Dutch online gambling license – application procedure update
Category: Gaming law
This blog explains the license application procedure with the Netherlands Gambling Authority (Ksa) and gives information on the on the games allowed under the Dutch Remote Gambling act. The Games of Chance Authority (Ksa) is preparing to process applications for online gaming licences under the Distance Gaming Act (Koa).
Applications can likely be submitted as of 1 January 2021 according the last KSA forecast. The online market is scheduled to open six months later. In order to ensure that the licensing process runs efficiently and smoothly, the Ksa is informing market participants about what information will be requested in the future. On 11 November 2019, further information was published on the subjects covered by the licence application. The purpose of this is to enable parties wishing to apply for a licence to be prepared. This will help to ensure that things run smoothly in the future. The application must be done in the Dutch language.
Four remote games of chance will be allowed in the Netherlands:
a. casino games in which the players play against the licensee;
b. casino games in which the players play against each other;
c. betting on events during a sporting event or on the outcome of a sporting event; and
d. betting on results of horse races and harness races.
For lotteries the existing application procedure is available. Foreign lotteries that qualify for organising lotteries in the Netherlands can obtain a Dutch license on an equal footing with Dutch licensees and use the Internet as a sales channel.
Method of application remote gaming licences
Applications are to be submitted digitally and are in Dutch. An application will cost approximately EUR 45,000. If the licence is not granted, this money will not be refunded. Applications will only be processed if they are fully complete, the identity of the applicant is clear, and payment has been made. In some cases, applicants will be asked to upload supporting documents. Please note: information should be provided as concisely as possible. Providing more information than necessary may result in the Ksa not being able to complete the application before 1 January 2021. Also check out the requirements for a foreign applicant here.
The Ksa license application contains seven parts (‘Modules’). Here are the main points per each part.
Part A – General Information
This part asks for the type of game of chance for which a licence is requested. This part also asks about the legal structure of the applicant, whether there are any stock market listings, along with contact details and an address.
Part B – Integrity
This part deals with the integrity of the applicant, the applicant’s managerial staff and the applicant’s contacts. Applicants are subject to a test within the framework of the Act on the Promotion of Integrity Assessments by the Public Administration (Bibob). A Bibob investigation investigates whether the applicant has a criminal history. In this part, information is requested about assets, debts, involvement in other companies, group structures and organisation charts, among other things. More information on the Dutch probity screening proceeding you can find here.
Part C – Expertise
In this part, the applicant must demonstrate that the policy makers and executive officers have sufficient expertise. The personnel and training policy is to be discussed here.
Part D – Finance
This part deals with the applicant’s financial management. How are the player’s funds protected? How is the continuity of the company guaranteed? In this context, a financial guarantee of an amount, which is expected to be EUR 830,000, is also requested. This is to ensure that taxes, gambling levies and possible fines can be paid.
Part E – Consumer protection
This part covers marketing and advertising, information and education, complaint handling, addiction prevention and player identification. For all these subjects, the applicant is asked to provide insight into the applicant’s policies, how these processes are monitored, what happens in terms of risk management and how errors are to be rectified and prevented in the future.
Part F – Business processes
This part is about:
– What inspections there are regarding game and ict systems;
– Which business processes have been outsourced and how they are monitored;
– How possible matchfixing is detected (if sports betting is offered);
– The integrity of its own employees;
– How payment transactions take place;
– How checks are carried out within the framework of the Money Laundering Prevention Act (Wwft) and the Sanctions Act.
As with Part E, the following applies: For all these subjects, the applicant is asked to provide insight into the applicant’s policies, how these processes are monitored, what happens in terms of risk management and how any errors are to be rectified and prevented in the future.
Part G – Digital communication
The two topics covered in this part are the Central Register Exclusion Games of Chance (Cruks) and the Control Database (CDB). The applicant must demonstrate that the applicant can connect to the digital Cruks system. The applicant must also demonstrate that a digital connection is possible between the applicant and the Ksa for the purpose of the CDB, whereby the Ksa has access to the applicant’s data. The technical conditions for Cruks and the CDB will be known at least three months before applications can be submitted.
