Full steam ahead Safeguarding a safe and fair gambling market Annual Report 2014
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Full steam aheadSafeguarding a safe and fair gambling market
Annual Report 2014
Content
> State of the sector
> Making progress> Prevention of gambling addiction > Prevention of illegality and crime > Protecting and informing consumers > National and international cooperation
> On track > Remote gambling> Overhaul of the lottery licensing system> Casinos> Gaming Machines Decree> Reform of the Money Laundering
and Terrorist Financing (Prevention) Act
> Facts and figures> Gaming Authority as an organization> Financial statements > Appendix: Market data
> Colophon
Full steam ahead
These are the keywords that characterize 2014 for the Gaming Authority. We have reaped the benefits in the past year of all preparations since our establishment in April 2012. Our activities have intensified both in the land-based domain and – in what is still – the illegal online domain of gambling. There have been more campaigns with municipalities, more fines for online gambling, an advertising campaign about illegal gambling on the Football World Cup and Tour de France, and consumers have also known how to approach us better with questions. You can read everything about it in this annual report.
OnlineThe most obvious intended change in the gambling sector is, of course, the envisaged licensing for online gambling in the Remote Gambling Bill. Parliament will hopefully adopt the Bill in 2015. Further delays are undesirable. After all, an estimated one million Dutch people already gamble online. The consumer is asking for fair play and deserves protection against the risks of addiction. The current physical licensees moreover deserve that their competitors also pay tax and must comply with conditions.
In the current, entirely illegal online gambling market, there are gambling providers, on the one hand, that are interested in a license for the Dutch market and already operate under strict licensing conditions from other European countries. On the other hand, the Gaming Authority sees gambling companies that are not licensed anywhere in Europe, which makes the protection of the consumer and combating fraud and other crime very uncertain. Only the first group responds to our request not to focus its activities on the Dutch market. As a result, the second group seems to be gaining market share, while we, as the Gaming Authority, have inadequate enforcement options at our disposal. The proposed Bill makes provision for those options and powers. For example, the Gaming Authority will soon have the power to block websites with the intervention of the delegated judge. We are already preparing for this!
These are results that firstly show where we stand as a regulator but also that a regulator is necessary, because gambling interests in our society are significant. Besides payments to the treasury and charities, the financial scale of the illegal gambling market is massive. Although we see the effects of our enforcement, we also see that it innovates the illegal gambling market. Where illegal ‘toto’ betting – i.e. the illegal betting terminals – was at first found on clearly visible computers with extra components, we now see ingenious, bogus screens on small laptops. But even if the illegal gambling market becomes more innovative, our enforcement as the regulator is just as innovative.
One example of this is our cooperation with municipalities. The number of times assistance was lent to municipalities during illegal gambling inspections has increased. Municipalities firstly identify the disadvantages of illegal gambling, for example via illegal betting terminals. They are also increasingly seeing the advantages of enforcement in relation to other problems. The Gaming Authority is keen to assist municipalities, supporting them with our knowledge and experience in conjunction with their own powers. This leads to increased and better enforcement against the illegal supply of gambling activities in the land-based domain. The Gaming Authority is also currently working on cooperation with the National and Regional Information and Expertise Centres (RIEC-LIEC) to act within that alliance with various other partners against organized gambling crime.
reissuing licences to existing holders, maintaining the number of licences, and issuing those privately. The Gaming Authority issued the new licences to the same parties at the end of 2014.
On the one hand, the Gaming Authority has to deal with new applications for multi-year lottery licences and, on the other hand, it has to deal with objections against the multi-year licences issued at the end of 2014 and refused licence applications. The licence applications and objections are being processed. The overhaul of the lottery system has been postponed until 2017, a decision that has dissatisfied other parties that wish to qualify for a multi-year gambling licence. These parties are relying on rulings of the EU Court of Justice that prescribe transparency in the granting of licences. The court will have to rule on this matter.
LegalizationAnother development in the land-based domain relates to gambling that is indeed illegal, but which seems to be accompanied by minor risks as regards addiction, consumer protection, fraud, and crime. Bingo is one example of this. It is permitted without restriction on a very small scale, provided that it is reported to the municipality and meets the conditions. It is only permitted on a large scale through a monopolistic licensee, even though we witness countless, medium-sized bingo shows – i.e. there is a consumer demand for it – there is no risk of addiction, and the key feature is entertainment. We will ask the Ministry of Security and Justice to cast a separate legal mould for bingos, licensed or otherwise.
The Gaming Authority is on track to implement all aspects of this Bill: monitoring gambling itself, checking advertisements, measures for the prevention of addiction, monitoring illegal gambling, and obviously granting licences.
It is clear from the number of expressions of interest that we have received that the Netherlands is attractive as a gambling market: 130 expressions of interest after three weeks were already more than expected. After three months, that number has already exceeded 200. This is a high number, given the estimated size of the illegal online market. It is estimated that the Dutch generate turnover of €250-800 million in the – as yet still illegal – online gambling market.
It is very useful for us that organizations are expressing their interest. It allows us, as a regulator, to estimate the number of parties that would be interested in a remote gambling licence. We moreover get to know this group better and can provide it with the latest information about the application procedure. The Bill sets stringent requirements for providers in relation to fairness and addiction prevention, for example.
LotteriesWe renewed various licences in 2014. Where possible, licences have become more standardized in order to create a more level playing field. The charity lotteries, the totalizator licence, licences for sports contests, and De Lotto also expired. The State Secretary for Security and Justice has provided the framework for granting licences with a view to the system overhaul that must be completed in 2017:
currently performs this task for casinos, but it is set to be transferred to the Gaming Authority. We will look at where the risks of money laundering lie, the conditions that must be met, and adjust our monitoring to that.
Financial sectorWe also look at what is happening outside the Netherlands in relation to innovation around gambling. We are aware that the ‘gaming sector’ has been knocking for some time at the door of the ‘gambling sector’ for cooperation. A new development is the investigation of gambling from within the financial sector in the Netherlands over the past year. The Netherlands Authority for the Financial Markets (AFM) asked the Gaming Authority to assess two initiatives on their gambling elements, one relating to options and the other relating to a derivative (contract for difference, CFD). Although this was new in the Netherlands, awards have already been given in England for the best binary betting platform. Gambling on and around the financial sector is already far more advanced abroad. This trend is even more prominent internationally, as we noted at an international trade fair, whose fancy advertising text read: ‘the game that does not cannibalize existing gambling turnover’. It is expected that more requests will follow the two official ones we received in 2014 over the next few years. There are already various initiatives involving binary options on the Internet that have not even applied for AFM approval.
drs. J.G. Pot | mr. J.J.H. Suyver | mr. H.W. Kesler
Money launderingIn addition to the Remote Gambling Bill, there is other legislation in the pipeline. The government intends allocating duties to the Gaming Authority in relation to the Money Laundering and Terrorist Financing (Prevention) Act. The Dutch central bank (De Nederlandsche Bank)
‘ Supervision without expertise is trouble; it never amounts to competent supervision’
While we agree that initiatives involving bets and the acquisition of financial products can be classified as gambling by definition, options trading as a whole, for example, cannot be referred to as gambling by definition by any stretch of the imagination. We find this undesirable. The financial world has competent regulators; the Gaming Authority does not need to join those ranks. The Gaming Authority therefore makes referrals to them in case of financial products. However, the question is: when does something stop being a financial product and become gambling? As the law is silent on this point, we have asked the State Secretary for Security and Justice to clarify this either through legislative measures or in another manner.
The gambling sector continues to innovate rapidly overall. More than fifty years after the Betting and Gaming Act came into force, a new chapter may be added to the history of gambling in the Netherlands. The Act is being adapted to the requirements of the 21st century. The Gaming Authority is ready to implement this revised Act, once it has been adopted by Parliament.
J.J.H. (Jan) SuyverChairman of the Board of Directors
Making progress in safeguarding a safe and fair gambling market
Preventing gambling addiction, protecting and informing consumers, and combating fraud and crime: these are the three public objectives that the Gaming Authority strives to achieve and for which it was established in April 2012.
Making progressThe Gaming Authority was active on various fronts during the past year. It performed a range of activities while striving to achieve its public objective, from giving warnings to consumers and enforcing licensing conditions to investigating and fining illegal providers. Qualitative reports supported by figures have been drawn up for each public objective.In 2014, the Gaming Authority shed light on developments in the gambling market with the 2013 market scan. By using this tool, the Gaming Authority can give substance to its regulatory and supervisory duties in a structured manner. In addition to describing the market structure and market conduct, the scan shows the status of the public interests ‘prevention of gambling addiction,’ ‘protection of consumers,’ and ‘combating fraud and other crime’.
