. The monopoly covers games of chance, betting, toto games, slots machines and casinos. Gambling profits are distributed under the Lottery Act to certain “good social and public causes”. The supervision of the execution and marketing of games resides with the Finnish National Police Board.

The Finnish Competition and Consumer Authority (“KKV”) has launched an assessment procedure in January 2019 concerning the legitimacy of the state monopoly notwithstanding the fact that Finnish legislator has already provided for two general reforms to the Lottery Act in 2008 and 2012 in order to be more aligned with the consistency and proportionality requirements of EU gambling law. The reforms entailed e.g an implementation of marketing restrictions against Veikkaus and extensions to Finnish National Police Board’s supervision jurisdiction as well as new criminal sanctions.

The need for the previous reforms was caused by the EU commission’s infringement proceedings under article 258 of the Treaty on the Functioning of the European Union (“TFEU”) against Finland in 2007 concerning compliance issues under EU gambling law. The EU commission decided, however, in 2013 not to bring the infringement proceedings to the European Court of Justice. The commission argued that the reforms made as well as national mandatory derogations to the fundamental freedom to provide services under TFEU 56 article regarding consumer protection and prevention of problem gambling, money laundering and fraud were proportionate in light of the EU gambling law and while permitting derogations to the freedom to provide services.

Despite of these previous developments the KKV is now of the opinion that Veikkaus’s legal monopoly is still notably inconsistent with EU gambling law. According to the KKV, the marketing operations of Veikkaus have clearly accelerated and diversified in recent years and, combined with a loose placement policy of slots machines, there is a reasonable doubt whether the underlying goal is to maximize state profits (at the expense of the underpriviledged) rather than the prevention of gambling-related problems.

KKV underlines statistically that Finns lost a total of 1.8 billion € to Veikkaus in 2017 which corresponds to 1 % of the country’s GDP. KKV further stresses that even though 1.3 billion € were used for good societal causes, most of the funds are generated by the disadvantaged portion of the people with 5 % of total gamers generating 50 % of the total funds.

Another major problem underlined by the KKV is the decentralization and availability of slots machines e.g in grocery stores and gas stations,. i.e outside exclusive game rooms supervised by Veikkaus. Even though KKV welcomes the scheduled changes to the Lottery Act by 2022 concerning mandatory identification systems for slots machines, it also stresses that these amendments may not be enough in light of the consistent application of EU gambling law, unless slots machines are placed in supervised gaming rooms or alternatively individual gaming restrictions are linked to the identification process.

The assessment will also cover the supposed connection between problem gambling by the underpriviledged and marketing actions for instant loans.

It will be interesting to see whether the results of the assessment will be enough to put sufficient  political pressure on the legislator to finally dismantle the state monopoly at least as regards to remote gambling following the path of several other EU member states.

If you have any questions regarding the Finnish gambling regime, please contact Joonas Dammert: joonas.dammert@dlapiper.com or +358 40 572 8347, DLA Piper Finland.

BREAKING NEWS: Dutch Senate votes in favour of the Dutch Remote Gambling Act

BREAKING NEWS: Dutch Senate votes in favour of the Dutch Remote Gambling Act

 

The Dutch Remote Gambling Act (Wet online kansspelen op afstand) has officially been adopted with a majority vote of 44 out 75 by the Dutch Senate!

It is safe to say that the adoption of the RGA was no small feat. In the last few weeks, it became clear that there was still uncertainty and quite a lot discussion among the different stakeholders. Nevertheless, a big step was taken today by the Senate. After more than 2.5 years, the Dutch gambling market will now officially open its doors for (licensed) operators of online games of chance.

Next to the vote with respect to the RGA itself, the Senate also voted on six different legislative motions from members of the Senate. These motions mainly aimed to introduce a pre-determined cooling-off period for “bad actors” (2 years or 5 years were suggested) and stricter rules for the advertisement of online games of chance (including a complete advertising ban). Based on the vote, a) a cooling off period of 2 years for bad actors has been accepted, b) illegal websites can be blocked, c) the Minster is forced to consider before 1 September 2019 whether a complete ban for advertising for remote gambling would be an option and d) the Minister must investigate whether enough prevention measures have been taken against “young problematic players”.

