Placanica Fallout – Will Dutch Gambling Monopolies Hold?

Placanica decision has placed Europe’s state gambling monopolies under added scrutiny. Despite increased confidence amongst private operators, however, observers remain unsure as to whether Holland will now open up its restricted market.

It seems as though Placanica decision has been met with roars of approval from all sides. On the one hand, state operators such as Deutscher Lotto- und Toto-block have stated that the ECJ’s decision reinforces the validity of state gambling monopolies. On the other, leading online bookmakers proclaim that the ruling proves that state gambling monopolies are an anachronism that contravenes European law. Evidently the Placanica judgement is open to interpretation.

“Since the judgement there has been a lot of empty rhetoric from both monopolies and the private sector,” notes leading Amsterdam-based gambling lawyer Justin Franssen of the firm Van Mens & Wisselink. “In this respect Placanica is very much comparable to Gambelli.” Franssen does not share the optimism of those operators such as bwin, Ladbrokes and Unibet who were quick to proclaim the death of state monopolies in Placanica’s wake: “It is very clear that the ECJ grants member states considerable discretion to limit gambling operators within their countries,” he says.

Does this mean, then, that the Dutch monopoly is likely to go unchallenged? “What was interesting about the Placanica judgement was the references it made to the tendering and licensing processes,” Franssen states. “The Dutch situation regarding the licensing of sports betting clearly has to be re-thought.”

At present the licence to develop sports betting in Holland is awarded on a renewable five year basis but, in reality, as Franssen attests, it is “semi-permanent” and international operators such as Ladbrokes (forced to cease all its Dutch operations by a court decision in 2003) and Betfair have been prohibited from even bidding for that licence.

Operators should not necessarily expect a wide-scale liberalisation, however, or even a partial opening such as that set to take place in neighbouring Belgium later this year. “Placanica may not have that great an effect,” says Franssen. “The sports betting system [limited to one exclusive licensee] is backed up strongly by the civil courts in Holland which have consistently ruled the system to be compliant with Articles 67 and 69 of the 2003 Gambelli judgement.”

Even if Holland does not open up its sports betting market to allow multiple licensees, the Placanica ruling means that the tendering process must be made more open and transparent as excluding EU-licensed companies from entering the bidding process contravenes European law.

However, Holland Casinos’ monopoly of the Dutch casino market is coming under increasing pressure. A decision is due later this week in the Dutch Council of State in a case brought against Holland Casinos’ monopoly on behalf of the French casino group Tranchant. And a ruling against Holland Casinos could be just the start of several challenges brought to the group.

Private operators will no doubt be emboldened by the Placanica decision to scrutinise the legitimacy of last year’s awarding of an exclusive licence to Holland Casinos to develop online casino gaming for the Dutch market.

Another European gaming expert, Jan Gerard Rodrigo – who worked for Holland Casinos for 17 years prior to 2002, is more confident than Franssen that the Dutch monopolies are unsustainable. “Eventually there will be a liberalisation,” he says. “The Dutch monopoly is like a house of cards that is going to fall – it’s just a question of when.”

Interestingly, according to Rodigo, a liberalised Dutch gambling market may not be such an unpalatable reality for Holland Casinos. If restrictions were lifted then Holland Casinos would also be freed from the shackles of its own monopoly and would be free to expand throughout Europe – in the manner of Casinos Austria, for example.

“Holland Casinos does not see the point in monopolies,” notes Rodigo. “Its knowledge of the casino gambling market is like a bottle of squash – it’s so concentrated. You could take that knowledge and operate fifty casinos.”

© Gambling Compliance Ltd 2006

The author of this article is James Kilsby. This article was published on 14/03/2007 on GamblingCompliance.com (http://www.gamblingcompliance.com)

Source URL: http://www.gamblingcompliance.com/node/7345

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Exploring The Status Of Poker In Europe – Holland

Although Dutch players are revered on the world poker scene, restrictive legislation in Holland limits opportunities for Dutch nationals to play the game outside of state-owned casinos.

