Dutch Regulator Declares Esports Betting And Skin Betting Illegal—But So Is All Online Gambling For Now

Posted By Joss Wood on January 22, 2018

[toc]The Netherlands’ gambling regulator, Kansspelautoriteit, has issued two advice notes, one on internet esports betting and one on internet skin betting, declaring that both are illegal under current law.

The statement on esports betting says:

“Playing games on the Internet (e-sports) is permitted. Betting on these games (betting) is a game of chance. For this, a license is required for anyone to be allowed to offer gambling in the Netherlands.

At present it is not possible for e-sports betting to apply for a license in the Netherlands. E-sports betting is prohibited in the Netherlands.”

The statement on skin betting uses exactly the same text, prefaced with “Betting skins/skin gambling are games of chance.”

In fact barring the title of esports or skin betting, both statements are the same. Both mention that the regulator doesn’t know whether either activity is prevalent in the Netherlands, but that it will monitor the situation.

New laws are on their way but have been delayed

The two advice notes are to some extent, a statement of the obvious. Under the current Dutch laws all online gambling is prohibited.

Since 2011, after complaints about Dutch gaming laws from the European Commission, the Netherlands has been trying to pass new online gaming laws.

The process has been tortuously slow, with each legal draft subject to consultation and further amendments.

The final text only made it through a vote in the Dutch House of Representatives in July.

A vote in the Senate is not expected until Q4 of this year; although even when the bill passes the upper house, there remain several bills of secondary legislation which must also be approved before the final legal framework will be in place.

The secondary legislation should take the whole of 2017 to complete.

During Unibet’s Q2 results presentation a fortnight ago, CEO Henrik Tjärnström estimated that a go-live date for operators who obtained a license would not be until Q1 of 2018 at the earliest.

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Will esports and skin betting be allowed when new laws come into force?

The significance of the regulatory notes issued this week is not that they set out the existing legal situation. Their real significance is that they set out Kansspelautoriteit’s ignorance of esports betting whether for skins or real money.

The regulator is asking the public to use an online contact form to give them information about both subjects. People are asked in particular to report their experiences with regard to:

  • The name of the provider.
  • In what way was the consumer approached?
  • Did minors (under 18 years) participate in esports betting? Computer games are widely played by minors who potentially face unwanted gambling.
  • How much money has the consumer lost or used to play with?

The content of the statements and the request for information suggest that the regulator lacks the knowledge it needs to feel comfortable with regulating esports betting even when the new laws come into force.

A 101-page market research report commissioned by Kansspelautoriteit was issued in August last year. It made only a single mention of esports, in paragraph 7.6.

The reference did no more than note the existence of esports betting and comment that it was an activity at high risk of cheating.

A pessimistic conclusion would be that there is a possibility that esports betting will not be allowed, or at least not allowed when the first wave of licenses are granted in 2018.

Kansspelautoriteit has time to remedy its lack of knowledge

As the result of the legislative delays, the Dutch regulator does have the benefit of time to learn about esports betting and develop a regulatory approach.

Kansspelautoriteit was authorized to create and regulate internet gambling when the expectation was that the laws would be implemented in 2014. It may still not have any licensees, but it has been active in preparing for its new role.

Early on, it announced and enforced a complete ban on online gambling advertising and affiliate marketing.

It has had considerable experience in dealing with unlicensed operators, and has become one of the more efficient regulators in that regard. It has conducted several high profile prosecutions which have set out clearly its intent to protect its license holders when they eventually begin operating.

It has also built strong relationships with other regulators through the establishment of bilateral information sharing agreements. In remedying its lack of esports betting knowledge, these will help it accelerate the learning process.

The UK Gambling Commission’s discussion paper on esports betting issued earlier this week will generate useful submissions dealing with the regulatory gray areas which remain.

By early 2018, there is no reason to think that Kansspelautoriteit should not be perfectly capable of regulating esports betting in the same way as the UKGC, or the Italian Agenzia delle Dogane e dei Monopoli (AAMS) currently do.

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Joss Wood

Joss Wood holds an English degree from the University of Birmingham and also earned a master’s degree in organizational development from the University of Manchester. Joss has a special focus on the international online gambling market, though he also writes extensively on US regulated markets, sports betting, and esports betting.

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