What does this all mean for gambling operators who are potentially interested in joining or expanding its activities to the Dutch market?

 

In short: Remote Gambling Act

The RGA provides for a licensed regime for the offering of online games of chance aimed at the Netherlands. For parties who wish to apply for such license, the following key highlights of the RGA are relevant:

 

  • Seat of the license holder – The license holder must have its principal establishment in any EU or EEA Member State. This obligation can be waived by the Board of Directors of the Dutch Gambling Authority (Kansspelautoriteit, “KSA”) if further conditions are satisfied. Furthermore, the license holder must be a public or a private limited liability company according to the laws of any Member State of the European Economic Area (EEA), or an European limited company;
  • Prevention of gambling addiction The license holder must implement measures to avoid gambling addiction, e.g. by identifying and adequately informing the players, monitoring their gaming behaviour, requiring a player profile which sets out the boundaries of that player and intervening where necessary. Where appropriate, operators must report a player with problematic gaming behaviour to the Board of Directors of the KSA for involuntary exclusion from participation in such games;
  • Central register A central register for the exclusion of participants to games of chance will be created. The license holder that may offer remote gambling cannot allow the participation of an individual that has no subscription with the license holder. Furthermore, the license holder cannot allow persons (a) under 18, or (b) that have an entry in the central registry for the exclusion of games of chance, (c) that have indicated (at their own initiative) that they have overstepped the borders of their gambling behavior;
  • Access to the electronic meansOperators may be required to record and provide information and must give the supervisory bodies direct access to the electronic means used by them to organize the games;
  • Tax regime – a uniform tax rate of 29% applies for all games of chance, i.e. both land based games of chance and remote games of chances.
  • Compliance requirements – Furthermore, from the application it should be clear that both the requirement of the WoK are fulfilled, as the requirements from the Money Laundering and Terrorist Financing (Prevention) Act (“MLTFA“) are met. Also, the applicant needs to show it soundly manages its organization of the games of chance, in such a way that the supervision on the compliance with both the WoK and MLTFA is warranted. Thereto the applicant is required use appropriate means, processes and procedures. Appointment of a functionary or official in the organization that supervises compliance with the WoK and the MLTFA is required.
  • Additional requirements – All other regulations on restrictions, provisions, duration and assignability of the remote gambling licenses will be stipulated in the Remote Gaming Decree (RGD), which is currently still in draft version. We previously wrote an article with respect to the draft RGD, in which the main topics are set out. This includes, among others, requirements regarding the reliability of the holder of the license, the UBO’s and decision makers, the requirement to have a representative in the Netherlands to comply with rules regarding the prevention of gambling addiction, and advertising rules. As the draft RGD is a ministerial decree, no further votes will take place and it is expected that the final adoption will shortly take place by the minister.

Next steps

 

There are a few last steps to be taken in the legislative process: the final RGA will be signed by the King of the Netherlands, after which it will be ‘countersigned’ by the minister. After this, the RGA will be published (promulgated) in the Official Gazette. The date of entry into force will be regulated by a separate Royal Decree on the entry into force.

 

With respect to the license itself: it is not yet clear when exactly parties can apply for a license with the KSA and when the exact license requirements/application forms will be published. We received mixed information from the KSA in this respect (differing from summer 2019 to summer 2020). However, the KSA mentioned that more guidance will be published shortly.

 

We will continue to closely monitor relevant developments and will keep you further updated.

