The new draft act on gambling

Date 11 mar. 2010

On 12 February 2010, a draft for a new act on gambling was presented in public hearing.

 

The draft act on gambling includes provisions to end gambling monopoly and to liberalise the market. Today, the Danish gambling market is regulated in such a way that commercial actors in principle are excluded, only allowing certain public benefit organisations and state controlled companies. The draft act will be part of a legislative package also containing a draft act on taxation of gambling, a draft act on gambling payments and a draft act on Danske Spil.

 

The final bill is expected to be introduced to the Danish Parliament in March 2010 and to come into force 1 January 2011.

 

The draft act on gambling includes provisions on various aspects of the gambling market. This memo will focus on the draft act’s definitions of the different types of gambling which will fall within the Act, as well as the provisions on licenses for providers of the different types of gambling.


The Definition of Gambling

Gambling provided or arranged in Denmark falls within the draft act, which defines and divides gambling into three main areas: Lottery, combined gambling and wager.´

 

Lottery is defined as an activity, in which a participant is able to get a chance to win a prize, and where the winner is decided solely by chance. Examples hereof are the National Lottery, Joker, state lottery, bingo, and scratch games.

 

Combined gambling is defined as an activity, in which a participant is able to get a chance to win a prize, and where the winner is decided by a combination of skill and chance. Examples hereof are bridge, poker, backgammon, whist and guessing competitions, if decided by a prize draw. However, any gambling based solely on skill may be comprised, if an element of chance is added in determining the winner, e.g. a prize draw between the best players.

 

Wager is defined as an activity, in which a participant is able to get a chance to win a prize by wagering on either the result of a race, a sports game, or another future event or the occurrence of an event.


Gambling Licenses

Providing any type of gambling as defined by the draft act will require a license. Licenses are granted by the Gaming Authority. An exception is made for gambling where no stake is paid in order to participate, in which case license will not be required. Additionally, license will not be required, if authorized within the draft act or another act.

 

The availability of a license is dependent on the type of gambling in question. Some types of gambling licenses are exclusive and only granted to a sole provider, whereas other types of gambling licenses may be granted to an undetermined number of providers. The duration of the various licenses vary as well, and some can be granted indefinitely.

 

As some types of gambling resemble each other, the draft act in many cases proposes that a license cannot be used to provide other types of gambling than the one specifically licensed.

 

There will be nine different types of licenses, these being the following:

 

  • A lottery license. The draft act proposes that license for providing lottery is granted exclusively to a sole provider, and that it is of indefinite duration. The explanatory notes suggest that the license is granted to Danske Spil A/S, who up until the draft act comes into force has been granted the license to provide lottery pursuant to the Act on Tips and the National Lottery. The types of lottery comprised by the license will include Lotto, scratch games, Joker, Keno, Online Bingo, Boxen, and Online Trackside.
  • A state lottery license. This type of license will be non-exclusive, and will be granted either for a period of up to ten years, or will be of indefinite duration. Today, three state lottery licenses are granted to the National State Lottery A/S, Landbrugslotteriet, and Industri- and Varelotteriet. The explanatory notes suggest that the National State Lottery will be granted a license of indefinite duration, whereas the other two licenses will expire in 2019 and 2016, respectively.
  • A non-profit making lottery license. This type of license will be non-exclusive. Today, pursuant to circular letter no. 147 of 1 August 1994, only associations domiciled in Denmark are able to obtain such license, but the explanatory notes to the draft act suggest that it should be made possible for any non-profit association to be granted a license for the purpose of providing non-profit lotteries for charity.
  • A wager license. This type of license will be non-exclusive, and will be granted for a period of up to five years. The explanatory notes suggest that the market should be open to new commercial actors, making them able to obtain licenses to provide wagers, both land-based and online. No specific types of wagers are determined in these provisions, opening up a wide range of possibilities, although certain limitations apply. Fixed odds gambling, live betting, land-based Trackside etc. will be comprised by the license.
  • A horse- and dog wager license. The draft act proposes that such license is granted exclusively to a sole provider, and that it is of indefinite duration. The explanatory notes suggest that the license is granted to Danske Spil A/S, who under the name of Dantoto up until the draft act comes into force has been granted the license to provide horse- and dog wagers pursuant to the Act on Tips and the National Lottery.
  • A local pool wager license. This type of license will be non-exclusive, and will be granted for a period of up to three years. Bicycle races, dog races on track, pigeon races, and horse races will be comprised by the license  The provisions on local pool wagers is a consolidation of Sections 1 and 1A(1) of Act on Local Betting, and no changes are intended.
  • A land-based casino license. This type of license will be non-exclusive, and will be granted for a period of up to ten years. The license comprises establishing and running a casino providing roulette, baccarat, punto banco, black jack, poker, and gambling on prize paying gambling machines. Certain organisational requirements must be met by the provider in order to obtain the license.
  • An online casino license. This type of license will be non-exclusive, and will be granted for a period of up to five years. The license will comprise combined gambling, roulette, and prize paying gambling machines provided by an online casino. In principal, the same types of gambling as provided by a land-based casino will be comprised by the license, e.g. roulette, poker, black jack and prize paying gambling machines. Furthermore, the online combined gambling provided by Danske Spil today (called “Zezam fællesspil”) will be comprised by the license, and may be provided by the license-holder, e.g. whist, hearts-free, yatzy, and ludo, as well as other games like bridge and backgammon. The explanatory notes suggest that poker providers should be able to offer poker games, in which Danish players may play against poker players from other countries in an open network, in order to create a poker network with a large cash flow. Within these networks, the games must comply with Danish legislation, be supervised by the Gaming Authority, and the provider must pay duty of the part of the stake that relates to Danish clients.
  • A prize paying gambling machine license for arcades and restaurants. This type of license will be non-exclusive. The license will comprise installing and operating such machines in arcades and restaurants owning an alcohol license. As for arcades, the license will be granted for a period of up to five years or be of indefinite duration, but a license cannot be granted, if the police opposes for orderly reasons. As for restaurants, a license will be in force as long as an alcohol license is owned, but a maximum of three machines will be allowed in a restaurant. Other regulations on prizes, providing other types of gambling, entry requirements, and more will apply as well.

