Autumn Column 2017 – Gaming Practice Group – Frank Tolboom & Kester Mekenkamp

Autumn is now officially upon us and, given the current weather, no doubt it also feels that way to most. This Autumn Column endeavours to provide a summary insight into the main developments this autumn in terms of games of chance.

Coalition agreement & new Cabinet

On Tuesday 10 October, after a prolonged period of 209 days to be precise, the coalition agreement between the VVD, CDA, D66 and Christian Union was presented. On 26 October, a good two weeks later, the ‘Rutte III’ Cabinet was sworn in by the King and the new ministers officially presented to the public on the steps of Noordeinde Palace.

The coalition agreement devotes only one paragraph to the gambling policy:

One of the conditions for granting licences for remote gaming will be that the provider must be established, in some form or other, in the Netherlands. The implementation of the betting and gaming policy will focus in particular on reducing gambling addiction but will not affect current policy on contributions to sport and good causes.

Whilst succinct, this paragraph does at least provide two important insights with regard to the (near) future of the Dutch gambling policy. First of all, the Remote Gaming Bill remains on course. The fears of many in the sector that the bill would be rejected under pressure from the CDA and the Christian Union have proven unwarranted. Secondly, an additional provision will be added to the licensing process under the Remote Gambling Bill, namely the requirement that a provider of online gaming services must, in some form or other, be established in the Netherlands. This is an aspect voiced earlier within CDA ranks, worded as “having feet on the soil” (“voetjes aan de grond”). The practical implications of this provision are still unclear at the moment. In any event, it is unlikely that we will end up with a “Belgian situation”, where online games of chance may only be supplied by an operator with a licence to supply a land-based variant of the relevant games of chance (although Prime Minister Mark Rutte will probably prefer to avoid using the phrase following his recent clash with the Belgian government).

Sander Dekker, a VVD MP and newly-appointed Minister for Legal Protection (part of the Ministry of Justice and Security, the “Ministry”) has been assigned the portfolio on gambling. He now faces the tricky task of overseeing the process leading up to the opening of the Dutch online gambling market.

The long wait is (almost) finally over

But first, there are still a number of hurdles to overcome. Secondary legislation covering the Remote Gambling Bill, as well as the Ministry’s response to the 2nd round of questions raised in the Senate, have to be published. It is also reported that, at around the same time, public consultations on this secondary legislation (coordinated by the Ministry) and the licensing process (coordinated by the Gaming Authority, “KSA”) will start (because of added delays in the political mill, this will most likely not be until February 2018 at the earliest). The Senate will then again review the Remote Gambling Bill in order to proceed to the final vote on the bill. If Minister Dekker has “cemented” the dossier correctly with all coalition partners, it is firmly expected that the bill will finally be adopted (and therefore have a different outcome to that of its predecessor in 2008). For ease of convenience, it is assumed that the privatisation of Holland Casino will proceed in parallel with the Remote Gambling Bill.

“Loot boxes”; from video games to gambling

The release of the new Star Wars video game Battlefront 2, has triggered discussions surrounding the use of what are known as “loot boxes” or “loot crates”. In short, these are digital treasure boxes containing random items, which make the game more attractive or easier for a player in possession of these items. Depending on the exact nature of the game in question, the loot boxes can be won by playing the game, or can simply be bought. The effective content of a loot box is only revealed to the player after it has been purchased.

Both the KSA and the Belgian Gaming Commission are examining whether these gaming features constitute a form of gambling. The outcome of this, and the subsequent standpoint adopted by the supervisory authorities, can be greatly significant now that increasing numbers of video games include these features. Around the turn of the year, the KSA will also be launching a public consultation on the assessment framework for new gaming supply, and consequently will once again be looking at the precise definition of a game of chance.

Outstanding issues on compatibility of the current Dutch gaming policy with EU law.

In the final item of this column, we are taking a look back as well as forward. As at the time of the previous column (Summer Column 2017), we (still) continue to eagerly await an answer from the the Council of State (“CoS”) on whether there is stringent government regulation of De Nederlandse Loterij, whereby a ground for exception under EU law is met, and on the basis of which the relevant licence (in this case the licence related to sports betting) does not have to be granted in a transparent manner. The CoS has already extended its decision period in these proceedings a number of times and has now even reopened the investigation.

Reopening the investigation is specifically concerned with the consistency or inconsistency of the Dutch gaming policy, and focuses on discrepancies in the degree of regulation of the various gambling submarkets (such as casino games, sports betting, slot machines, and lotteries). It will need to provide the CoS with an answer to whether Dutch gaming policy meets the requirements of horizontal consistency (as expressed by the European Court of Justice in, among others, the Carmen Media ruling). This is because the slot-machine sector (where there is a high risk of addiction) is characterised by an open licensing system and expansion policy. While, for example, on the other hand the market for land-based sports betting (with a lower addiction risk than in the slot-machine sector) is in fact constrained under scarce or exclusive licences. The Advisory Department of the Council of State has already indicated (in its recommendations on the modernisation of the casino regime and the advice on the Remote Gambling Bill) that regulation through the introduction of a multi-licensing system in one particular submarket may have consequences for the possibilities of pursuing a stricter policy in other submarkets.

It is currently expected that the CoS will come to a decision in this case sometime during the first half of 2018. The implications of the decision, depending on the final outcome, could be extremely substantial. For example, the Nederlandse Loterij may no longer be assured of the relevant licences and may have to compete with other stakeholders. The KSA’s enforcement options could also be hampered. After all, if the licensing system used by an EU Member State is deemed to be incompatible with EU law, it is not permitted to impose sanctions on gambling providers for infringements committed in relation to that licensing system (as determined by the European Court of Justice in Sebat Ince).

Closing note

The next edition, our Winter Column appearing early 2018, will (in all probability) cover the numerous public consultations launched by the KSA, and one other interesting case that is significant for the ins and outs of the gaming world, and also on the CoS agenda: the CURO Payments case.

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