Ilias Abassi & Richard van Schaik

SWEDEN: Limitations on bonuses and the SGA’s official position on the definition thereof

In Sweden, license holders may only offer or leave a bonus at the first opportunity a player plays at any of the licensee’s games (See Chapter 14, Section 9 of the Swedish Gambling Act (Sw. Spellag (2018:1138))).
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The Netherlands – Vote on RGA on 19/2, Privatization Holland Casino suspended

During the plenary session of the Senate today, it was decided that the final vote with respect to the Dutch Remote Gambling Act (“RGA”) will take place next Tuesday 19 February.

There was still too much uncertainty among the different members of the Senate, and the Minister was heavily questioned today on different parts of the RGA.

The main discussion concerned the cooling-off period, that is envisaged to be applied to gambling operators that have previously violated the Dutch gambling laws by actively targeting games of chance to the Dutch market. The Minister indicated that the prioritization criteria of the Dutch Gambling Authority will be leading to assess whether a gambling operator has previously violated the Dutch market (in short: use of the Dutch language, use of a .nl website,  use of IDEAL, etc). Furthermore, there was discussion with respect to the length of the cooling-off period. The Minister mentioned that he can support a cooling-off period of 2 years.

The second main point of discussion concerned the restrictions on advertisement of online gambling. It was questioned whether advertisement would be necessary to achieve the desired channelling rate. However, the Minister was pretty clear that he doesn’t not support further restrictions on the current proposed regime, as informing players through advertisements is – in his view – an essential part of achieving the desired channelling rate.

As one or more members of the Senate asked for a vote, the vote on the RGA will take place on 19 February 2019. We will of course keep you updated on the vote!

Finally, the Minister asked the Senate to postpone the vote on the privatization of Holland Casino, as there did not seem to be enough support from the Senate. The Minister will revert to the Senate in the last week of May 2019 with further information on how he envisages to present this act to the Senate (e.g., no expansion of the amount of casinos, privatization will take place at a later stage), after which a vote may take place.

 

Ilias Abassi and Richard van Schaik

 

NETHERLANDS – Minister hints to cooling off period for bad actors

Today, the Minister of Legal Protection provided his answers on the outstanding questions from the Senate regarding the draft Remote Gambling Act (“RGA”), asked earlier this week. The letter of the Minister including its answers has been published by the Senate and can be found here (in Dutch). A brief overview is provided below. As you will see, particularly interesting is that the Minister insists on applying a cooling-off period for previous “bad actors” and provides further clarity in this respect.

 

  1. Which “illegal” gambling operators will be subject to a cooling-off period when applying for an online gambling license, and on which legal basis?

 

Types of “illegal” gambling operators”

This was the most discussed question during the Senate’s plenary session earlier this week and raised the most concerns. The starting point of the Minister is clear: illegal gambling operators that will continue to actively target the Dutch market and recruiting players from the Dutch market, must be avoided. These are operators that e.g. use payment instruments such as iDeal, advertising aimed at the Netherlands or use a Dutch domain name. These gambling operators are referred to by the Minister as “cowboys”, and it seems that these cowboys will – in most cases – not be eligible for a license.

 

With respect to the operators that were active in the offering of illegal games of chance in the past, the Minister mentions that it can take away the doubt about their reliability during a consecutive period prior to the license application showing good behaviour (the “cooling-off period”). During this cooling-off period, the KSA can assess the behaviour of the applicant according to its prioritization criteria. Therefore, it is safe to say that such applicants are eligible for a license (provided that they meet all the criteria), but will need to undergo a cooling-off period during which they need to demonstrate good behaviour. No examples are given by the Minister of which (types of) illegal behaviour will give cause to the application of such cooling-off period.

 

Legal basis for the cooling-off period

With respect to the legal basis for applying such cooling-off period, the Minister mentions that games of chance have not been harmonized in a European context and Member States are free to determine their policy objectives in the field of games of chance themselves, e.g. by setting its own policy and own reliability requirements. In this regard, the Minister refers to Article 31(i) of the draft RGA (par. 1 and 5), on the basis of which the KSA will look at – among others – antecedents, organizational and financing structure, and more importantly: the actions of the license applicant in the past. Furthermore, according to the Minister the cooling-off period complies with the (stringent) conditions that apply to restrictions on the free movement of services (as defined by the Court of Justice of the EU), provided that the duration of the cooling-off period is also proportional.