Licence for remote games; which games will be allowed (from the Decree on Remote Gaming)
I have translated some relevant articles from the Decree on Remote Gaming. Ive also added ‘the translation of some of the explanation given for the articles.
- Authorisation may be granted for the remote organisation of:
- a. casino games in which the players play against the licensee;
- b. casino games in which the players play against each other;
- c. betting on events during a sporting event or on the outcome of a sporting event; and
- d. betting on results of horse races and harness races, organised by or under the auspices of the Stichting Nederlandse Draf en Rensport or a comparable national or international, whether or not an umbrella organisation, to the extent that, in the opinion of the Executive Board, they are responsible, reliable and organised in a verifiable manner.
- Authorisation shall not be granted for the remote organisation of lotteries.
- Further rules shall be laid down with regard to games of chance by order of Our Minister, referred to in the first paragraph, and the way in which they are organised. In addition, in each case:
- a. further requirements to be met by the games of chance referred to in paragraph 1 and their organisation, and
- b. designated ways in which games of chance may not be organised.
- The regulations referred to in subsection 3 may lay down more detailed rules with regard to the games of chance referred to in the second paragraph.
- Explanation of article 2.1: more information on the games allowed under the Dutch Remote Gambling act
- This article regulates, among other things, which games of chance may be organised remotely and which may not.
- The licensee has to organise his or her business operations (the gaming system) on the basis of Article 31h, paragraph 1, Wok, in such a way that the responsible, reliable and verifiable organisation of the licensed remote gambling is guaranteed. Given the close correlation between the nature of games of chance which may be organised remotely and those that are organised in person, this article in the Remote Games of Chance Regulation also contains technical and operational requirements of the gaming systems.
- First paragraph
- The range of games of chance that can be organised remotely is very large, diverse and constantly subject to change. It is not possible to create set rules for each individual game of chance and to maintain them in such a way that responds to developments in practice. The regulation of the licensed games of chance is therefore based on the characteristics of those games of chance and the associated risks they entail for the responsible, reliable and verifiable organisation. A distinction is made between four types of games of chance:
- a. casino games in which the players play against the licensee;
- b. casino games in which the players play against each other;
- c. sports betting, and
- d. betting on the results of horse races and harness races.
For the purposes of this Decree, in addition to games of chance organised as classic table games casinos, casino games also include slot machine games organised remotely. It is important that at least the popular casino games (including roulette, blackjack, baccarat, sic bo, money wheel, poker and 50 ball, 70 ball and 90 ball bingo) and remote slot machine games may be offered. It is impossible to predict which games of chance will be developed in the future and for which games there will be a high amount of demand in the future. It is important for there to be flexibility how the supply of games is regulated, so that licencees can develop an appropriate supply. In this way, the licensee can adapt the supply to the changing demands of players in the Netherlands.
The casino games in which the players play against the licensee (jeux de contrepartie) include almost all of those currently organised in the casinos of Holland Casino table games (with poker as an important exception) and the games of chance played on slot machines. The probability determination is almost entirely controlled by a random generator. The speed of the game is a risk in this category of games of chance, as the game of chance has no inherent factors that could slow the pace of play, such as interaction between players or waiting for sports results.
The casino games in which the players play against each other (jeux de cercle) include most forms of poker and the bingo formats of 75 balls, 80 balls and 90 balls. The licensee only has a facilitating role. The probability determination is controlled by a random generator, by the players’ different skills and by the group dynamics between the players. Additional risks for this category of games of chance are cooperation between different players to the detriment of other players’ chances of winning, money laundering by means of transactions between players and self-overestimation on the part of players as a result of their (alleged) influence on the outcome of the game of chance.
Following the 2008 Dutch Media Act, a sports competition is defined in Article 1.1 as a competition organised by or under the auspices of the national sports organisations recognised by the NOC*NSF and their affiliates, or by comparable international sports organisations, whether or not umbrella organisations, or another competition of a sport designated as a sport by the NOC*NSF.
