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Leigh Nissim, Managing Director (UK), Swiftstake Technologies.
When tackling regulated or regulating markets, you should consider carefully your choice of product supplier. No single company can claim to be the best in all European markets – each has strengths and weaknesses. Whether it’s the game- play in a slot or the composition of their poker liquidity, research your supplier and their capabilities in your market of choice. For example, casino players in the Germanic- speaking regions like different games, graphics, payouts and bonus features to those in more Anglo-centric markets. If you’re entering a ring-fenced poker market like France or Italy, does your provider have sufficient liquidity to sustain a vibrant network? How strong is their customer base in the market in question? Are their developers close to the local market? Do they have visible market presence? Look for signs that indicate the supplier is serious about the regulated market in question and has the funds and expertise in which to ensure your product gives you the best chances of success in a competitive market, where you’re likely to be up against major commercial brands and often lottery operators with deep pockets.
Commission’, was set up to examine whether online gambling should be separately regulated and whether licences should issued to private operators. The commission report recommended that the existing online regulations, which were aimed at current monopoly operators should continue for online sports betting, horse racing and the national lottery. Further, they recommended a new internet regulatory system, which they considered should apply only to poker as it is the major online game of preference for the Dutch. In fact, the game accounts for 38 per cent of total online player activity.
All other online gaming activities, including casino gaming and betting exchanges would remain illegal. The means of enforcement against foreign internet gaming businesses that target Holland would follow a strategy by the Ministry of Justice, which intended to draw the Internet Service Providers (ISPs) and financial institutions into the battle. The stated aim being to isolate ‘illegal’ online companies from the Dutch people in order to protect them from the risks of fraud and a potential increase in gambling addiction. ISPs may resist calls from the Ministry of Justice to block illegal sites and could face the wrath of the Dutch regulator. Recently, the French gambling regulator, ARJEL, brought proceedings against 7 French ISPs that resisted its request to block illegal sites and this situation may be repeated in Holland.
More successful may be the Ministry of Justice’s move to ‘blacklist’ 30 online operators and legal pressure on financial institutions to refuse to do business with those operating illegal online sites in Holland, and those sites abroad that accepted Dutch players. Despite the strong line, it has been recognised that the Dutch state cannot reasonably expect banks to monitor or block transactions between the online companies and Dutch citizens due to financial burdens and the cross-border nature of the internet, where payment processing is performed in multiple jurisdictions. Therefore, requests for the banks to abide by the ‘blacklisting’ is voluntary. However, two banks, Barclays and ABN Amro, are taking no risks and have blocked transactions with online companies.
Interestingly, it is worth mentioning that the Dutch government intend to tax both legal and illegal gambling. The Online Gaming Tax Act 2008, means that foreign internet gambling would be taxable, even though the activity is
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nominally illegal in Holland. Domestic providers pay 29 per cent tax on Gross Gaming Revenues (GGR). For ‘illegal’ foreign providers the tax is controversially claimed directly from the Dutch players themselves as a form of income tax, again at a rate of 29 per cent on monthly winnings. Professional poker players in particular are suffering since they are not be able to carry over any losses to next winning month. Further, there have been reports of tax authorities sending tax law advisories to poker players thus driving some of them to sunnier climates such as Malta where the taxman cannot reach them.
Amidst this regulatory confusion and doubts as to the workability of the current tax regime, experts have warned that the Dutch government could target the domestic affiliates of the big online companies. It remains to be seen if affiliates will be classed by Dutch law as providers themselves, but if so they also risk paying 29 per cent on gross revenues.
However, a week is a long time in politics as they say, and the Jansen Commission report is becoming the victim of political change. Towards the end of 2010, the new coalition government began to examine potential revenue streams from licensing and taxing online gambling, and not just poker. It was calculated that licensing online gambling could raise approximately €10 million a year. In March 2011, headlines trumpeting that the
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