On trackThe Gaming Authority also engaged in various activities over the past year with a view to the near future. The Betting and Gaming Act is being amended to include the granting of licences for and the supervision of online gambling. As such, the Gaming Authority will be responsible as the regulator for the implementation and supervision of online gambling. The Betting and Gaming Act is also being amended for the purpose of a new casino system. This implies new duties for the Gaming Authority, for instance because there will be several licensees instead of a single monopolist: Holland Casino.
In achieving the public objectives, the Betting and Gaming Act and the Gaming Authority pay particular attention to the participant in gambling, in other words the consumer, and especially the vulnerable among them, such as minors and gambling addicts. Consumers must be able to wager a small bet in a fair environment now and again; an environment in which there is no place for illegal practices and where they are protected against the adverse effects of gambling. This is what the Gaming Authority is strongly committed to achieving.
MissionThe public objectives are inextricably linked with the Gaming Authority’s mission. The mission reads: Safeguarding a safe and fair gaming market. This is what the Authority advocates.
VisionWithin three years, society, management, providers, and consumers must perceive the Gaming Authority as a good regulator. In order to achieve this, the Gaming Authority works tirelessly at raising quality standards, focusing on values such as honesty, independence, and reliability.
Core valuesFour core values form the essence of the Gaming Authority’s work:Responsiveness, Decisiveness, Fairness, and Perseverance. These concepts form the basis of the actions taken by all the Authority’s employees.
The following chapters provide more detail on the activities it has initiated with a view to future developments.
PUBLIC OBJECTIVEPrevention of gambling addiction
A gambling licensee is required to adopt measures against gambling addiction. Licensees namely have a statutory duty of care to prevent gambling addiction as far as possible. The Gaming Authority ensures that licensees duly comply with this duty. It does this in a number of ways, including developing licensing rules and standards in the area of gambling addiction and overseeing their implementation. The Gaming Authority also has a role in encouraging and coordinating prevention policy. To this end, it will work in structural consultation with licensees and partners from addiction care towards common goals, strategies, and measures to minimize the risks of gambling addiction.
The addiction prevention role of the Gaming Authority is currently limited to the land-based licensees. This role will become broader in view of the future legislation on remote gambling. The preventative tasks of the Gaming Authority will then extend to online gambling licensees. Additional instruments – such as the Central Register of
‘ Adhering to our public objectives is the key to effective supervision’
The casino must intensify both its initial and refresher training programmes for employees and its contact with addiction care centres. Holland Casino has already taken steps in both areas.
What next?The period of more intensive monitoring has been satisfactorily completed. Discussions with patrons of Holland Casino that have now been introduced will have a permanent place in the general supervision of casinos and gambling halls. Future prevention of gambling addiction
Cooperating and learningThe Gaming Authority’s role in the area of addiction prevention is set to become broader in the near future. The entry into force of the Remote Gambling Bill will place large demands on the Gaming Authority in relation to the prevention of gambling addiction. Current monitoring practices and related instruments will have to be adapted to the new situation, with sufficient flexibility to respond to future developments and innovations in the online gambling market.
Cooperation with partiesIn addition to the Gaming Authority, gambling providers, the addiction sector, and consumers play an important role in combating gambling addiction, each from the perspective of their own expertise and angle of approach. In that respect, the Gaming Authority is looking for cooperation and facilitating licensees, consumers, and other parties in shaping their own role. During the forthcoming period, structural
Exclusion from Gambling (CRUKS) and the Addiction Fund that is to be established – will also be further developed. In anticipation of the proposed legalization and regulation of online gambling, the Gaming Authority started the necessary preparations for this purpose in 2014. More about that will follow later in this chapter.
Monitoring gambling addiction at existing licensees
Holland Casino’s prevention policyThe Gaming Authority has been monitoring Holland Casino’s prevention policy more intensively since October 2013. Why? Holland Casino announced shortly beforehand that it would be making cutbacks and shifting its marketing focus from the night life crowd to regular patrons. This gave rise to the question: what are the implications for the implementation of the gambling addiction prevention policy?
MethodDuring the intensified monitoring, the Gaming Authority spoke about the prevention policy to a number of employees in various positions, including croupiers, catering assistants, and policymakers. It also spoke to various patrons of the different branches of Holland Casino about their experiences and to addiction care centres about their involvement in drafting Holland Casino’s policy.
In November 2014, the more intensive monitoring revealed that Holland Casino’s prevention policy was and is well up to standard. However, the regulator does make two binding recommendations.
consultation will be started with market players and social organizations with the aim of jointly minimizing the risks of gambling addiction. The Gaming Authority also wishes to step up efforts in cooperating with the addiction sector, in order to be able to take developments in the area of prevention and new scientific and practical insights into consideration for tightening up prevention policy.
CurriculumThe ‘2012 curriculum for courses on the gambling issue’ will be evaluated in 2015. This curriculum was developed in 2012 by the Dutch Mental Healthcare Association (GGZ Nederland) and the Slot Machines Trade Association (VAN), under the direction of the Gaming Authority.
Addiction FundThe Gaming Authority will also give effect to the Addiction Fund, which is yet to be established and will provide funding for research into and the anonymous treatment of gambling addiction.
Central Exclusion RegisterThe Gaming Authority’s role in the area of preventing gambling addiction will become broader and more intensive with the entry into force of the Remote Gambling Bill. This Bill introduces the Central Register of Exclusion from Gambling (CRUKS) as an instrument for the prevention of gambling addiction. Players that are entered in this register – voluntarily or otherwise – can be excluded for at least six months from participating in the most addictive forms of gambling. This includes gambling in casinos, slot machine halls, and via the Internet, with the exception of lotteries.The Gaming Authority is going to manage this automated and 24/7 active register.
Status of CRUKSThe Gaming Authority is currently assessing the provisional scope and functional requirements of CRUKS, as well as the operating procedures and accompanying policy, on the basis of the above Bill. The legislature will obviously determine the framework for CRUKS.
JOOP POT, MEMBER OF THE GAMING AUTHORITY’S BOARD OF DIRECTORS
‘ CRUKS is an important instrument in the area of preventing gambling addiction. The Remote Gambling Bill states that the Gaming Authority is the manager of CRUKS. That is in keeping with the Gaming Authority’s mission: ‘Safeguarding a safe and responsible gambling market’. Viewed from that perspective, it is logical that the management of CRUKS be placed with the Gaming Authority.’
PUBLIC OBJECTIVEPrevention of illegal and criminal practices
The Gaming Authority regards enforcement against illegal gambling to be essential in order to give consumers the opportunity to participate in gambling in a fair environment.
Consumer riskThe consumer is not protected when participating in illegal gambling. There is no control, for instance, over the participation of young people, whether the game is fair, and whether prizes are awarded honestly. Players may also continue to bet endlessly, causing the risk of gambling addiction to increase. In legal gambling, the provider must inform the consumer about the applicable conditions (costs, prizes, period of subscription) and the risks of addiction. Exactly how did the Gaming Authority work to prevent illegality and crime in 2014? More about this will follow later in this chapter.
Investigation within the gambling sectorThere have been several investigations into different areas during the past year:• the market for illegal gambling on the Internet;• illegal betting terminals;• physical availability of illegal gambling.
Illegal gambling
The Board of Directors also has the option of imposing an obligation under administrative enforcement or a cease and desist order.
Creating barriersBesides fines, the Gaming Authority also uses other means to combat illegal gambling. Over the past year, it has taken steps to block both advertising and payment transactions for illegal gambling.
Blocking advertising for illegal gamblingThe Betting and Gaming Act stipulates that promoting participation in illegal gambling is not permitted. The Gaming Authority monitors advertising for international and national sporting and other events. It pays particular attention, for example, to excessive gambling advertisements during the World Series of Poker (WSOP), the largest poker event in the world. It is however impossible for the Gaming Authority to rid the entire Internet of gambling advertisements. For this reason, the regulator focuses mainly on the advertising that constitutes the greatest risk for consumers.
Effect of warningsOne week before the start of the Football World Cup, the Gaming Authority sent warning letters to various online sports betting providers. The Authority noticed online advertising activities in Dutch that promoted illegal betting on the World Cup matches during the run up to the event. The letters proved to be effective: a month later there was a sharp decrease in advertising, which even disappeared completely in some cases. Tweets and Twitter accounts were also suspended. The promotional websites themselves also ceased later:
Market for illegal gambling on the InternetThe Gaming Authority acts against online gambling providers that focus the supply of their products on the Dutch market. The Gaming Authority takes priority action against providers that comply with one or more of the prioritizing criteria:• the gambling website ends with .nl; and/or• the gambling website can be consulted in Dutch; and/or• advertising via radio, television, or in printed media is focusing
on the Dutch market.
