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Online Gambling in the Netherlands Receives Surge of Applications Ahead of Legalisation

Earlier this year it was revealed that the Netherlands will legalize online gambling in the country by 2021. The Netherlands remains one of only a few countries in Europe that maintains an illegal status on online gambling.

Since the news was made public in February, the nations gambling regulator has received a slew of applications from various operators for an online gambling license.

In addition to local organizations, several of the EU's larger international gambling outfits have also applied, including Bwin and Pokerstars. Until now, the only company that was permitted to facilitate online gambling in the country was the state-regulated Holland Casino. Following the change in law, the state monopoly will be lifted and Holland Casino will be diluted and sold off in various stages.

Under the new laws, operators need only to have a registered office in any of the EU/EEA member states, after Minister Dekker waived a condition requiring offices to be registered in the Netherlands.

Fighting gambling addiction

While the change in the law is clearly welcome by both casino operators and players alike, it comes with several restrictions that could make it tough for online casinos to turn a profit. The restrictions that have been implemented are intended to help combat addiction and include a requirement for players to register their 'limits' and for operators to use 'addiction reminders' on screen. The regulations are similar to laws implemented in New Zealand recently to combat gambling addiction, which helped to give rise to more controlled online gambling and slots sites.

In addition to this, online casino operators will need to fund an anti-addiction program and pay some of the highest gambling taxes in Europe - a whopping 29 percent. The new laws will open up a wide range of online gaming options to citizens of the Netherlands, including poker, roulette, blackjack, and popular online slots games.

Reasons for the law change

It appears the main reason driving the change in the law is the potential tax revenue the government could accrue combined with keeping the industry well regulated and above ground. Since players are still able to access online gambling sites that operate in other countries, making it illegal does nothing to help combat addiction in the country. The government now hopes that opening up the industry to local operators will help them to better regulate it and improve addiction treatment.

The law defining the way in which tax on winnings will be collected is also scheduled to change, with the government now shifting this cost to the operator. Currently, players are expected to pay tax on any winnings above €449 from other forms of legal gambling like sports betting. The new online gambling tax regulations will require that the operator takes on this cost by taxing their 'gross game result.'

The current budget expectations released by the Dutch government foresees a two-fold increase in sports betting revenue from 2020 to 2021, increasing from €6,000,000 to €12,000,000. Further statistics formulated by the government estimates tax losses of up to €175,000,000 for the country due to the non-legal status of a broader spectrum of online gambling options. This amount dwarfs income that the government has made from fines imposed to illegal operators, amounting to only €1,700,000 in 2018.

According to reports regarding the change in law, applications will be considered until 1st July 2020, when the Kansspelen Op Afstand (KOA), or Remote Gambling Act, effectively comes into place. After this date, the local Gaming Authority will spend six months issuing the required licenses and permits and developing infrastructure to support the change. Online casinos that have met the necessary requirements and received authorization are expected to begin operations in early 2021.

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