 

  1. Regulating advertising

 

Furthermore, the Minister mentions that the strict advertisement regime for online games of chance set out in the draft RGA apply regardless of the medium, i.e. also for online advertising and advertising via social media. Also, advertising for online games of chance may not be made in games or on websites where games are offered. The deployment of individual athletes in advertisements is also forbidden, nor may product placement take place. For that reason, license holders are not allowed to use influencers or vloggers as, according to the Minister, the followers are predominantly minors or young adults. Specifically for television, no advertising is allowed between 6 o’clock in the morning and 7 o’clock in the evening. Furthermore, the Minister stresses out that the KSA will actively enforce the advertising requirements and that he shall, together with the KSA, closely follow developments in advertising immediately after the implementation of the RGA.

 

  1. Prevention of illegal gambling websites

 

Lastly: the Minister mentions that when it comes to enforcement of the RGA, administrative sanctioning is the starting point. In case of aggravating circumstances, violation of the KSA can be sanctioned on the basis of criminal law. As an ultimum remedium, Article 54a of the Dutch criminal Code can be used to block illegal websites. However, as there are sufficient instruments for the KSA on the basis of the RGA to block websites, the criminal enforcement measures will in practice not often appear. The administrative enforcement powers of the KSA are considerably expanded under the RGA. For example, the KSA can give binding instructions to payment service providers, marketing companies and other facility service providers, in order to e.g. directly block payment services to illegal providers.

 

During the next plenary session of the Senate, taking place Tuesday 12 February, it will become clear whether the Senate is satisfied with the answers given by the Minister and whether this leads to an adoption of the RGA. To be continued…..

 

Ilias Abassi and RIchard van Schaik

New programming and investment obligations for VOD and linear audio-visual media service providers!

On 25 January 2019, the Italian Communications Authority (Autorità per le Garanzie nelle Comunicazioni, hereinafter “AGCOM“) published the Resolution 595/18/CONS setting out the new Regulation on programming and investment obligations in favour of European works and works by independent producers (as amended by AGCOM Resolution 24/19/CONS) (hereinafter, “New Regulation“).

The New Regulation – which replaces the previous resolutions concerning the programming and investment quotas, including Resolution 66/09/CONS – was adopted on the basis of the Legislative Decree no. 204/2017, which amended the Consolidated Act on audio-visual media services and empowered AGCOM to set detailed rules applicable to linear and non-linear audio-visual media services providers, as well as to pay-per-view media services providers.

The New Regulation provides for a gradual increase in the programming and investment obligations applying to audio-visual media services providers subject to the Italian jurisdiction, depending on the type of services provided and the type of work to be aired. Note that the application of certain provisions set out in the new Regulation has been postponed from 1 January 2019 to the 1st July 2019 in accordance with Resolution 24/19/CONS and 2019 Budget Law.

On demand audio-visual media services

The New Regulation provides that starting from 1 July 2019 on demand audio-visual media service providers shall be subject to the following programming and investments obligations.

Programming obligations. On demand audiovisual media service providers shall reserve at least 30% of the providers’ catalogue to European works, a sub-quota of which, corresponding to at least 50%, shall be reserved to works of Italian original expression, wherever produced. The percentage shall be calculated on the total amount of hours available within the catalogue on an yearly basis.

Investment obligations. On demand audiovisual media service providers shall reserve at least 20% of their annual net revenues as specifically resulting from the provision of on demand audio-visual contents within their catalogue in Italy to the production, pre-purchase and purchase of European works produced by independent producers, with particular regard to works published within 5 years of their production. A sub-quota, corresponding to at least 50% of the aforementioned quota, shall be reserved to works of Italian original expression, wherever produced. Annual net revenues means revenues strictly related to the typical business of an audio-visual media service in accordance with its authorization as they result from the last approved balance sheet available on 1 January of each relevant year.

