Denmark’s new Draft Bill aims to further liberalise its Gaming Market

Date 29 jun. 2017
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Published in Online Gambling Lawyer.

 

Introduction

In January 2017, the Danish Government announced that it was to amend the country’s current gambling legislation to liberalise a number of minor monopoly games and introduce a new support scheme for horseracing in the form of a special contribution. In accordance with this, the Danish Minister of Taxation proposed a new Draft Bill to liberalise online bingo and horserace betting on 26 April 2017, which - if approved - will lead to a further liberalisation of the Danish gambling market from 1 January 2018, as Pernille NørkærCamilla O. J. Pedersen and Zia Hammer of Moalem Weitemeyer Bendtsen, explain.

 

 

Current Regulation of online Bingo, Horseracing, Dog Racing and Pigeon Racing in Denmark  

Online bingo

Today, bingo is covered by the definition of a lottery which is described as an activity in which the player has a chance to win a prize, and where that chance of winning is completely random. Danske Spil A/S has a monopoly on offering lottery products and consequently online bingo in Denmark and Greenland. Despite the Danish monopoly, online bingo in Denmark is currently offered as part of both the regulated and unregulated market, and the unregulated market is believed to be twice as big as the regulated market. Consequently, the existing regulation is no longer deemed to be the most suitable model for providing online bingo.

 

Horseracing, Dog Racing and Pigeon Racing

Likewise, betting on horseracing, dog racing and pigeon racing, which is only allowed as pool betting, are monopoly games, and Danske Spil A/S has the exclusive right to offer these bets. Horserace betting is offered through Danske Lotteri Spil A/S, a branch of Danske Spil A/S.

 

Horseracing in Denmark has seen a decrease in interest and turnover since 2007, and it appears that the model under which Danske Spil was provided with the monopoly actually contributed to the declining interest in the sport.

 

 

The Draft Bill

Online bingo

The Draft Bill proposes quite a remarkable liberalisation of the provision of online bingo. The Draft Bill proposes that online bingo is simply covered by the current online casino licence. The purpose of this liberalisation is to move the unregulated online activities into the regulated  market in order to increase player protection and to ensure that arrangements to combat compulsive gambling cover as much of the market as possible. A liberalisation of online bingo games is also expected to result in increased online bingo revenue from gambling operators holding a Danish licence to provide online casino games, as they will be entitled to provide a greater variety of games.

 

The amendments to online bingo regulation will include new rules on game duration and a delimitation of player participation in a game.

 

The liberalisation of online bingo, according to which online bingo will be covered by an online casino licence, means that online bingo will be subject to the same tax as any other bet covered by the online casino licence. The tax will be changed from the existing tax on lottery prizes to a tax of 20% of gross income (which is defined as stakes minus prizes). For gambling operators, wishing to enter the Danish market to provide online bingo  services, the gambling operator will need to apply for a gambling licence following the same application procedure and meeting the requirements to keep information up-to-date as is the case with the current games offered.

 

Horseracing, Dog Racing and Pigeon Racing

Regarding the offering of horserace betting, the opinion is that the existing monopoly is not the most suitable model. Horseracing plays an  important role in local and social functions, and the purpose of the new rule is to keep the sport on local tracks for the benefit of local communities and to support a sport which has not been as popular in Denmark as e.g. soccer and other physical sports. The Draft Bill proposes a liberalisation of the offering of pool betting on horseracing, dog racing and pigeon racing and that such games be covered by the licence to offer betting, cf. the Danish Gambling Act.

 

Furthermore, the Draft Bill proposes to remove the prohibition on the offering of fast odds betting on horseracing, dog racing and pigeon racing and that fast odds betting on horseracing, dog racing and pigeon racing be covered by the licence to offer betting. The liberalisation of horserace and dog race betting is expected to result in increasing interest in horseracing and dog racing and thus an increased turnover for such betting. The removal of the prohibition on pigeon racing is expected to result in increased interest in the racing of carrier pigeons.

 

The liberalisation of horserace betting, dog race betting and pigeon race betting, where such betting will be covered by the licence to offer betting, implies that horseracing, dog racing and pigeon racing will be subject to the same tax as the other bets covered by the licence to offer betting; consequently the tax will be changed from 11% and an additional tax on gross income at 20%.

 

Under the current regime horseracing is granted a certain part of the annual revenue from Danske Lotteri Spil A/S, which will be replaced with a new special contribution to the sport of 8% of the turnover generated from horseracing. The contribution is intended to cover expenses of a common interest in the sport and of licence holders with the overall purpose of supporting initiatives that raise the popularity of the sport.

 

The required special contribution is imposed on licence holders offering betting on horseracing on race tracks in Denmark. It should be noted that the contribution is a forced payment without immediate consideration of where the proceeds go beyond the Exchequer and that such payment goes directly to the purpose determined by the public. A similar settlement is in place in France and Great Britain.

 

 

Our Comments

Although it is only five years since the Danish gambling market went from a monopoly to a relatively liberalised market, it appears that the market is facing a time of change.

 

Last year the Danish Government declared its wish to sell off the business activities of state owned Danske Licens Spil A/S, which is active within the liberalised gambling market, including through the major betting brand Oddset, in order to prevent state owned activities from competing with private companies. If or when such sale is completed it is expected to result in severe structural and Commercial changes in the Danish gambling market. While we are waiting for the sales  process to be structured, the Danish Government has continued the changes to the gambling landscape in Denmark, with the proposed further liberalisations. Generally, the initiatives for further liberalisation are considered positive developments for the Danish gambling market and for the types of gambling impacted. Especially for horseracing, dog racing and pigeon racing, which have seen decreasing interest over the last decade, the new regime could lead to a rise in interest as more providers will be offering bets on such events. From a cultural and social perspective the liberalisations are thus more than welcome.

 

In addition, and from a gambling operator perspective, the liberalisation of these games should also be welcomed, as they will enable the licence holder to provide a wider range of bets and games under the same licence. We expect that the application process for online bingo, horseracing, dog racing and pigeon racing will be the same as for the current liberalised games. However, licence holders should obviously be particularly aware of the special support scheme and taxation that differs from the current schemes for already liberalised games.

 

 

If you have any questions or would like additional information regarding any of the above, please contact Partner Partner Pernille Nørkær (pno@mwblaw.dk) or Junior Associate Camilla O. J. Pedersen (cpe@mwblaw.dk).

 

The above does not constitute legal counselling and Moalem Weitemeyer Bendtsen does not warrant the accuracy of the information. With the above text, Moalem Weitemeyer Bendtsen has not assumed responsibility of any kind as a consequence of any reader’s use of the above as a basis for decisions or considerations.