This does not mean that providers of websites that do not comply with the prioritizing criteria are not tackled. They are also providing unlicensed gambling, but are simply later in the queue for enforcement action. The Gaming Authority can also act against promoters of online gambling, such as payment service providers and advertisers.
What enforcement methods does the Gaming Authority use? The Gaming Authority has administrative enforcement instruments at its disposal. It firstly enforces contraventions of the Betting and Gaming Act on an administrative level. The Gaming Authority may request the Prosecution Service to take action under criminal law in exceptional cases.Under the Betting and Gaming Act, the Gaming Authority’s Board of Directors is authorized in the event of a contravention to impose a maximum fine of €810,000 or 10% of the turnover in the financial year prior to the ruling, whichever is the larger.
These payment service providers entered into the cooperation agreement during 2014:• Payment Service Providers: Mollie BV, DialXS BV and Sisow BV,
Card Gate Plus BV and Curo Payments BV (companies that focus on facilitating the payment of products and services offered via the Internet);
• Currence iDEAL BV (owner of iDEAL);• the payment company Betalingsbedrijf Mastercard;• the members of the Dutch payments association, Betaalvereniging
Nederland (including the Dutch banks);• Acquirer PaySquare SE (responsible for the processing and
payment of debit card transactions).
sites of providers that provided information about matches and players, from which it was possible to click through to the betting websites. The Gaming Authority continued this campaign during the Tour de France, and it was noticeable how there was no excessive advertising during that event. At the request of the Gaming Authority, sports betting advertisements were also pulled from the television during the World Darts Championship in December 2014.
Blocking payment transactions to illegal gambling providersThe Gaming Authority achieved one of its goals last year: setting up blockades in payment transactions between consumers and illegal online gambling providers. Providers on which the Gaming Authority has imposed an irrevocable administrative sanction and whose products are still aimed at the Netherlands are placed on a blacklist. This list is shared with payment service providers that have entered into a cooperation agreement with the Gaming Authority. The payment service providers will refuse or stop providing their services to these providers.
MARC MERX, HEAD OF THE ENFORCEMENT DEPARTMENT:
‘ No pay, no play. If an illegal provider does not receive money from a consumer, it is not lucrative to operate illegally from the outset. It is therefore essential for a payment service provider to block a transaction.’
Location inspectionsThe Gaming Authority decides which approach is the most effective in conjunction with the police or municipality. This may involve an investigation by the Gaming Authority governed by administrative law, or a criminal investigation by the police where there are several problems (such as alcohol, drugs, or noise disturbance). The Gaming Authority may also decide to hold an independent investigation. The role of the Gaming Authority has not only been limited in the past year to investigating and fining betting terminal providers. It has also actively informed the operators of all premises where these betting terminals are often found about the risks they are taking.
Some examples from practice are discussed below:• Illegal gambling activities during an inspection in Amersfoort
The Gaming Authority uncovered illegal gambling activities at a number of companies in Amersfoort during April 2014. Three illegal betting terminals were found at a café. No contraventions were established during a subsequent inspection in June 2014. The earlier warning resulted in the end of the illegal activities.
• Seven illegal betting terminals in Nijmegen The Gaming Authority, police, Labour Inspectorate, and the municipality of Nijmegen found illegal betting terminals during a joint inspection in Nijmegen on 11 April 2014.
• Fining guidelines for betting terminals A set of guidelines for betting terminal fines was published in May 2014. These guidelines include the provisions that the Gaming Authority’s Board of Directors takes into account when fixing the amount of an administrative fine for betting terminals.
Betting terminalsA consumer can place a bet on a sports competition, e.g. football, by means of a betting terminal (a computer system). Betting terminals are not permitted in the Dutch market because the technical reliability of the equipment and software that is used cannot be controlled. This unregulated betting is moreover not subject to any financial and tax accounting for income and expenses – including the payment of winnings – and it is unknown how attention is paid to preventing excessive betting and gambling addiction. The betting terminal market is an illegal market in which many millions are estimated to pass hands each year in the Netherlands.
Cooperation among the police, municipalities, and the tax authoritiesThe Gaming Authority works closely with the police, municipalities, and the Tax and Customs Administration in order to combat betting terminals. This appears to be effective. The Gaming Authority then limits itself to a report of its findings for the municipality concerned. For that reason, the Gaming Authority has often lent assistance to municipalities.
Reports of betting terminals reach the Gaming Authority from various sources. This may be a report from a consumer or one that reaches the police or municipality through a cooperation partner.
• Warning letter about betting terminals for cafés and shops In November and December 2014, the Gaming Authority warned cafés and telecommunication equipment shops about supplying betting terminals. The regulator did this in a letter that explained why betting terminals are prohibited and the risks that the business owner is taking.
• Closure of premises due to illegal sports betting On 27 November 2014, the municipality of Arnhem, the Gaming Authority, the police, and the Tax and Customs Administration came across an illegal gambling house in which people were engaging in sports betting. Slot machines and betting terminals were seized.
• Cafés closed because of betting terminals In November 2014, the Gaming Authority and the municipality of Ede came across betting terminals during the inspection of catering establishments. Three cafés were closed on the orders of the municipality. The police and Tax and Customs Administration were also involved in this action.
• Utrecht Municipality closes two premises after an inspection During an inspection in November 2014, two premises were closed in Utrecht for hosting illegal gambling activities. A total of fifteen businesses were inspected. The Gaming Authority worked together with the municipality of Utrecht, the police, the Regional Fraud Prevention Coordination Centre, the Social Affairs and Employment Inspectorate, and the Employee Insurance Agency (UWV) in this regard.
HENK KESLER, MEMBER OF THE GAMING AUTHORITY’S BOARD OF DIRECTORS
‘ Our efforts are paying off. Our policy in relation to betting terminals, for instance, has been upheld in court. The Gelderland District Court found in our favour with regard to the fine we imposed on a betting terminal provider. The District Court held that the fine and the underlying enforcement and fining policy were proportionate. This is an excellent judgement that we can be proud of.’
Physical availability of illegal gambling
Raid on illegal poker gameDuring joint action taken by the Gaming Authority, the police, and the municipality of Menterwolde, an illegal poker game was halted in Menterwolde on 24 May 2014. The police received a tip-off about a poker game in a vacant café, based on which the decision was made to raid the premises. Everyone present was questioned. The police made no further arrests.
Gooische Bingo showThe Gaming Authority’s Board of Directors made a decision in the ‘Gooische Bingo Show’ case on 11 March 2014. The board held that the organization was in contravention of Article 1 of the Betting and Gaming Act (providing an unlicensed gambling activity). The organization was not fined, but a cease and desist order was imposed. This meant that the organization had to bring its procedures into line with statutory rules. The period given in this case was four months. If the organization failed to comply with the order, it would forfeit penalties. The organization of the show complied with the order. In view of the involvement of municipalities in bingo enforcement, all municipalities in the Netherlands received an information letter. This letter contained detailed information on bingos, such as the conditions that apply to organizing a bingo and the enforcement thereof.
Investigations
2013 2014
Investigations into the illegal supply of gambling on the Internet Initiated 9 19
Completed 15 19
Investigations into Online others (advertising, etc.) Initiated unknown 22
Completed unknown 22
Investigations into betting terminals Initiated 28 6
Completed 22 9
Investigations into poker and commercial bingos Initiated 13 6
Completed 18 6
Investigations into other gambling activities, such as illegal gambling halls and pyramid schemes
Initiated 11 9
Completed 7 11
Number of investigations into complaints about slot machines Initiated unknown 54
Completed unknown 52
Number of investigations into operating licences Initiated unknown 25
Completed unknown 18
Number of times assistance lent 22 34
Note Where more investigations were completed than initiated, this number includes investigations started in the previous year.
Criminal lawWhen administrative enforcement is ineffective, the Gaming Authority may ask the Public Prosecutor’s Office to apply criminal law. This occurs when there are repeated or serious contraventions of the law. Examples of this include organized crime or situations in which administrative law does not work satisfactorily.
Fining guidelinesIn 2014, the Gaming Authority published various fining guidelines on its website. These guidelines include the provisions that the Board of Directors takes into account when fixing the amount of an administrative fine.
Published fining guidelines:• Fining guidelines for the provision of unlicensed online gambling;• Fining guidelines for betting terminal cases;• Fining guidelines for the operation of unlicensed slot machines.