Starting from 1 July 2019 similar investment obligations shall apply also to on demand audiovisual media providers subject to the jurisdiction of any Member State of the European Union bearing the editorial responsibility of catalogues addressed to Italian consumers. In this event, the aforementioned percentages shall be calculated on the provider’s annual net revenues resulting from the distribution of its catalogues in Italy.

Moreover, specific rules are set out by the New Regulation so as to ensure visibility to European works included in on demand catalogues. In this regards, on demand audio-visual media service providers shall create a dedicated section on the main access page or a specific category for the research of European works and reserve a quota of its advertising campaigns to European works, regardless of any methods, processes or algorithms used to customize user profiles. In this regard, Annex B to the New Regulation sets out a scoring system to assess whether the on demand audio-visual media service is compliant with these requirements.

Linear audio-visual media services

Programming obligations. Linear audio-visual media services providers shall reserve to each category of works a percentage of their broadcasting time (i.e. the total number of programming hours, less the time spent for news, sport events, television games, advertising, teletext services and teleshopping) as calculated on a yearly basis, as defined in the following table.

Type of Work 01.01.2019 – 31.06.2019 01.07.2019 – 31.12.2019 2020 From 2021
European works > 50% 53% 56% 60%
Recent works (of the last 5 years) > 10% N/A N/A N/A
Works of Italian original expression 1% (within the quota of 10% of the recent works) 1/3 of the quota destined to European works 1/3 of the quota destined to European works 1/3 of the quota destined to European works
Works suitable for minors > 3% > 3% > 3% > 3%
Works for both minors and adult > 10% > 10% > 10% > 10%

The New Regulation further provides that starting form 1 January 2019 a quota corresponding to the 6% of the broadcasting time calculated on a weekly basis shall be reserved to fictional and cinematographic works, fiction, original documentaries or other works having high cultural or scientific content, including the television editions of theatrical works, of Italian original expression, wherever produced, whose beginning or end takes place in the time slot from 6.00 pm to 11.00 pm.

Investment obligations

The table below identifies the investment obligations applying to each category of works for their the production, financing, pre-purchase and purchase, to be calculated on of the broadcaster annual net revenues.

Work 01.01.2019 – 31.06.2019 01.07.2019 – 31.12.2019 2020 From 2021
European works N/A 12.5% 15% 15%
European works by independent producers > 10% Sub-quota of at least 10.4% of the quota reserved to European works Sub-quota of at least 12.5% of the quota reserved to European works Sub-quota of at least 12.5% of the quota reserved to European works
Works of Italian original expression Sub-quota of the quota reserved to European works of independent producers corresponding to 32%, equal to 3.2% of annual net revenues 3.5% (not applicable to linear audiovisual media services providers broadcasting less than 52 cinematographic works on a yearly basis) 4% (not applicable to linear audiovisual media services providers broadcasting less than 52 cinematographic works on a yearly basis) 4.5% (not applicable to linear audiovisual media services providers broadcasting less than 52 cinematographic works on a yearly basis)
Recent works of Italian original expression (of the last 5 years) Within the sub-quota mentioned above, a further sub-quota corresponding to 70% (at least 30% of which is destined to the pre-purchase), equal to 2.24% of annual net revenues N/A N/A N/A

Sanctions

The New Regulation also introduces specific procedures for compliance monitoring and issuing sanctions.

The Legislative Decree no. 204/2017 provides for a significant increase of the sanctions applicable in case of breach of the programing and investment obligations. While the Consolidated Act provided that infringing broadcasters would be punished with a financial sanction ranging between € 10,329 and € 258,228, the Legislative Decree no. 204/2017 provides for a sanction ranging between € 100,000 and € 5 million, or up to 1% of annual turnover, if the value of this percentage exceeds € 5 million. Moreover, depending upon the severity of the violation, AGCOM may also apply the suspension of the activity for a period of 6 months or the revocation of the audiovisual media services authorization.