Anyone who knows poker knows that the Dutch make for some of the most formidable players on the planet. Among their number are young tyro Noah Boeken, whose career earnings exceed US$630,000, former athlete Rob Hollink, a father of three with earnings in excess of US$2.2m, as well as one of the Godfathers of European poker, Marcel Luske. Luske, the ever-stylish ‘Flying Dutchman’, has well over US$3m in the bank thanks to poker, and if his trademark habit of wearing his sunglasses upside down seems a little odd at first, it soon becomes familiar and, one might think, evidences a buoyant, confident and well-established Dutch poker market.

Sometimes though, style triumphs over substance. If Luske has an undoubted pedigree in international poker, there are serious questions to be asked of his homeland’s regulatory stance towards the game. The Dutch may have produced world-class poker players but their laws arguably leave a lot to be desired.

“The game in Holland has exploded in popularity,” confirms Justin Franssen, an expert in gaming law with Amsterdam-based law firm Van Mens and Wisselink. “It’s going through the roof, with plenty of exposure on television and the ongoing success of players like Luske, Boeken and Hollink. Home games among friends, whatever the stakes, are fine but otherwise the legal status of poker is arguably contrary to European law.”

Franssen explains that “…according to the Gaming Act of 1964, poker is only legal in casinos.” Moreover, those casinos are established thanks to a state monopoly. “Holland Casino is a 100-percent state-owned foundation which operates 14 casinos in locations in the Netherlands. It was established in 1975 when the government decided to grant just one exclusive gaming license in order that gaming remained honest, reliable and well-controlled.”

Since 1975, Holland Casino has grown and its bricks and mortar incarnation is set to expand yet further, with applications for five additional casinos, so as to provide “nationwide coverage”, currently pending. Further development is expected as Holland Casino has been authorised by recent legislation, in Holland’s Second Chamber, to develop an online gaming presence. This draft law has received serious criticism, according to Franssen, from the First Chamber (which can, on certain rare occasions, veto laws passed in the lower house), with additional criticism, and the implied threat of potential infringement proceedings, also coming from the European Commission.

The present case law means, in effect, that it is illegal for overseas operators to accept bets from Dutch residents and the regulatory emphasis on national exclusivity is not going down well in all quarters. “It is an interesting and delicately poised situation,” says Franssen, himself a former casino dealer, “not least because the 1964 Act came from the pre-internet age and did not anticipate these modern developments. Another difficulty exists when the EU law perspective is considered. Arguably the position occupied by Holland Casino contravenes Articles 43 and 49 of the EC Treaty.”

Article 43 provides for the freedom of establishment within the European community, while Article 49 establishes the freedom to provide cross-border services. Both are designated as “fundamental freedoms” whose existence is crucial to the functioning of the EU Internal Market. Moreover, they are of “direct effect”. This means that Member States are obliged to modify national laws that restrict freedom of establishment, or the freedom to provide services (and which are therefore incompatible with these principles). There is, though, a carve-out. Member States can implement or maintain restrictions on Articles 43 and 49 in specific circumstances, for example when justified by overriding reasons of public policy, public security or public health. Even so, the restrictions have to be “proportionate”.

There is ample case law on Articles 43 and 49, and, insofar as gaming is concerned, the trend has generally been that national courts do not believe that restrictive gaming laws infringe the EC Treaty. However, as the betting and gaming markets continue their worldwide exponential rise, there are signs of increasing disquiet in various territories – Holland among them. Franssen cites a case brought by Compagnie Financière Régionale B.V (CFR BV) against the Ministry of Justice and Ministry of Economic Affairs as an example.

“Judgment by the Administrative Court of Breda, in December 2005, was greeted as a significant victory for those who contend that state gaming monopolies contravene the EC Treaty. The background is that CFR BV applied for a license to operate a casino in the Dutch municipality of Bergen op Zoom. It was rejected, because of the exclusive rights of Holland Casino but CFR BV launched legal proceedings which ultimately give ammunition to those seeking liberalisation of this sector.”

