Dutch government looking for ways to revitalize online gambling

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Gambling industry eyes have been on Sweden since the summer of 2018 as the gambling world watched and waited to see how government leaders would implement liberalized gambling rules meant to break up the state-run monopoly and introduce online gambling to foreign operators. With the implementation of the country's new gambling law on 1 January 2019, things are well underway.

Not far away, the Netherlands is wrestling with a similar liberalization of its own gambling laws. Unfortunately, they are not quite at the same level of Sweden. In fact, the Dutch government's lower house passed liberalized gambling legislation a couple or so years ago. It has sat unaddressed in the upper chamber ever since - at least until recently.

The law, known as the Remote Gambling Bill, is scheduled for debate in the Dutch Senate on February 5. If all goes well, there could be a final vote on the legislation the following week. Passage of the bill would put the onus on regulators at the Kansspelautoriteit (KSA) to figure out how they will enforce new rules without stifling operator interest. The KSA has already published their Monitoring Agenda 2019 in anticipation of the law passing.

Breaking Up the state monopoly

Like so many other countries in Europe, the Netherlands has long maintained a state-controlled gambling monopoly. Such monopolies were very popular decades ago when it was thought that controlling gambling operations at the state level was the best way to maintain a stable market and protect consumers. But times have changed, along with the thinking of legislators.

State-controlled monopolies do make it easier for regulators to control gambling, but they also stifle market growth. Countries like the Netherlands and Sweden have been forced to look at their monopoly structures in light of what they see happening in other places - most notably in the UK.

The UK has one of the most liberal gambling laws in the world. And guess what? The industry there is thriving. If you were to take an hour or two to go through all the sites listed at MegaMoolah.com, you would probably be surprised to learn how many of them are located in the UK.

Other countries are observing the UK's gambling industry and realizing they are missing out on a lucrative source of revenue. If they hope to grow the industry in their own countries to match what the UK is doing, they have to break up their state monopolies. That is what Sweden has done; it is what the Netherlands wants to do.

The unfortunate thing is that changing the game is easier said than done. State monopolies are entrenched to such degree that regulators seem clueless about how to embrace a more open market. Like in other countries, Dutch regulators are concerned about a number of things.

Addressing gambling addiction

EU regulations require countries within the bloc to be proactive about gambling addiction if they allow private operators to do business within their borders. One of the ways this bears out practically is a requirement that says overseas operators have to establish a presence in any EU country they operate in for the purposes of addressing gambling addiction.

In other words, an overseas operator does not necessarily have to establish a land-based casino in an EU country in which it hopes to operate a website. But it does have to have at least one person on the ground promoting responsible gambling and providing assistance to gamblers who need help with addiction.

Dutch regulators are rightly concerned about problem gambling. They intend to address the issue according to current regulations as best they can. The Dutch law also calls for maintaining a voluntary opt-out list through which people can ban themselves from gambling online. A similar list exists in Sweden and has already attracted tens of thousands of registrations.

Vetting new licensees

The next concern of Dutch regulators is the monumental task of vetting any and all new licensees. As soon as they open the door to overseas applications, they expect to be flooded with dozens of inquiries. Every application will require a thorough vetting to guarantee that no bad actors are allowed in.

Part of the vetting process is to take a look at operator advertising practices. Dutch regulators are extremely sensitive to who gambling operators target, how they advertise, what they say, and so forth. Regulators have already said that new licensees will be required to adhere to special marketing and advertising rules that account for the unique nature of gambling.

All of this leads to the inevitable question of enforcement. Among all the concerns in the Netherlands, enforcement is the biggest. All efforts to enforce existing laws against international operators thus far have fallen flat.

Regulations with no teeth

The Dutch government is fully aware that punters in their country are gambling online via sites hosted outside of the Netherlands. And by the way, this does not just happen in the Netherlands. Anyone with a computer and a basic understanding of networking can gamble on sites legally registered around the world regardless of where they live. This presents a problem for regulators.

In the Netherlands, regulators have sought for years to enforce their current regulations against overseas operators whose websites Dutch citizens utilize. But the regulations really have no teeth. It is very difficult, if not impossible, for the Dutch government to go after operators with no physical presence on Dutch soil.

For example, consider that the KSA levied some €1.7 million in fines against international operators in 2018. They have collected very little of that money because they have no means to do so. Furthermore, fines and the threat thereof are not enough of a deterrent to stop international operators from allowing Dutch punters to gamble on their sites. According to the KSA, the demand among gamblers for online services is just too high.

As the thinking goes, the best way to attack the enforcement problem is to liberalize gambling laws and allow international operators in under a licensing program. Voluntarily agreeing to be licensed means operators are also voluntarily agreeing to abide by Dutch regulations.

This would instantly alleviate any concerns about above-the-board operators willing to go through the licensing process. Regulators would then be free to concentrate more on those operators still looking to fly under the radar. But enforcement against those operators will still not be any easier.

State monopolies are crumbling

The long and short of what is happening in the Netherlands is pretty simple: the country's state-run monopoly is crumbling. Moreover, state-run monopolies around the world are also in jeopardy. It is abundantly clear that gamblers want the opportunity to play their favorite games online from wherever they are. And they are going to do so one way or another.

Government officials in Sweden, the Netherlands, and elsewhere are gradually coming to the realization that the demand for online gambling is too significant to ignore any longer. They can continue operating state-run monopolies while attempting to crack down on overseas operators, or they can break up their own monopolies and introduce competition to the market. Either way, gamblers are going to gamble online.

The only way any of this makes sense is to pursue a model similar to that which exists in the UK. As one of the world's most liberal environments for gambling, the UK openly welcomes land-based and online operators alike. They welcome both domestic operators and their international counterparts looking to do business there.

What other countries are figuring out is that it's possible to open the market and still effectively address things like gambling addiction, advertising, and consumer protections. In other words, regulating gambling does not have to be an all-or-nothing proposition. Governments do not have to maintain monopolistic control in order to make it work.

It is only a matter of time

The good news for Dutch gamblers is that it's really only a matter of time before the Remote Gaming Bill becomes law. The writing is on the wall as evidenced by publication of the Monitoring Agenda 2019. So now it is really only a matter of when. It could be that by the time you read this post, the Remote Gaming Bill will have already passed the Dutch Senate.

Passage of the law will bring the Netherlands more in line with Sweden's gambling law. Then it's on to other EU countries with existing state monopolies that need to be addressed. With each one that falls, the movement will spread across Europe, Asia, and beyond.

Across the Pond, there is movement in the U.S. to start allowing online gambling on a state-by-state basis. If you know anything about U.S. gambling laws, you know this is big. Significant liberalization of state laws could very well make the U.S. gambling market more like Canada's. That liberalization would likely spread south until all the Americas are influenced to follow suit.

There is a lot to like about online gambling. If nothing else, the demand for it has clearly shown regulators in the Netherlands that their state monopoly must go. National governments and their regulators are unable to put a damper on demand, so the next best thing is to get on board and open the market to privatization. Liberalizing gambling laws is the best solution for everyone involved.

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