In practice, sports betting is organised in different ways. Examples are fixed odds betting, pool betting, betting exchange and spread betting. In the case of fixed odds betting, the provider himself determines the odds (a rating) of a fixed odds bet on which players can place bets. A rating determines what the player gets paid if he or she makes a bet and wins. The bookmaker sets the fixed odds before the match. Such bets are currently offered in Netherlands in the form of the toto.
In exchange betting, the provider offers a market comparable to the stock exchange in which buyers and sellers can trade with each other. The provider of exchange betting does not determine the quotation itself, but leaves this to supply and demand on the relevant exchange market. For every bet that players make with each other, the provider receives a commission. In pool betting, the provider collects all bets on a sporting event. The provider receives a percentage of this. The remainder is the total pot that is paid out to the winner(s).
In the case of spread betting, no rating is set prior to participation and the odds are not determined until after the end of the game, exposing the player to the risk of losing a higher amount than his or her wager to lose. As a result, the financial risks for the player cannot be anticipated.
Online Games that are not allowed in the Netherlands
A number of games of chance may not be organized. This applies, among other things, to casino games and sports bets organised in such a way that the player can lose more than he or she has actually bet (spread-betting). (Sports) bets on matches with an unacceptably high risk of manipulation are also not allowed. A characteristic of sports betting is that the outcome of the game of chance is not determined by a chance generator, but by the outcome of a sports match or by events during sports matches. Risks include manipulation of the events on which betting is made (including match fixing) and, insofar as it concerns sports betting between players, (peer-to-peer) money laundering by means of arranged betting.
Because horse racing and harness races are not sports competitions defined in Article 1.1 of this Decision, they have been treated separately. Risks include, in particular, the manipulation of the outcome of matches. Organising bets on these types of matches is permitted, insofar as the competition is organised by or under the auspices of the Dutch Draf en Rensport (NDR) or a comparable national or international organisation, umbrella or not. In horse races and harness races, it is only possible to bet on the results.
On the basis of the licence to organise remote gambling, in principle, all casino games (in which the players play against the licence holder or against each other), all sports bets and all bets on trotting and trotting races at a distance may be organised. This is on the basis that these games of chance and how they are organised meet the requirements included in this Decree and in the Remote Games of Chance Regulation.
Virtual sports, fantasy sports and e-sports
Paragraph 1 does not exclude betting on virtual sports, fantasy sports and e-sports, insofar as those games of chance: can be considered games as referred to in paragraph 1, meet the relevant technical and operational requirements, are organised in a responsible, reliable and verifiable manner in the opinion of the Games of Chance Authority and, insofar as applicable, are organised with due observance of the safeguards against the manipulation of sports competitions (Articles 4.7 through 4.9). In principle, betting on e-sports competitions may be allowed as soon as such e-sports meet the definition of sports competition in Article 1.1 of this Decree. They must therefore be organised by, or under the auspices of, the national sports organisations recognised by the NOC*NSF and their affiliates, or by comparable international sports organisations, whether or not they are umbrella organisations, or designated as sports by the NOC*NSF. However, this is not (yet) the case.
Fantasy sports bets are considered sports bets and are therefore allowed, insofar as they are based on (elements from) sports competitions that fit within the definition of a sports competition, and are organized with due observance of the safeguards against the manipulation of sports competitions (Articles 4.7 through 4.9). Virtual sports whose outcome is determined by a random number generator are regarded as casino games, and betting on these, is therefore permitted in theory.