The reason, explains Franssen, is that the court adopted liberalisation-friendly aspects of the well-known Gambelli case on Italian sports betting. While other ECJ jurisprudence had suggested that exclusive rights for gaming were not incompatible with EU law, the Gambelli case stated that “…the restrictions must serve to limit betting activities in a consistent and systematic manner.” The ECJ, in the same case, also held that “…insofar as the authorities of a Member State incite and encourage consumers to participate in lotteries, games of chance and betting to the financial benefit of the public purse, the authorities of that State cannot invoke public order concerns relating to the need to reduce opportunities for betting in order to justify.”

The court in Breda looked at these and other aspects of the Gambelli judgment and found that Dutch policy was at best counterproductive and at worst that its insistence on a restrictive casino monopoly was potentially contrary to Article 49. “The court found that the policy did not comply with the principles of consistency and coherency as set forth in Gambelli,” says Franssen.

Regrettably, for those who would see Holland change its restrictive stance, the Breda decision has since been overturned, though the points it raised seem set for renewed argument, if not in Dutch jurisprudence then elsewhere in EU Member States. Meanwhile UK operators Ladbrokes and Betfair have also drawn a blank in Holland, with their challenge to the monopoly of De Lotto, the state-authorised entity that runs lotteries, sports books and scratch cards, having failed thus far (although the challenge was only made in relation to sports books).

The restrictive zeitgeist is the antithesis of a report published in 2000, entitled ‘New Round, New Chances,’ which proposed that the Dutch market be liberalised with a phased introduction of a totally free market which would be open to any commercial operator able to meet the licensing requirements. As well as the recent overturning of the CFR case, in 2004 the Dutch government officially reaffirmed its commitment to a single gaming entity. The upshot is that Holland Casino continues to hold all the chips.

Despite this, Franssen says that the tide could be turning. “Poker is so popular here and the Dutch people have a tolerant attitude to the game. This may be not be shared by Parliament but the ongoing disputes in other Member States might help to bring about a harmonisation of European law. It’s a difficult one to call but I’m not sure that Holland Casino will still have an online monopoly by 2010.”

If the restrictive legislation covering poker in Holland does indeed have to be redrawn to accommodate the game’s inexorable rise in popularity, then Marcel Luske’s sunglasses may not be the only thing turned upside down on the Dutch poker scene in the coming years.

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The author of this article is Alex Wade. This article was published on 11/09/2007 on GamblingCompliance.com (http://www.gamblingcompliance.com)

© Gambling Compliance Ltd 2006

Dutch Lawmakers KO Remote Gambling Bill

The Dutch Senate yesterday voted down proposals that would have granted the state-run operator Holland Casinos a three-year exclusive license to operate internet gaming in the Netherlands. The proposal was rejected by a narrow margin, but the outcome nevertheless sparked celebration among private gambling operators.

Under existing rules no operator is licensed to offer casino and poker online in Holland, despite the presence of many dozens of foreign companies doing just that. The proposal – contained within the remote gambling bill – to give online exclusivity to Holland Casinos, consequently raised the prospect of a well-advertised and state-run operator quickly building market share in the fashion of Svenska Spel in Sweden.

The bill, put forward by the Dutch Ministry of Justice, was defeated yesterday afternoon by the slim margin of 35 votes to 37. Lobbyist Justin Franssen of the Dutch law firm Van Mens & Wisselink, said it was, “a very good day for our industry”.

He noted that in some ways it signalled the return of business as usual in Holland but also observed, “the important point is that there can now be no new powerful competitor in the online market in Holland, and that is good for all operators who have a market in the Netherlands.”

The vote against the bill was the result of a sustained lobbying effort by Franssen’s firm. “We worked very hard the last months to convince the individual senators that the Remote Gaming Act does not comply with European law,” he said.

“For some senators the deciding factor was the European argument, for others I think it was that the bill represented a new gaming offering that was going to stimulate gaming in a way that was not compatible with their restrictive market policy.”

The vote represents a setback for Holland Casinos, which had already prepared an online poker and casino operation for launch.

Holland Casinos vice president Ron Goudsmit told GamblingCompliance: “We were sure we would have done well online, but what this vote means is that all the illegal offerings we have now will continue”

The situation whereby no company is licensed to operate online has created a situation in which many major European online companies are operating Dutch language sites. “There have been some measures taken against them but there are still an enormous number of sites, more than 100, offering their services into Holland” confirmed Goudsmit.