Breakdown of municipal and police investigations in 2014
Number of times assistance lent 34
Completed investigations 31
Number of locations visited 78
Temporary closure of locations 8
Permanent closure of locations 2
Municipal measure 11
Police seizures of equipment 2
Powers and instrumentsThe manner in which the Gaming Authority reacts to the contravention of rules depends, among other things, on the nature, seriousness, and extent of the contravention, the size of the gambling provider’s business and its market position within the gambling sector. A discussion to convey rules, advice, or a warning suffices for most contraventions. However, when a warning has little effect among licensees and illegal providers, heavier artillery is needed, such as a fine or revoking of a licence. The Gaming Authority has administrative-law enforcement measures at its disposal, namely the administrative fine, the cease and desist order, and the order for periodic penalty payments.
providing illegal gambling in Dutch. Consumers’ payments were also being channelled through a non-existent company. Consumers lodged complaints about the websites with the Authority.
Effect of supervision: online provisionThe Gaming Authority monitors the effectiveness of its own supervision. Effectiveness has been easy to measure especially since the first step in online supervision. Since 1 April 2012 (the establishment of the Gaming Authority), 48 warning letters have been sent to online gambling providers. Some 33 of these providers have made adaptations and no longer focus their supply of online gambling activities on the Netherlands. Two-thirds of the providers that received letters thus complied with the Gaming Authority’s request. The number of providers that made adaptations after receiving a warning letter and were measured only over the 2014 calendar year is comparable: around 62%. One provider has completely stopped providing online gambling activities.
Since 2012, 59 online gambling providers have been identified and then investigated. In 2010, it was clear that ten of these providers, which had not received a warning letter, nevertheless took the prioritizing criteria into account and were not an enforcement priority. The Gaming Authority sees this as a sign that divulging the prioritizing criteria has the required effect in the online gambling world.
Some examples of imposed fines from practice are discussed below. For a complete list of the total number of imposed fines, see Table: Total imposed sanction cases.
€150,000 fine for provision of illegal online gamblingOn 6 February 2014, the Gaming Authority imposed a joint fine of €150,000 on the companies Onisac Limited and Mansion Online Casino Limited. These companies had been providing unlicensed gambling activities aimed at the Dutch market. The activities involved online casino games, using the website casino.com in Dutch.
€80,000 fine for organizing a house lotteryThe organizers of a house lottery offering a villa in South Africa as the main prize were fined €80,000 on 2 September 2014. A lottery in which a villa called ‘Mountain View’ could be won in South Africa was offered via websites such as winjouwdroomvilla.nl. Interested parties could compete in the lottery by purchasing one or more lottery tickets. The organizers also advertised their lottery in the Dutch media, at a stand at a migration trade fair, through digital mailings in Dutch, and social media advertising in Dutch.
€310,000 fine for providers of illegal online gambling activitiesIn October 2014, the Gaming Authority imposed fines in excess of three hundred thousand euros on the companies behind the websites 7red.nl/.com and royaalcasino.nl/.com, which were
Requests under the Government Information (Public Access) Act
2013 2014
Total number of the above requests received
Not kept updated
13
Of which: Decision 13
Of which: Withdrawn 1
Of which: Forwarded 1
Note: Not all fines are irrevocable because of pending objections and appeal cases.
Some requests under the Government Information (Public Access) Act on which a decision
has been made were submitted in 2013.
Sanctions
2013 2014
Total number of sanctions imposed 6 10
Of which: Administrative fine 6 8
Of which: Cease and desist order 1
Of which: Administrative enforcement
Of which: Notice under Article 5:50, paragraph 2(a) of the General Administrative Law Act
1
Total value of fines in € 350,000 821,500
Number of sanctions for online gambling 2 3
Number of sanctions for betting terminals 4 3
Number of house lotteries 2
Number of bingos 1
Number of unlicensed operations 1
Sanctions
20130
5
15
20
10
2014
€1,000,000
€750,000
€500,000
€250,000
0
Total number of sanctions imposed Total value of fines in €
Complaints about the Gaming AuthorityThe Gaming Authority’s board regulations set out the procedure for dealing with complaints against it. There were two complaints in 2014.
The first complaint pertained to how a licensee’s complaint was handled, while the second pertained to the Gaming Authority’s authority to give a certain analysis. Both complaints were dealt with in writing within the stated periods.
As a result of the relevant complaint in 2014, there was contact with a licensee about the need for due care in communication with players. An internal adjustment was also made for dealing with complaints about licensees.
Reduced number of sanctionsThe Gaming Authority has intensified its cooperation with municipalities over the past six months, particularly in relation to enforcement action against betting terminals. Municipalities may also take enforcement action again betting terminals without the assistance of the Gaming Authority. The Municipalities Act provides adequate tools for this purpose. In practice, municipalities are increasingly taking on the role of enforcer in relation to betting terminals themselves. That is also the reason why the number of investigations and sanctions imposed by the Gaming Authority in respect of betting terminals has decreased in 2014.
Legal consequences of sanction decisions
2014
Number Sanction decision 10
Objections against sanction decisions
Submitted 5
Finalized 7
Objections against publication Submitted 7
Finalized 7
Objections relating to licences Submitted 18
Finalized 8
Interim measures Submitted 2
Finalized 3
Appeal cases Submitted 10
Finalized 5
Complaint under the General Administrative Law Act
Submitted 2
Finalized 2
Note Where more cases have been finalized than initiated, this number includes cases started
in the previous year. No data was kept for 2013.
PUBLIC OBJECTIVEProtecting and informing consumers
The Act protects the consumer by making it compulsory for gambling providers to inform consumers promptly and properly about the game in question, the applicable conditions (costs, prizes, and period of subscription) and any risks of addiction. The Gaming Authority ensures due compliance with this obligation.
Informing consumersIn 2014, the Gaming Authority informed its target groups, consisting of consumers, licensees (potential and current licensees), the business sector, and government bodies (municipalities) through various channels. A few examples follow below.
Public informationThe Gaming Authority informs its target groups via an Information Line, its website www.kansspelautoriteit.nl, by e-mail and social media, such as Facebook, Twitter, and LinkedIn. In addition to informing consumers, the Gaming Authority also deals with complaints from consumers pertaining to gambling and slot machine providers. The Gaming Authority also registers complaints about slot machines and reports about illegal gambling and, if necessary, warns consumers about illegal gambling.
Fact sheetsDuring 2014, the Gaming Authority published fact sheets about various gambling related topics on its website. The idea for these fact sheets arose from the many questions from consumers on specific topics that were received via the Public Line.
The following fact sheets were published in 2014:• Fact sheet on small-scale gambling;• Fact sheet on penny auctions;• Fact sheet on trust offices.
Demand-driven website During 2014, the list of FAQs was significantly extended on the basis of incoming questions from consumers. The information that the regulator receives about the website via statistics is also taken into account when updating the website.The Gaming Authority has introduced a new structure for the website over the past year in order to enhance user-friendliness for visitors.
Informative lettersThe Gaming Authority uses informative letters to inform its target groups about changes to its policy.
Complaint handlingIf a licensee does not resolve a complaint to a consumer’s satisfaction, the complaint may be filed with the Gaming Authority. A complaint must always be made to the organizer of a gambling activity first. This procedure ensured a considerable decrease in the number of complaints in 2014. In 2013, the Gaming Authority received 138 complaints in comparison to a total of 56 complaints in 2014.
Trends in complaintsMost complaints in 2014 related to the award of prizes and the prizes to be won. This was followed by complaints about subscriptions, such as unjustified payment collections after the termination of a subscription.
Social mediaThe Gaming Authority has made use of social media, such as Twitter, LinkedIn, and Facebook since February 2014 in order to inform consumers, gambling providers, the business sector, government bodies (municipalities), and other stakeholders. Besides information about varied gambling-related topics, the Gaming Authority also issues warnings via its social media channels. This is in order to gain the broadest possible attention for its warnings. And it does so successfully. The warnings are divulged further via social media and frequently read by followers. The Gaming Authority’s Facebook posts were read 18,594 times in 2014.
Letter to slot machine operators about the complaints handling procedureIn a letter of 27 January 2014, the Gaming Authority informed existing slot machine operators and the Slot Machines Trade Association (VAN) about the handling of complaints relating to slot machines. The letter was sent to around 750 operators. The central message of the letter read as follows: ‘The Gaming Authority registers and analyses every complaint received about the slot machine sector and carries out random investigations. We do not investigate every complaint on location, but your report is important to us. This enables us to obtain a picture of possible malpractices in the slot machine sector, which we can act against in case of a specific risk.’ Letter to municipalities about small-scale gamblingIn a letter of 26 March 2014, the Gaming Authority informed all Dutch municipalities and included a fact sheet about small-scale gambling, including bingo. The reason for the letter was the growing need among municipalities for information about small-scale gambling, including its enforcement.
Letter to operators about the revised integrity testAt the start of July 2014, the Gaming Authority informed all slot machine operators by letter of the introduction of a revised integrity test for slot machine operating licences.