Article 2.1 lid 2 & 3 – Licence for Dutch Lotteries – equal chances for foreign lottery providers
Pursuant to the second paragraph, lotteries are expressly excluded from the games of chance that may be offered at a distance. The regulation of games of chance at a distance is intended to make it possible – under strict conditions and subject to heavy safeguards – to also organize the more risky casino games and sports bets at a distance for which there is substantial demand. It is not intended to organise the considerably less risky lottery products. Section 31(2) of the Wok regulates that the sale of entry tickets to lotteries licensed in the Netherlands under the Wok via the Internet is not governed by Title Vb of that Act (remote gambling). Foreign lotteries that meet the conditions for organising lotteries in the Netherlands can obtain a Dutch license on an equal footing with Dutch licensees and use the Internet as a sales channel. For the sake of completeness, it is noted that subsection 2 relates to all forms of lotteries and not only to the lottery products that are currently offered under a license pursuant to Sections 3, 8, 14a, 15(4) and 27a(2) and (3) of the Wok. Pursuant to subsection 4, the Remote Games of Chance Regulation lays down rules with which lottery products in the rapidly changing gaming market can be distinguished from other games of chance.
Article 2.2: Authorisation shall be granted for a period not exceeding five years.
Article 4.7 – appropriate measures
- Without prejudice to Articles 4.5 and 4.6, the licensee shall ensure the following bets are organized and ensure that an effective policy for its organisation is developed, applied and maintained with a view to preserving the integrity of those betting matches involved.
- In any event, the licensee shall take appropriate measures aimed at cooperation and exchange of information in the interest of preventing and identifying the manipulation of competitions together with relevant organisations working in field of sports integrity, including at least those involved in competitions, match organisers, sports organisations, the National platform for match fixing, and an International partnership of competition organisers and gaming providers.
- The licensee shall also take appropriate measures to prevent conflicts of interest and abuse of insider information in relation to competitions. These measures shall in any event be aimed at preventing:
- a. misuse of its financial and economic relationship with the sports organisation, sportsmen and sportswomen concerned and the organisers of competitions on which it bets;
- b. involvement in the establishment of betting odds on a match of persons involved in that contest, and
- c. participation in a bet on a match organised by it by persons who are involved in that match or in the organisation of that bet.
- Further rules may be laid down by Our Minister’s regulation with regard to the first to the third paragraphs.
- Article 4.8 Providers’ assessment an analysis of the matches at stake
- The licensee who organises betting operations shall, prior to the betting operation, ensure the proper identification, analysis and evaluation of the risks to the integrity of the match in question, which shall in any case involve:
- a. the extent to which the outcome of the match is relevant to the competition in the sport concerned;
- b. the extent to which the sportsmen and sportswomen concerned are paid in a timely and sufficient manner;
- c. the degree of objective reporting of the match;
- d. the extent to which the organisation of the competition otherwise contains safeguards against manipulation, and
- e. internal and external signals which indicate a risk to the integrity of the affected persons contest.
- Prior to the bet, the licensee shall in any case inform the involved competition organiser and the sports organisation concerned on the nature of the products to organise a bet.
- During and after the bet, the licensee shall arrange for a proper identification, analysis and evaluation of the risks to the integrity of the concerned contest, in which at least they’ll be involved:
- a. the indicator referred to in the first paragraph under e;
- b. the number of bets placed on that match, and
- c. the amounts wagered in the bets on that match.
- If the investigation referred to in the first and third paragraphs reveal unusual facts or circumstances indicating an increased risk of manipulation of a match, the Authorisation-holder shall then take appropriate measures and inform the Management Board and the Agency. The organiser of the competition and the sports organisation concerned are informed of those facts or circumstances without delay and the measures taken or to be taken.
- The marketing authorisation holder shall ensure that he or she is at all times able to account for on the manner in which the previous paragraphs have been implemented.
- By order of Our Minister, further rules may be laid down with regard to the first to fourth paragraphs. Matches and competitions may be designated in which a prior identification and analysis as referred to in the first paragraph may be omitted. Our Minister proposes that organisations by whom or under whose auspices the competitions in question or competitions are organised prior to the establishment or amendment of a designation as referred to in the second sentence in the opportunity, issue a written opinion on the risks to the integrity of the matches and competitions concerned. If Our If the Minister deviates from the advices issued, he shall do so stating the reasons.
