Dutch iGaming Market Predicted To Finish 7.6% Higher In 2015

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Thursday, September 24th, 2015 | Written by Lucy Brown

The Netherlands has no regulated iGaming legislation in place, and over the years progress of the country’s Remote Gaming Bill has been held up in the Dutch Parliament by endless debates on how the online gambling industry should be best regulated. Nevertheless, while lawmakers argue topics such how many licenses to grant, and what tax rates to set, unlicensed sites continue to operate in the country, stoking concerns unscrupulous illegal operators targeting Dutch consumers may be contributing to problem gambling in the country of almost 17 million people. As State Secretary for Security and Justice Klaas Dijkhoff has said:

“Maintenance and enforcement of the current ban is in reality not possible due to the large online offering and the cross-border nature.”

There therefore exists a belief in the industry that regulation is needed to ensure consumer confidence and allow sites to prosper, but recent statistics released by Dutch regulator Kansspelautoriteit (KSA) suggests this may not be as true as many believe.

Growth Without Regulation

Earlier this month, KSA released a report regarding the state of online gaming in the Netherlands. It is predicted that by the end of 2015, the industry will bring in gross revenues totaling €296 million, a 7.6 percent increase over 2014’s gross revenues of €275 million. The report reveals that about 437,000 residents of the Netherlands, about 3 percent of the population, have used an online gambling site over the last year. This is all despite the fact that the Dutch iGaming industry is largely unregulated. As the KSA report summarily states; “The size of the market has grown significantly in the period 2003 to 2015.”

How the Dutch Market Compares to Europe

While the report from the KSA shows that the Dutch iGaming market is doing well, it does highlight some differences between the state of gaming in the Netherlands and how the industry is growing throughout the rest of the EU. The average growth of the online market in Europe is slightly above the numbers out of the Netherlands. Also, conventional land-based casinos are still preferred to online gaming by the Dutch, and currently account for 87% of the total gambling market, whereas in most other countries, players are increasingly favoring online gambling over traditional gambling. These facts could be due to the lack of regulation, indicating that while laws governing online gambling are not necessary for growth they do contribute to it.

Debate Over Future Taxation

Part of what is holding up regulations on online gaming in the Netherlands is a debate over how the industry should be taxed. Dutch land casinos must pay a tax rate of 29 percent on their gross gaming revenue under current laws, and lawmakers in the Netherlands have so far proposed a 20 percent tax on online gaming businesses. This has been met by protests from some operators in the country, which are requesting lower rates of about 10 percent. As Kalf Katzz & Franssen legal attorney Justin Franssen, explains:

“The conclusion of the Gaming Authority is that if the tax rate goes up it will have a detrimental effect on channelization, and I don’t think they’ve said that publicly previously.”

Those pushing for the lower rates argue that foreign investors will shy away from the Dutch online gaming market if taxes are high, but proponents counter that major online casinos such as Roxy Palace, Mr Green, and Platinum Play are already popular gambling destinations for Dutch players, while there are also 200 foreign companies currently pursuing licensure, despite the possibility of a 20 percent tax rate.

Gambling Addiction in the Netherlands

One other interesting finding in the KSA’s report relates to gambling addiction; it seems that rates of addiction are lower than the norm among Dutch online players. The report shows that 83 percent of online players exhibit no signs of addiction, that 11 percent show risk signs and that 5 percent of players are currently addicted. As attorney Justin Franssen explains:

“It’s also important to note that the regulator found that there is also no evidence that legalizing online gambling will lead to an increase in addiction.”

Nevertheless, it will be interesting to see if these numbers shift if iGaming becomes better regulated and more people are enticed to play as a result.