INFORMATIONHOTLINE
REPORT OF ILLEGAL GAMBLINGCOMPLAINTSMEDIA INQUIRIESREQUEST FOR INFORMATION
Given the nature of the contravention, the Gaming Authority did not find it necessary to impose a fine on the Postcode Lottery. However, the licensee was warned against repeating the contravention.
The Gaming Authority investigated nine promotional campaigns of the National Postcode Lottery that were organized in the period from 1 April 2012 to 18 July 2013. Contraventions of the Code of Conduct regarding Promotional Games were established in those campaigns. These mainly related to the failure to comply with the obligations under Article 7. This article of the Code of Conduct regarding Promotional Games obliges the provider of promotional gaming to draw up general conditions of play. The general conditions of play lacked information about where and with whom any complaints about the campaigns could be filed and the complaints handling procedure.
One campaign did not comply with Article 4, paragraph 2 of the Code of Conduct regarding Promotional Games. In this campaign, the prize package that was communicated to participants via the Scratch & Win voucher and the campaign website did not correspond with the prize package that was referred to in the conditions of play.
The gist of the letter read as follows: ‘With effect from 15 July 2014, the Gaming Authority will extensively examine the integrity of both an applicant for an operating licence and an existing operating licensee. The reason for this extensive testing is to prevent the licensee from using the operating licence for criminal activities.’
Letters to catering establishment owners about betting terminalsIn November and December 2014, the Gaming Authority informed catering establishment owners (Hotels/restaurants/cafés) and phone shops about betting terminals. The letter focused on the risk run by betting terminal providers, namely:• the Gaming Authority may impose a fine;• the municipality may close the catering establishment;• the police may seize equipment.
The Gaming Authority also drew the attention of the business to the ‘Fining guidelines for betting terminal cases’ for more information and the amount of the fine.
Investigation into the promotional campaigns of the National Postcode LotteryThe Gaming Authority expects organizers of promotional gaming, and licensees in particular, to be able to apply the rules of the Code of Conduct regarding Promotional Games to specific situations. It is important with a view to protecting consumers that the general playing conditions fully comply with the obligations set out in this code of conduct. To this end, the Gaming Authority had a discussion to convey rules with the National Postcode Lottery in March 2014.
1 Consumers2 Business sector/organizations3 Government/municipalities/police
Top 5 questions1 Reports of illegal gambling2 Slot machines3 Lotteries4 Promotional gaming5 Bingos
Contact with the Gaming Authority
Method of contact 2013 2014
Telephone contact 1,278 1,275
E-mail contact 950 1,035
Total contacts 2,228 2,310
Of which:
complaints about lotteries, horse race betting, Holland Casino, and slot machine operators
110 54
complaints about promotional gaming 28 5
Total general complaints from citizens 138 184
Reports of illegal gambling 260 572
General questions 515 1161
Questions about online gambling 195 129
Questions about lotteries and slot machines 915 841
Questions about promotional gaming 205 60
Other
Questions from the media 85 137
Top 3 van vragenstellers
Warning about telephonic recruitment for bogus prize draws, 25 March 2014The Gaming Authority received complaints from consumers pertaining to foreign organizations that posed in Dutch as representatives of the State Lottery. They tried to sell lottery tickets by telephone on behalf of this licensee. It was noteworthy that this related to game variations that the State Lottery does not provide. A higher ticket price than normal also applied. Both the Dutch State Lottery and the Gaming Authority issued warnings about false telephone sales.
Warning to consumers about lottery fraud, 13 May 2014Brand and personal names of legal Dutch lotteries were misused to defraud consumers. In 2014, the National Postcode Lottery and consumers were the victims of a bogus campaign involving e-mails entitled ‘PostcodeKlapper’ in which so-called prizes were given away in exchange for personal data. The logo, address details, and personal name of an employee of the BankGiro Lottery were used in an e-mail with guaranteed prizes that proved not to exist. The name of the National Postcode Lottery was once again misused in a phone campaign that targeted specific towns. Consent had to be given for the direct debit collection of administration fees of €24.95 in order to receive a prize. In order to create trust, a business name is often mentioned in phone campaigns and this business poses as a lottery representative. An actual website in Dutch may also exist temporarily.
During the past year, the Gaming Authority has held seven campaigns to inform and protect consumers against illegal gambling providers. The Gaming Authority informed consumers about house lotteries, 5 February 2014The Gaming Authority advised against responding to statements such as: ‘This villa can be yours for €100’. It also warned against buying any tickets for a house lottery, as the consumer would then be involved in illegal gambling.The reason for the warning is that the Gaming Authority receives an increasing number of questions from consumers about whether house lotteries are legal and/or fair. In a house lottery, the owner transfers the house to the winner of the lottery. The Gaming Authority has also seen increased interest among home owners to dispose of their homes via a house lottery.
The Gaming Authority warns against fake e-mails, 12 February 2014Both the Gaming Authority and the National Postcode Lottery warned against fake e-mails. This was due to complaints received from consumers pertaining to the ‘PostcodeKlapper’. The National Postcode Lottery indicated that this was not their campaign.
raud by winning bogus prizes, 13 August 2014The Gaming Authority advised consumers not to respond to text-message campaigns alleging they had won a prize. The Gaming Authority’s position is that it is impossible to win a prize from a lottery in which you have not participated. In that respect, the Gaming Authority warned consumers against the phenomenon of phishing, an attempt to extract login details and personal data from users. Consumers lose money in this way, and fraud may also be involved. An amount must be paid in order to claim the prize. This varies from very small to huge amounts.
Warning about a bogus lottery by telephone and e-mail, 27 November 2014The Gaming Authority warned consumers about bogus lotteries, which were once again using the name of the State Lottery.
Publication of granted licencesIn 2014, the Gaming Authority published the licences it had granted on its website www.kansspelautoriteit.nl. These included one-off licences, slot machine licences and model admissions for slot machines. Due to these lists, a consumer can always check whether he/she is dealing with a legal gambling provider.
As a result of these bogus campaigns, the Gaming Authority also gave tips on how to recognize lottery fraud in addition to its warning.• Never pay a sum of money in order to receive a prize. No legal
lottery will require this of you because, after all, you have already paid via the ticket price.
• Do not give consent by telephone for a direct debit collection. Telephonic authorization was abolished on 1 February 2014. Companies that you have never been in contact with before can no longer ask for telephonic consent for a direct debt collection.
• Always ask if a lottery is licensed. The following lists can be consulted for this purpose: multi-year licences, granted one-off gambling licences, and granted slot machine licences.
Football World Cup as a source of inspiration for lottery fraudsters, 16 June 2014On 14 June 2014, consumers received an e-mail from a lottery fraudster stating that they had won the State Lottery draw: a World Cup trip to Brazil (The Netherlands-Chile match). The addressees were asked to pay a €155 luggage fee. The Gaming Authority advised the recipients not to open the files in the e-mail, not to click through, and certainly not to transfer any money.
LicenseesIn order to ensure that gambling is fair for consumers, the Gaming Authority ensures that licensees comply with laws, regulations, and licensing rules. Licensee must submit a quarterly report on their payments to charities and all other licensing requirements to the Gaming Authority. Lottery providers are also obliged to draw up financial accounts for the Gaming Authority.In that respect, the Gaming Authority initiated several investigations in 2014, including:1 National Postcode Lottery Investigation into the Novamedia licence
fee and the governance structure of the DOEN Foundation; 2 Foundation for the Operation of the Dutch State Lottery (SENS)
Investigation into the implementation of the duty of care.
1 National Postcode Lottery InvestigationWhen the new licence was granted to the National Postcode Lottery in 2012, the Gaming Authority announced the start of two investigations: one into the licence fee and the other into the governance structure of the DOEN Foundation. Both investigations started in 2013 and were completed in 2014.Reason for the investigation: Is the licence fee (2.05% of turnover, fixed in 1998) that the National Postcode Lottery pays for a licensing and management contract with Novamedia B.V. still currently acceptable? The investigation showed that the licence fee being paid to Novamedia B.V. was on the low side and the fee being paid to directors of the National Postcode Lottery was on market terms.
Code of Conduct regarding Promotional Games On 1 January 2014, an amended Code of Conduct regarding Promotional Games entered into force. The new Code replaced the existing Code of Conduct regarding Promotional Games that had applied since 1 January 2006. The new Code contains both new conditions and amended conditions that apply to the organization of promotional gaming. The main aim of the Code is to protect consumers or participants in promotional gaming. For this reason, conditions have been included in the Code that the provider must comply with when organizing promotional gaming. Such a condition from the Code reads: ‘The provider must actually pay all the prizes or premiums offered to which the participants are entitled.’ or: ‘The provider must clarify the total value of the prize package before participation (Article 4, paragraph 2).’ The Gaming Authority received new powers with the entry into force of the new Code:• the right to inspect the structure of the communication costs
(Article 3, paragraph 5 of the Code); • the right to inspect how winners are designated (Article 4,
paragraph 6 of the Code); • the right to make it compulsory for a provider to issue a list of the
prizes and premiums paid (Article 4, paragraph 7 of the Code).