Please feel free to contact us, Alessandro Ferrari (alessandro.ferrari@dlapiper.com) and Laura Borelli (laura.borelli@dlapiper.com), if you wish to discuss!

The Netherlands – Vote will be next week; Minister forced to provide more details

Today, was an important day for the Dutch gambling sector: after more than 2.5 years, the Dutch Remote Gambling Act (Wet online kansspelen op afstand) reached the latest phase of the legislative process, during which the RGA could have been adopted. This would mean that the Dutch gambling market would embark on a new era by opening up its door to (licensed) online games of chance.

However, today it appeared that there is still a lot of discussion and uncertainty with respect to several aspects of the RGA. The plenary session has been suspended, as a majority of the Senate requested more clarity from the Minister of Legal Protection with respect to several questions that were not answered satisfactorily by the Minister. The Minister will provide written answers on these questions by means of a letter no later than this Friday. The last part of the plenary session will be continued next week, on Tuesday 12 February.

Next to the RGA, the Casino Regime (Modernisation) Draft Act was discussed by the Senate. This Act provides for the privatization of Holland Casino and a partial opening up of the casino market. The Senate will further discuss this draft Act during the session of next week, together with the RGA.

The key outstanding issues discussed by the Senate today – and to be answered by the Minster later this week – are the following.

  1. Can previous illegal operators obtain a license? The question that seemed to raise most discussion tonight is whether previous violations (i.e. illegal offering of online gambling in the Dutch market) would prevent a successful application for a remote gaming license in the Netherlands. In our previous article, we pointed out that the Minister of Legal Protection (the “Minister”) previously indicated that violations can be a ‘heavy contraindication’ and is considered a reliability risk, however also that for each individual violation the consequences for the reliability must be considered. In short: there was uncertainty on whether previous remote gaming violators will be eligible for a license. Tonight, the Minister provided some more clarity. The Minister explained that it envisages to make a distinction between the different type of license applicants: applicants that have never offered online games on the Dutch market, will in principle be eligible for a license if they meet the criteria. However, for applicants that have previously violated the Dutch gambling laws by offering online games on the Dutch market, the Minister stated that a cooling-off period is envisaged. This means that such applicants will only be eligible to obtain a license after the end of the cooling-off period, i.e. after the non-violating applicants. According to the Minister, this also applies to operators that are licensed in another country and de facto offer online games of chance to the Dutch market, e.g. due to the fact that Dutch players are involved in their games. The application of such cooling-off period was heavily criticized by several members of the Senate. In this respect, the Senate asked the Minister to provide clarity on the definition of an illegal gambling operator (that will be subject to a cooling-off period), and on which legal basis such cooling-off period will be introduced. During the debate, the Minister already indicated that the legal basis for such practice lies in the reliability exercise that will be conducted by the Dutch Gambling Authority (Kansspelautoriteit, “KSA”). However, the Senate required further clarity on this (also in light of European legislation), as it envisages that international gambling operators will contest such practice by the KSA.
  2. As second point, the Senate asked the Minister to provide clarity on the possibilities to limit online gambling advertising (other than on TV) and which enforcement measures the Minister can take in this respect, and on which legal basis. During the day, several discussions took place with respect to advertising. The RGA prohibits TV advertisements with respect to online games of chance to be aired before 19h, however the question was raised which measures are taken to avoid surreptitious advertising (e.g. online gambling advertisements that are part of other advertisements, such as sport ads).
  3. Lastly, the Senate asked the Minister to provide clarity on which measures will be taken and on which legal basis to combat illegal websites which offer online games of chance. The Minister stated that action can be taken against illegal website operators on the basis of Article 54a of the Dutch Criminal Code, however the Senate asked further clarity on how this article would be used as a legal basis for this purpose.