Section 6 of the Decree – The game system
The marketing authorisation holder shall ensure that in his or her organisation develops, applies and maintains:
a. a quality management system that complies with the regulations laid down in Our Minister’s regulations.
b. an information security system that complies with the requirements laid down by Our Minister’s regulations, and
c. a system for the management of information technology and communication networks which complies with the requirements laid down by Our Minister’s regulations.
Paragraph 2. Periodicity of inspections of game system
The permit holder submits the entire game system for commissioning to the inspection by a designated inspection body.
- The licensee shall submit an intended amendment to any part of the game system to be put into operation for inspection by a designated inspection body.
- Prior inspection as referred to in subsection 1 may be dispensed with, insofar as this concerns the modification of a non-critical part of the game system and the game system after modification of that part meets the requirements. In that case, the authorisation-holder shall notify the Management Board of any such change and submit the modified part to the Administrative Board:
- a. Immediately to its own inspection, and
- b. within 180 days of inspection by a designated inspection body.
- Prior inspection as referred to in the first paragraph may be dispensed with, insofar as the amendment is necessary without delay for the responsible, reliable and verifiable organization of the licensed games of chance. In that case, the licensee shall inform the board of management board without delay and submit the amended section in such a way as to, as soon as possible, but at the latest within 30 days, have it inspected by a designated inspection body.
- A proposed change is necessary without delay for the responsible, reliable and controllable organisation of the licensed games of chance, if it is possible to refrain from doing so if this would lead to significant security risks or to significant adverse effects on the continuity of the gaming system or for the integrity or confidentiality of data.
- Further rules shall be laid down with regard to this section by order of Our Minister. More detailed rules shall in any case be laid down with regard to the inspection referred to in the second paragraph, point (a).
- Article 4.52
- The permit holder shall subject every component of the gaming system to inspection by a designated inspection authority in accordance with the procedures referred to in section 4.41(2), under c.
Execution of game system inspection
- The designated inspection authority shall inspect the playing system or any part thereof on the basis of:
- a. the conformity assessment scheme adopted by the Management Board, and
- b. its inspection plan drawn up on the basis of the characteristics of the game system.
- In an inspection as referred to in subsection 1, the appointed inspection authority shall involve as much as possible the results of other tests of the game system or part of it.
- The appointed inspection body shall draw up an inspection report for each inspection.
- Further rules shall be laid down by Our Minister’s regulation with regard to the implementation of the following provisions of the inspection. In any case, further rules shall be laid down with regard to the use of the results of other inspections as referred to in the second paragraph.
On advertising of remote gambling in the Netherlands
The licensee who organises games of chance remotely is allowed to advertise his or her services. This advertising enables the player to take note of the licensed offer. Moreover, in his or her advertising and recruitment activities, the licensee must contribute to the objectives of the Dutch gambling policy. This means, among other things, that the advertisements must not encourage excessive participation and must not be misleading. This is a general requirement that also applies to all other gaming licensees.
Not being allowed to encourage excessive participation means that advertising must be restrained and balanced in terms of, for example, form, target group, content, tenor, number and type of channels on which the advertising message is offered. Furthermore, advertisements which incite immoderate participation also include advertisements which persuade impulsive decisions to participate, e.g. offers such as ‘today only’, ‘for quick decision makers’ and temporary discounts such as ‘two for the price of one’. The same applies to advertising that suggests financial advantage, increased social acceptance or happiness, that promotes gambling as a solution to financial or personal problems or that promotes gambling as a lifestyle. For example, misleading advertising occurs when an unrealistic or incorrect image of the product is given. This may include the odds of winning or the costs associated with participation. Finally, advertising should not be intrusive or aggressive. All gambling licensees should pay special attention to vulnerable groups.
I understand this is a lot of information. The mentioned paragraphs of the Decree are important for potential applicants of the remote gaming license. Please don’t hesitate to contact gaming lawyer if you have any question on the application procedure.We help out our clients with the application and the probity test.