No specific problems were identified in the relationship between the lottery and the DOEN Foundation. The National Postcode Lottery is however busy with a recommendation about its procurement policy and an amendment of its articles of association in relation to the DOEN Foundation in order to further rule out any possible conflicts of interest.
2. Dutch State Lottery InvestigationIn August 2014, the Gaming Authority started an investigation into how the Foundation for the Operation of the Dutch State Lottery (SENS) implements the rules referred to in Articles 9 and 10 of the State Lottery Decision of 1992. Briefly put, this deals with the duty to ensure monitoring of the quality of the organization and the product, namely with a view to prevent fraud, disposal, or theft, and the duty to ensure effective operations that must take the State Lottery’s good reputation into consideration. For the sake of brevity, these two rules are jointly referred to as the ‘duty of care’.
Reason for the investigationThe investigation started following a SENS report dated 13 August 2014 on incidents during the January 2014 draw and the King’s Day lottery of 2014. The investigation was fast tracked after an article was published in the Volkskrant newspaper on 20 September 2014. This article referred to possible fraud in the State Lottery draws.
SLOTMACHINELICENCE
LOTTERYLICENCE
ONLINELICENCE
>> Licenceapplicationrequest
PROPER USEOF LICENCE
LICENCE
LICENCE
PayGambling tax
Supervision
Licencegranting
ENFORCEMENT AGAINSTILLEGAL PROVIDERS
AmendedExpiredWithdrawn
KANSSPELVERGUNNINGAANVRAGEN
Gambling authority
Applications for and granting of licences
Subject 2013 2014
Occasional lottery Applications 53 49
Granted 46 45
Multi-year licences Granted 2 7
Modified multi-year lottery licences 9 13
Modified regulations for lottery participants 9 15
Slot machine licences Applications 88 59
Granted 72 51
Revoked slot machine licences 58 30
Model approval admission slot machines Applications 314 314
Granted 311 203
Slot machines approval stickers Granted 5,309 5,788
Confirmation of model conformity of slot machines
1,633 1,333
RecommendationsThere was no investigation into possible fraud in the draws. The Gaming Authority monitors compliance with the Betting and Gaming Act, which includes monitoring compliance with the rules attached to granted licences or – in the case of SENS – the granted Decision. As a result of the investigation, the Gaming Authority made recommendations in November 2014 pertaining to the prize draw process of the Dutch State Lottery. The Dutch State Lottery has indicated that it has adopted and will implement the recommendations. The Gaming Authority will ensure this happens.
Granting of licencesEveryone in the Netherlands must be able to participate in gambling in a fair environment. The Gaming Authority is committed to this and, among other things, grants licences for slot machines, for operating slot machines, lotteries, and sports betting. Emblems are also issued for slot machines in order to facilitate monitoring, by making it clear to municipal supervisors whether a particular machine complies with the rules.
What does the extended testing involve?Among other things, the Gaming Authority looks at any criminal record of the operator, as well as of people that work with the operator, such as directors and managers. Dishonest acts may have consequences for the licence. The Gaming Authority may decide not to grant the licence in case of new applications. All existing operators have been informed by letter about the revised integrity test.
List of Operators 2014
Number of slot machines in game halls 732
Number of slot machines in catering establishments 15,685
Number of skill with prizes (SWP) machines 20,498
Number of catering establishments 4,660
Number of game halls 10,887
Aantal speelhallen 262
Integrity test for existing and new operators In order to avoid operating licences (slot machine licences) being used for criminal activities, the Gaming Authority tests the integrity of new licence applicants. The integrity test has been further extended since 1 July 2014. The testing is done on the basis of Article 30k, paragraph 3 and 4 of the Betting and Gaming Act and Article 3 of the Public Administration (Probity Screening) Act (Bibob).
Active role in international forumsIn 2014, the Gaming Authority played an active role in international regulator forums, including the Gaming Regulators European Forum (GREF), the International Association of Gaming Regulators (IAGR), and the Expert Group on Gambling chaired by the European Commission.
In order to share information, acquire knowledge, and maintain a feel for gambling providers, the Gaming Authority has also made contributions towards international conferences and congresses, such as the Excellence in iGaming conference in Berlin, the Malta iGaming Seminar, and the annual ICE Totally Gaming congress in London.
COOPERATIONNational and international cooperation
The Gaming Authority works both at national and international level with various organizations. In the Netherlands, the Gaming Authority works with the Tax and Customs Administration, police, Prosecution Service, ministries, the Advertising Code Committee, regulators and supervisory authorities, municipalities, payment service providers, and the judiciary.
National cooperation
Market Regulators CouncilThe Gaming Authority wishes to cooperate with other regulators. It has thus actively participated in the past year in the Market Regulators Council, in which Dutch market regulators cooperate towards achieving better and more efficient supervision.
International cooperationSupervision for the Gaming Authority does not end at national borders. Developments elsewhere in the world have an influence on the Dutch gambling market. That influence will increase as the date for the entry into force of the Remote Gambling Bill draws nearer. The Gaming Authority therefore works closely with its peers abroad to share information and gain knowledge. To this end, the Gaming Authority agrees on declarations of intent with its peers. The cooperation with Malta is explained elsewhere in this annual report.
DUTCH CENTRAL BANK (DE NEDERLANDSCHE BANK)
‘ Combating money laundering is definitely a task that benefits from good cooperation among all the different regulators and other bodies that work in this field. De Nederlandsche Bank therefore hopes that this early cooperation with the Gaming Authority will continue to gain strength in future.’
JAN SUYVER, CHAIRMAN OF THE BOARD OF DIRECTORS
‘ I regard cooperation with our European peers within the EU as an important step in developing and sharing standard regulations and exchanging knowledge. This will contribute to combating illegal online gambling and benefit both consumers and providers.’
On track with safeguarding a safe and fair gambling market
The gambling world is developing rapidly. These developments imply new roles and tasks for the Gaming Authority. Besides implementing and monitoring compliance with the Betting and Gaming Act and consenting to the Remote Gambling Bill, the Gaming Authority is also involved in preparations for and implementing the new duties that arise from the Money Laundering and Terrorist Financing (Prevention) Act, as well as the overhaul of the lottery system. Yet the Gaming Authority is about to receive even more work. It is prepared for this in any event. It is on track.
Monitoring online gamblingAfter the Remote Gambling Bill enters into force, the monitoring of online gambling will change. There is presently a ban on the provision of all online gambling that is aimed at the Netherlands. The Gaming Authority is continuing in full with its current monitoring activities on this ban on online gambling. Gambling providers that act in contravention with this ban in advance of this new legislation run the risk that their application for an online gambling licence will be rejected.
Online gambling licences will soon be granted in accordance with the Bill. The Gaming Authority will monitor these licensees. Every licensee will have to set up a control data bank. This data bank is akin to a copy of the records of the licensee – which often operates from another Member State – being placed in the Netherlands. The licensee must save data about its transactions with players in the data bank. The Gaming Authority needs this data to monitor compliance with the licensing conditions or in case of any suspected fraud or money laundering.
The most important developments are listed below. In 2014, a lot of hard work went into preparing for these developments in various internal projects and in projects with third parties.
Remote gamblingIt will soon be possible to request a licence in the Netherlands for the provision of online gambling activities. The Remote Gambling Bill regulates online gambling and creates the basis for a licensing system, so Dutch players can participate safely and fairly in online gambling. See also page 8.
Protection of playersBy regulating online gambling, it becomes simpler to identify players (including ‘invisible’ players) with problematic play patterns and offer them protection. A central register for those most at risk is also being introduced so problem players can be temporarily excluded from these games. Gambling providers must soon also start contributing towards a fund aimed at combating gambling addiction.
Role of the Gaming AuthorityAs the regulator, the Gaming Authority will be responsible for implementing and monitoring compliance with the rules arising from the Remote Gambling Bill. The Gaming Authority must be ready as the regulator and licensor to implement the Act as soon as it enters into force. It is currently making the necessary preparations in that regard. It is giving shape and substance to its supervisory role: how can the Gaming Authority use the current and new supervisory powers to monitor a gambling provider and supervise the game?
Overhaul of the lottery licensing systemFrom 2017, the government wishes to provide greater scope to new lottery initiatives that focus on the social interest. In order to achieve this, the compulsory percentage to be paid by lotteries to charities will decrease from 50% to 40%. This will give current and future lottery providers more scope for innovation. At the request of the State Secretary for Security and Justice, the Gaming Authority extended licences that expired at the end of 2014 by two years.
