Dutch gaming authority issues new enforcement policies after launch of online gambling

With the 1 October 2021 opening of the Dutch licensed online gambling market, the Dutch Gaming Authority (Kansspelautoriteit or KSA) has licensed ten online gaming operators, which can legally offer online games of chance in the Netherlands. In addition, the KSA published new enforcement and fining policies that include severe penalties for unlicensed operators.

Enforcement policy

Before the recent launch of online gambling and the new gaming rules entered into force, it was illegal to offer online games of chance to Dutch citizens. For illegal gaming companies, the KSA used the following "prioritisation" criteria to determine the operators to be targeted. Specifically, the KSA focused on illegal gaming websites that:

• used a .nl domain;
• were in the Dutch language;
• advertised through Dutch media;
• offered certain payment methods popular among Dutch consumers (e.g. iDeal);
• failed to employ technology to block Dutch IP addresses (geoblocking) and did not verify the age of the player during the registration process.

These criteria expired on 1 October 2021. However, once the online gambling market opened in the Netherlands, the Dutch government urged the KSA to perform a drastic “acceleration” of its enforcement action against any online gambling company without a licence that accepted players from the Netherlands. In response, a new KSA enforcement policy came into effect on 1 November, which acknowledged that choices had to be made about which investigations to pursue. This ultimately led to new prioritisation criteria to determine the gambling operators to be targeted.

According to this criteria, the KSA will determine the priority of an investigation based on the following questions:

• How many Dutch players are playing on the illegal website?
• How harmful is the illegal offering vis-á-vis the KSA's goals of protecting consumers, preventing gambling addiction and combating illegality and crime?
• Are players being pulled away from the legal market by the illegal offering?
• To what extent does the illegal offering target the Dutch consumer? When determining whether the Dutch consumer is targeted, the "old prioritisation criteria" remain important, and the promotion of illegal online games and other circumstances that pull players away from the legal offering carries extra weight.

The KSA explicitly noted that the prioritisation criteria are not cumulative. An illegal offering does not have to achieve a high score on all criteria before an enforcement investigation will be started. Circumstances may also arise that are not listed above, but can still play a role in assessing whether priority should be given to an investigation.

Fining policy

The KSA also published fining policy rules for offering unlicensed online games of chance, which came into force on 1 October 2021.

The penalty consists of a basic fine, which can be increased when certain circumstances occur. Until 1 October, the basic fine was EU 200,000 with no turnover-related fine.

According to the new policy, the calculated fine depends on the offender's turnover in the Netherlands:

• If the offender's turnover is less than EUR 15 million, the fine will be calculated on the basis of fixed amounts. The basic fine is EUR 600,000.
• If the offender's turnover is EUR 15 million or more, the fine will be calculated on the basis of the turnover. The basic fine is 4% of the turnover.

The KSA will assess the turnover if it cannot determine the relevant turnover on the basis of information provided by the offender.

Circumstances that will increase fines are divided into two categories. In the first category, the fine will be increased by EUR 150,000 euros or 1% when the turnover is more than EUR 15 million. The circumstances related to an increased fine include targeting minors or other vulnerable groups with prohibited games or betting. Prohibited games are defined as remote games of chance, such as spread betting and betting on non-sports events, which are disallowed even for an operator with a licence.

In the second category, the fine is increased by EUR 75,000 or 0.5% when the turnover is more than EUR 15 million. This category includes infractions, such as having a website with incorrect or irrelevant notices about licensing, no addiction prevention information, no playing limits or pre-filled playing limits, no age verification or an illegal offer available via a mobile application.

Conclusion

At the opening of the Dutch games of chance market, the Dutch government urged the KSA to formulate plans to intensify enforcement. To support the legal offering of online games, the KSA was instructed to tackle illegal online gaming. In response, the KSA has published higher penalties and stricter rules against unlicensed operators. It remains to be seen how aggressive the KSA will be in enforcing illegal offerings from unlicensed online operators. We will keep you informed of any developments.

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