Terms for obtaining licenses

The draft act proposes that licenses may be granted to persons, companies, associations, funds, and the like.

 

Persons will have to comply with a set of requirements set forth in the draft act.

 

  • A person must be at least 21 years of age.
  • A person may not be under guardianship or co-guardianship pursuant to Sections 5 and 7 of the Guardianship Act.
  • A person may not have begun restructuring proceedings, filed a petition for compulsory composition, bankruptcy, debt rescheduling, or have gone into restructuring proceedings, bankruptcy proceedings, debt rescheduling, or compulsory composition.
  • A person may not be charged with or convicted of a crime which may substantiate obvious risks of abuse of the possibility to run a business or have a job related to gambling.
  • A person may not have unpaid government debt which is due for payment. This does not include instances where a repayment arrangement has been made or where security has been provided.
  • Companies, associations, funds, and the like will have to comply with the same requirements as persons, although not including the requirements concerning age and guardianship/co-guardianship, as these are irrelevant. However, members of the management and the board of directors must comply fully with all the same requirements that apply to persons.
  • A license may be granted to companies which are established within Denmark or another EU- or EEA-country. A license may also be granted to companies established within a non-EU or non-EEA-country, if a representative domiciled within Denmark is appointed by the applicant. This representative must be authorised by the Gambling Authority and comply fully with the same requirements as personal applicants. Such authorisation may be revoked, if certain requirements are no longer met.

Licenses may only be granted to persons, companies, associations, funds, and the like if it is presumable that they are able to provide gambling in an economically safe way and are professionally qualified. A license may not be granted if a conduct causing reasonable doubts about the propriety in the running of the company is shown by the applicant itself, members of the management or the board of directors, or others who may exercise controlling influence on the running of the company.

 

Special provisions apply for local pool wager licenses.

 

Terms of a license may be applied.

 

The Gambling Authority supervises persons, companies etc., who have been granted a license pursuant to the draft act.

 

Licenses may be revoked by the Gambling Authority, if the license holder does not comply with the provisions of the draft act.

 

Licenses may also lapse under certain circumstances, e.g. if requested by the license holder, if the license is not actively used within certain time-limits, or if the license holder dies.

 

 

If you have questions regarding the above or require additional information about the draft act on gambling, please contact attorney Dan Moalem (dmo@mwblaw.dk) or, attorney Henning Hedegaard Thomsen (hht@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 a reader’s use of the above as a basis of decisions of considerations.