The Gaming Authority is currently making the necessary preparations, including in the area of ICT, to process data from the licensees’ data banks.
The Gaming Authority is aware that the legislative framework on which a future licence under the Remote Gambling Bill will be based is still being debated in the Lower and Upper Houses of Parliament. It is obviously up to the legislature to determine the duties, responsibilities, and powers of the Gaming Authority.
Call for interest by those interested in a licenceThe Gaming Authority started to register the interest of potential applicants in a remote gambling licence on 1 December 2014. Interested providers can give notice of their interest to the Gaming Authority by means of a digital ‘Call for interest remote gambling’ form. More than 200 interested parties have already given notice of their interest in a remote gambling licence to the Gaming Authority.
Purpose of the call for interestThe call for interest enables the Gaming Authority to keep interested providers updated with the course of proceedings ahead of the processing of licence applications. The Gaming Authority can also use the call for interest to learn more about the potential applicant.
GERALDINE HUIJSSOON, PROJECT LEADER FOR REMOTE
GAMBLING LICENCES
‘ My team is making the necessary preparations with boundless energy to be ready to implement the Remote Gambling Act once it comes into force.’
Gaming Machines DecreeThe Ministry of Security and Justice has indicated that a review of the Gaming Machines Decree must lead to the modernization and simplification of outdated and complex rules in the area of slot machines. The review follows an investigation that was carried out on the Ministry’s instructions into the problem areas of the current regulations and possible areas for improvement. The Gaming Authority already has a licensing and supervisory role in this area and is thus involved in the preparations. The regulator will still test the implementation in the new system based on its expertise.
Reform of the Money Laundering and Terrorist Financing (Prevention) ActThe government wishes to appoint the Gaming Authority to implement the Money Laundering and Terrorist Financing (Prevention) Act. This is currently the task of the Dutch central bank (De Nederlandsche Bank) in respect of casinos and will be transferred to the Gaming Authority. The Gaming Authority is currently orientating itself for the implementation of this Act. Preparation and implementation is expected during the course of 2015.
CasinosHolland Casino is currently the only legal provider of casinos in the Netherlands, with the State as its sole shareholder. Since State ownership and a restriction on the number of providers are no longer necessary to achieve the current gambling objectives, Holland Casino is to be privatized in 2017 and new providers will be permitted. This is the government’s intention for which the parliament must adopt legislation. The current Holland Casino with its 14 branches will be split up and sold for this purpose. Holland Casino is to be sold as a group of ten casinos under the name Holland Casino. Four branches will be sold separately to other new providers. Two licences for new branches are to be granted, and the Netherlands will thus potentially have 16 casinos from 2017.
The licences are divided among five regions, in order to prevent a concentration of casinos in some parts of the country, which could lead to illegal casinos in other regions. All providers must pursue a prevention policy that is at least of the same high standard as Holland Casino’s current policy. The Gaming Authority will have both a licensing and supervisory role. It will also assess the feasibility of the intended policy. Once approved in the two chambers of Parliament, the Gaming Authority will grant licences on the basis of the new policy framework.
Gaming Authority as an organization
Organization chart
RUTGER STRAATHOF (28) HAS BEEN WORKING AS A LAWYER AT
THE GAMING AUTHORITY SINCE OCTOBER 2014.
‘ Working at the Gaming Authority means monitoring a socially and politically sensitive market that is developing rapidly. That is where the challenge lies for me. The Gaming Authority is also an ideal start for me to further develop my political, policy-related, and legal skills. Within the Authority, I am involved in preparing various decisions, legal proceedings, hearings, giving internal advice, and collaborating on new laws and regulations. Due to the short lines of communication, my documents nearly all go straight to the Board of Directors and I also handle most legal proceedings myself. It is therefore an exciting and dynamic place to work.’
Board of Directors
Chief Executive of the Board of Directors
Legal and Communication
Department
LicensingDepartment
EnforcementDepartment
FacilityManagementDepartment
EmployeesPosition as at 31 December 2014
Headcount in FTEs
Employed at the Gaming Authority Headcount in 2013
Headcount in 2014
Board of Directors 1.3 1.3
Senior Management 1.0 1.0
Management 3.7 3.8
Licensing Department 7.9 12.5
Enforcement department 9.2 17.1
Legal and Communication Department
12.0 16.0
Facility Management 10.2 16.1
Total 45.3 67.8
Note The Facility Management department does not only have a staff responsibility,
it is also charged with the administration of licences.
Flexibility
End 2013 End 2014
Permanent appointment 40 74% per-manent
50 71% per manent
Permanent appointment in probation period
5 2
Temporary appointment 9 26% flexibele
13 29% flexibele
Seconded 2 3
Via temporary employment agency
0 0
Hired on contract 3 5
Traditionaluniversity
0
10
20
30
50
% 60
40
Highervocational
Intermediatevocational
Male / Female Employees
Age Level of education
20-290
10
20
30
% 50
40
30-39 40-49 50-59 60+
Female Male
Absence due to illness
Average absence due to illness in 2014,
including long-term leave
3.8 %71people
2013 2013
2014 2014
Knowledge developmentTraining Expenses 2014
Organization-wide 24,523
Department-oriented
26,782
Individual 39,576
Total 104,139/1,446 per person
Salary scales
0
10
20
30
40
% 50
5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
2013
2014
Salary scales
ICTFurther work was done to build-up and expand the ICT environment within the Gaming Authority in 2014.A contingency environment has been tested and is operational. This environment can be used whenever there is an emergency.
Information systemNew functionality was once again added to the system last year and work was done to organize the existing workflows more efficiently within the system. In consultation with the process owners, adaptations were made to the model admission process. Timekeeping functionality has been added, so employees can allocate time to pre-defined projects and activities, and for registering and handling incoming complaints.
Development of workforcePreparations for the actual performance of new tasks, such as the implementation of the Remote Gambling Act, require an adequate number of properly qualified personnel. Investment has thus been made in the Gaming Authority’s workforce during the past year. This has mainly involved increasing the workforce with employees that have specific vocational knowledge. The permanent-flexible contract ratio has remained constant, in connection with fluctuations resulting and remaining from the legislative process for remote gambling. The current number of employees appears to be adequate and there will be no growth in capacity (subject to unforeseen circumstances).
Investing in employeesNew duties are the norm in a young organization like the Gaming Authority. For this reason, the Gaming Authority has focused on the development of its employees to enable them to grow in their positions and be able to assign them to projects outside their own department. Employees have thus been given the opportunity to gain and share new knowledge and experience. This has included training for the entire organization, such as a writing course, a course in project-based work, training in how to deal with aggression, and basic good governance training. Popular lunchtime lectures as well as book and case law discussions are also regularly arranged within the organization for the purpose of knowledge sharing.
MARJA APPELMAN, CHIEF EXECUTIVE OF THE GAMING AUTHORITY
‘ Investing in employees is essential because that is how we strengthen our organization. Moreover it ensures that employees remain competent in their area of expertise.’
In order to improve financial decision-making, budget simulation software has been added while the installed Event Manager has been successfully used to completely automate the process for collecting contributions from operating licensees.
SystemsThe Gaming Authority switched to a new system to actively monitor computers for viruses, etc. in 2014. PCs can be monitored and controlled remotely, if required. Printing facilities have been structurally improved and a pilot project for secure printing was successfully completed in 2014.
TelephonesThe switchboard has been expanded and the telephone standby service can be controlled remotely so the Gaming Authority can be contacted after hours.
Cooperation with implementing bodiesA development that started in 2014 and is to be continued in 2015 is the Gaming Authority’s contribution towards ‘Klein LEF’ (an alliance of small implementing bodies). The cooperation of various independent management bodies has led, among other things, to ‘Klein LEF’ being given a vote on the SGO-9 programme ‘Digitalisering Rijksoverheid’ (Digitization of the National Government). The Gaming Authority signed a declaration of intent with ‘Klein LEF’ in 2014.
MARGRET ESMEIJER, FACILITY MANAGEMENT DEPARTMENT EMPLOYEE
‘ In my job, I regularly hold telephone discussions with licensees. These may involve licensees whose operating licence has been revoked, for example, while I also speak to licensees that do not agree with the regulatory costs, the gambling levy, or payments that are in arrears. Because of the aggression and violence training I have received, I am better able to deal with the other party’s emotions and I am more aware of my environment. I stick to the current facts, let the caller come forward with his/her version of events, and am better able to anticipate this.’
FinanceThe financial statements have been prepared in accordance with the Non-Departmental Public Bodies Framework Act. This Act states that the annual accounts should be prepared as far as possible in compliance with the statutory provisions of Part 9, Book 2 of the Dutch Civil Code.
