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Julian Harris, Partner, Harris Hagan harris@harrishagan. com
The development of Denmark’s new regulatory system for online gaming, which is to replace the current state monopoly system, has been stalled by a complaint lodged by one of the country’s land based casinos. It is alleged that the proposed gaming duty rate of 20% on gross gambling yield will give online operators an unfair advantage over land based operators, who currently pay up to 75% duty on their activities, and amounts to unlawful state aid. Despite the outcome of this case still being in doubt, the Danish regulator is proposing to begin accepting licence applications on 1 January 2012.
When it comes to the location of operators’ servers, the new regime is more flexible than in some other jurisdictions. Provided the Danish Gambling Authority has a Memorandum of Understanding with the regulator where an operator already holds a licence, it will be permitted to retain its server there. This provision is likely to make the Danish market attractive to existing operators in other jurisdictions as they can begin targeting Danish customers without incurring the expense of a local server.
• The Ministry of Taxation will set the fees for costs associated with the administration of licensing and permit holders etc.
• All licence holders must be connected to the monitoring system SAFE and security system (Tamper Token).
• Players can voluntarily register for temporary or permanent exclusion from playing online games.
• A tax rate of 20 per cent of the GGR is recommended for betting and online casino games plus an annual licence fee (see chart below)
• The state will charge: An application fee of DKK 250,000 (€36,000) per licence for the provision of online casino or betting.
An application fee of DKK 350,000 (€51,000) for a licence for both betting and online casinos.
• There is one exception to the above where a one year licence to offer betting or online casino is available where the taxable income does not exceed DKK1m and this is a DKK50,000 one time fee.
At the moment the total turnover (2008) for the Danish gaming market (not including
casinos or online casinos) amounted to DKK25bn according to Skatteministeriet (Tax Ministry). The gross gaming revenue is estimated to be around DKK7.7bn in 2008 which includes land and online casinos whilst each Danish person spent approximately DKK150 per month on gaming.
The total turnover for betting amounted to DKK5.1bn and of this amount around DKK2.1bn was from foreign suppliers. GGR was around DKK1bn. Meanwhile GGR for foreign online casino games including online poker amounted to DKK350m.
Online poker over the last few years has become increasingly popular and is the most
ReGulation of the GaminG sectoR in
denmaRk has Been simplified and GRouped undeR the ministRy of taxation.
popular online game played at the moment in Denmark. Because poker cannot really be played in a closed network with just Danish players, it is now authorised to offer poker via an open network even though operators are controlled by Danish law and must pay tax on that game.
Danske Spil has also recently partnered with online gaming provider Party Gaming to prepare for upcoming competition. The two companies signed a five year agreement in January this year.
Land based poker tournaments have been permitted under the new draft legislation since January this year. It means that individuals, companies and associations can now apply for authorisation to arrange public poker tournaments for up to a two year period, enabling them to host tournaments for up to five times a week. Total prize pool will be limited to DKK15,000 with a maximum buy in of DKK300.
Meanwhile the regulation of the gaming sector has been simplified and grouped under the Ministry of Taxation and the regulation and control will now be carried out by the Danish Gaming Board.
technical standaRds While the Danish government may not have finished establishing a completely open market
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denmaRk
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