As mentioned, the Minister will provide written answers to the above mentioned questions this Friday.  The Minister already indicated today that it has the answers ready to these questions, but a majority of the Senate nevertheless requested a written answers from the Minister. The answers of the Minister will be discussed during the next plenary session of next Tuesday 12 February.

Further to the above mentioned points, the following topics were discussed today:

  • How will the channeling rate of 80% be met? – several questions were raised with respect to the channeling rate of 80%, which the Minister envisages to reach by the introduction of the RGA. It was not clear to several parties how this channeling rate will be reached. The Minister explained that research has been conducted, also based on the channeling rates of other countries that have regulated their online gambling market (e.g. Belgium, Denmark and Norway). The Minister explained that there are two main factors which are essential to reach the channeling rate: the amount of operators and the variety of games that can be offered. In this respect, the RGA does not include any limitations on the amount of licenses that can be provided (even though the Minister indicated that it envisages that approximately 40-45 licenses will be granted) and that in principle there are no limitations on the offered games (i.e. all games of chance can be offered online).
  • Will the RGA lead to more online gambling players and if yes, how will further gambling addiction be prevented? It was clear that several members of the Senate were concerned that the introduction of the RGA would lead to a significant increase of online gambling players, which may lead to heightened risks of gambling addiction. The Minister acknowledged this issue and could not exclude the possibility that there would be an increase of new players to the online gambling market, e.g. as a result of new advertisements in this respect. However, the Minister also stressed out that the RGA sets out several measures which are all aimed to prevent gambling addiction, and which should limit the accompanying risks of new players.
  • Is a licensing regime the most appropriate mechanism to combat illegal offering of online games? Lastly, a question that came back several times is whether the opening of the online gambling market – which is the most far-reaching option – is the most appropriate mechanism to combat illegal offering of online games. Several parties seemed to prefer a less ‘drastic’ solution, e.g. by offering the KSA with strengthened enforcement actions and possibilities to combat the current illegal offering.

 

We will continue to closely follow relevant developments and will keep you updated on the plenary session of the Senate next week.

Ilias Abassi and Richard van Schaik

 

Netherlands: 5 February 2019 – D-Day Remote Gambling Act

Only a few more days to go: on 5 February 2019, there will be the hearing in the Dutch Senate on the introduction of the Remote Gambling Act (‘RGA’). This is more than 2.5 years after the Act passed the House of Representatives.

In principle, no changes to the latest draft are accepted anymore. This means that the RGA will either be approved or denied. If all parties agree to the proposal, no vote is required and the Act will pass. If one of the parties requires a vote, the vote will be on 12 February 2019.

DLA Piper will be attending the final vote, and we will immediately report the outcome.

 

 

 

Richard van Schaik

 

 

Gaming Team ranked tier 1 in Legal 500 Germany

By Dr. Michael Stulz-HerrnstadtDr. Kai Tumbrägel and Christoph Engelmann

DLA Piper’s gaming team is ranked tier 1 by Legal 500 in Germany 2019. Partners Dr. Michael Stulz-Herrnstadt and Dr. Kai Tumbrägel as well as Senior Associate Christoph Engelmann among others are highlighted by name.

The just recently published handbook outlines the following in the “Media” section: “The team at DLA Piper, comprising four partners, is ‘excessively competent and creative, thinks out of the box and can also go off the beaten track’.”

Legal 500 further mentions that the firm “together with Michael Stulz-Herrnstadt and Senior Associate Christoph Engelmann, is ‘one of the top addresses for gaming law in Germany'”.

This ranking is a great success – not only for the German gaming team but also for the international gaming group as well as the lawyers of the German IPT group, led by Prof. Dr. Stefan Engels. Without their collaboration this success would not have been possible. Counselling in the gaming and betting industries requires a complete expert knowledge of both national and international law in several areas, such as regulatory law, IP/IT law, media law, corporate law, tax law and administrative and civil litigation, which we offer through our global offices. Equally important are our national and international clients who reward the organization and quality of our practice by placing their commissions with us. Many thanks for this!

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