Balance sheet (after accounting for result, in thousands of euros)
Assets Year end 2013
Year end 2014
1. Intangible fixed assets 650 1,853
2. Tangible fixed assets 296 253
Inventory 82 62
ICT 95 124
Renovations 119 67
3. Current assets 2,116 5,211
Inventory emblems 36 23
Receivables, prepayments, and accrued income
211 203
Sanction decision - 775
Cash and cash equivalents 1,869 4,210
Total assets 3,062 7,317
Liabilities Year end 2013
Year end2014
4. Equity 1,426 2,952
Earmarked reserve Ministry of Security and Justice
493 493
Equalizing reserve 283 606
Statutory reserve 650 1.853
5. Provisions 733 730
6. Long-term debt - 2,000
7. Current liabilities 903 1,635
Short-term debts 709 147
Sanction decisions - 1.131
Accrued liabilities 194 357
Total liabilities 3,062 7,317
Explanatory notes on the balance sheet, income statement, and valuation principles
Intangible fixed assetsThe preparatory work of the Gaming Authority for the opening and regulation of the online market is capitalized. These are development costs that can be capitalized because they are expected to be recouped via the gaming tax on online licensees once the legislation for the online market is introduced in the second half of 2016.
Development costs are valued at production cost, and will be decreased in the future, by accumulated amortization and impairment losses.
These development costs primarily include the salary costs of personnel involved. The capitalized costs will be amortized after completion of the development phase and after the introduction of legislation for the online market, over their estimated useful life (ten years). Amortization is calculated using the linear method.
Tangible fixed assetsTangible fixed assets are valued at their historical cost of acquisition, minus linear depreciation based on the estimated useful life. Investments are depreciated from the date of commissioning.
Income statement (in thousands of euros)
Income Actual 2013
Budget 2014
Actual 2014
Gaming levy 6,993 7,000 6,992
Levies and fees 1,048 1,000 1,237
Total income 8,041 8,000 8,229
Expenses Actual 2013
Budget 2014
Actual 2014
Staff costs 4,421 7,334 6,148
Advice 2,659 826 210
Housing 416 623 564
Organization 509 738 555
ICT 272 279 255
Depreciation 123 100 174
Activation costs Remote gambling project
-/- 650 -/- 1,900 -/- 1,203
Total expenses 7,750 9,900 6,703
Operating result 291 - 1,526
The depreciation periods are six years for inventory and three years for hardware and software. For renovations, depreciation takes place until the end of the rental agreement (1 February 2016).
ReceivablesReceivables are valued at nominal value, less the provision deemed necessary for bad debts.
Sanction decisionsThe Gaming Authority imposes sanctions. These sanctions have no effect on the result but do form part of the balance sheet as they accrue to the State, as determined in the Betting and Gaming Act.
Cash and cash equivalentsThe Gaming Authority has a current account with the Ministry of Finance and the Ministry manages any funds. The Gaming Authority received a loan from the Ministry of Finance of €2 million in 2014 and will receive a further loan of €1.7 million in 2015 to prepare for remote gambling (online legislation).
ProvisionsDeferred compensation represents the nominal value of the estimated future obligations, for long-service anniversaries, the part-time employment system for seniors, and for the early retirement of personnel. A provision has also been made for a dispute with a former supplier.
ResultsThe 2014 income statement provides an insight into the actual and budgeted result in 2013. The income statement compares the actual results to the budget set by the Board of Directors.
Income and expenses are attributed to the period to which they relate.
RemunerationThe top executives need to be mentioned in accordance with the Senior Officials in the Public and Semi-Public Sector (Standards for Remuneration) Act (see overview op page 52).
AccountantThe annual financial statements give a true view of the size and composition of the assets of the Gaming Authority as of 31 December 2014 and of the 2014 results. The financial statements are in accordance with Non-Departmental Public Bodies Framework Act and the provisions of the Senior Officials in the Public and Semi-Public Sector (Standards for Remuneration) Act.
The auditor (KPMG) issued an unqualified audit certificate on 1 April 2015.
X € 1,000Name Start date
employmentEnd date
employmentScale
EmploymentRemuneration Taxable
fixed and variableExpenses
Provision rewardpayable in the future
Topfunctionarissen
Chairman of the Board of Directorsmr. J.J.H. Suyver 01-04-12 67% 85 4 0
Member of the Board of Directorsmr. H.W. Kesler 01-04-12 33% 40 4 5
Member of the Board of Directorsdr. P.J.G. Tang 01-04-12 28-02-14 33% 5 1 1
Member of the Board of Directorsdrs. J.G. Pot 01-11-14 33% 6 0 0
Chief Executive of the Board of Directorsdrs. M.D. Appelman 23-09-13 100% 99 0 17
Other officer
drs. H.W.G. Remme (advisor)2014 01-04-12 31-03-14 100% 321 0 4
2013 100% 94 0 9
The provision item in the above table relates to the pension costs paid by the Gaming Authority as an employer.
Illegal gambling marketIt is estimated that the Dutch generate turnover of EUR 250-800 million in the – as yet still illegal – online gambling market. The physical availability of illegal gambling, such as betting terminals, is estimated to generate tens of millions of euros.
Appendix
Market dataThe Gaming Authority supervises all gambling in the Netherlands, legal or illegal, but how big is this market? More about this follows below.
The following table shows the turnover figures and gross gambling result of licensees. The figures are based on 2013 annual reports. All figures are stated in millions of euros.
The total estimated gross gambling result of the legal gambling sector (including slot machines) in the Netherlands in 2013 is €2.2 billion. A total of €480 million (rounded off) was paid in gaming tax. Charities (including sport) received €494 million. Occasional lottery licences (for instance by a club trying to find money to build a sports canteen) have not been included in this list. The turnover of these lotteries in 2013 was €4.9 million. Promotional gaming has also not been included in this list.
Sector Licensee Omzet Prijzen1 BSR2 Afdracht goede doel
Afdracht staat
KSB3
Lotteries Dutch State Lottery 772.6 466.2 306.4 123.6 63.9
Holding National Good Causes Lotteries4 827.75 298.76 638.1 413.8
41.3
Cooperating non-profit Lotteries7 25.3 0.7 24.6 19.2 0.1
De Lotto8 253.1144.3 162.5 59.6
20.4
Sports betting De Lotto 53.7
Sportech Racing B.V. 23.1 16.9 6.2 1.6 0.4
Casino gambling Holland Casino (table games) 209.09 60.0
Slot machines Holland Casino (casino machines) 242.5 70.9
Game hall machines10 769.3 223.1
Total market 2,358.6 494.2 123.6 480.1
1 Market value, net of gaming tax2 Gross gambling result
(gambling turnover minus purchase value of net prizes)3 GT = Gaming tax
Includes National Postcode Lottery, BankGiro Lottery and VriendenLoterij
5 National Postcode Lottery 605.3; BankGiro Lottery 124.9; VriendenLoterij 97.5
6 Includes non-cash prizes. Economic value (not adjusted for purchase discounts).
7 Cooperating non-profit lotteries, Jantje Beton, de Grote Clubactie, de Zonnebloem, KWF Kankerbestrijding, and Scouting Nederland
8 Including Instant Lottery 9 Excluding casino fees10 Source: 2013 market scan of
the Gaming Authority
Statutory requirementsThe Non-Departmental Public Bodies Framework Act sets various statutory requirements for an annual report, including the content. These requirements are as follows: The following must be described:1 the performance of duties;2 the policy pursued;3 the policy pursued with regard to quality assurance.In accordance with 19, paragraph 3 of the above Act, an explanation must be given concerning action taken for the performance of the duties and powers relating to:4 punctual preparation and implementation;5 the quality of the procedures used for that purpose;6 the proper treatment of persons and institutions
that come into contact with the NDPB;7 t he proper processing of incoming objections
and complaints;8 the measures adopted, by which people and
institutions that come into contact with the NDPB are able to make proposals for improving methods and procedures.
Colophon
This annual report has been issued by: Gaming AuthorityPostbus 298| 2501 CG The HagueT +31 (0)70 302 1300E [email protected] www.kansspelautoriteit.nl
Text Gaming Authority, The Hague
PicturesGaming Authority, The Hague
Design and productionOntwerpwerk, The Hague
The items under 1, 2, and 4 are discussed at length in this annual report. Items 3, 5, 6, 7, and 8 are not explicitly included in the annual report because that would adversely affect its readability and clarity.
DisclaimerNo rights may be derived from the contents of this report. Publication is subject to typing errors.Quoting from this publication is permitted, provided that the source is properly acknowledged.
©Copyright Gaming Authority 2015The Hague, April 2015
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