According to Goudsmit, yesterday’s Senate vote hinged on unpredictable party allegiances.

“Only one party was going to make a difference in the vote and that was the Green Party. They had voted in favour of the bill in the Lower House but surprisingly they didn’t follow that in the Upper House,” he said.

One block voting steadfastly against the measure was the Dutch Liberal Party, which objects to monopolies of any sort, but Goudsmit noted that Holland Casinos itself had raised the possibility of additional licences and had proposed that VAN, the Dutch Gaming Machine Association, also be granted a license.

“It’s not us that has been fighting for a single licence but the Ministry of Justice who themselves thought it would be better to put their case to Brussels if Holland Casinos were granted a sole license for the trial period.”

Observers from the private sector have speculated over whether an arrangement that existed between Holland Casinos and software firm Cryptologic to share revenues from their online venture might have also swayed the Senate vote. Questions had been previously asked about the deal in the Lower House, but not at Senate level.

“There was a question from an MP which the Minister of Justice answered,” counters Goudsmit. “But while there is a contract between us and Cryptologic, it is a commercial agreement with a confidentiality clause applying to it.”

With one issue now decided, the next stage of the battle between private operators and the Dutch Government shifts to the even more contentious issue of financial services and ISP blocking.

The Dutch Ministry of Justice last month indicated that it intended to take action against online gambling operators listed by the ministry and against intermediaries, such as payment service providers and ISPs, that facilitate the activities of the operators.

With Holland currently facing infringement proceedings issued by the European Commission against the Dutch sports betting monopoly, the European Gaming and Betting Association (EGBA) this week wrote to the Dutch Minister of Justice Dr Hirsch Ballin urging a change of direction.

“The position of the Dutch authorities is not sustainable or EU compatible and the EGBA therefore takes a clear stance against the enforcement of financial and ISP blockings directed at EU licensed operators. The EGBA believes that private companies (in this case financial and/or internet service providers) should not be made into the enforcers of ineffective government legislation,” said the letter signed by EGBA Secretary General Sigrid Ligné.

© Gambling Compliance Ltd 2006

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The author of this article is Andrew Gellatly. It was published on 02/04/2008 on GamblingCompliance.com (http://www.gamblingcompliance.com)

Europe’s Lotteries Debut New Sports Betting Code

Two of Europe’s most prominent monopoly sports betting operators have put forward a code of practice for sports betting which looks set to be endorsed continent-wide but the timing, ahead of this summer’s controversial EU White Paper on sports funding, has raised questions about their motivations.

Finnish State lottery Veikkaus Oy and French State lottery La Française des Jeux last week drew up a new European code of conduct for sports betting, and the code was unanimously agreed following a vote by the 40 state lotteries which offer sports betting services at the recent European Lotteries Association general assembly meeting in Budapest.

Already twenty lotteries have signed up to the code, including Finland, Norway, Denmark, Belgium, seven German state lotteries, the Czech Republic and Portugal. Others are expected to join as soon as they have secured permission from their respective regulators. The code features commitments on promoting sporting values, responsible gambling, combating sports corruption and cheating. It also includes anti money laundering provisions, and proposals on avoiding conflicts of interest. From September 2007, an independently chaired ethics committee will be established to oversee the adoption of the code.

While renowned Brussels-based lawyer Phillipe Vlaemminck, who acts for many lottery operators, notes that the code only “puts what we already have in practice onto paper,” other observers believe the move is part of a calculated charm offensive by the lotteries, aimed at strengthening their relationship with sport’s governing bodies at a transitional time in European sport.

“The question to ask is why are they only coming up with this code of conduct now,” says Justin Franssen a leading gaming lawyer from the Amsterdam office of law firm of Van Mens & Wisselink. “They should have had this in place 50 years ago or whenever they first got their monopolies. The whole reason to have a monopoly is to have a code of conduct which others do not have.”

The decision by the European Lotteries Association to seize the initiative with their new code is certainly well-timed. The European Commission is currently drawing up a white paper on the status and funding of sport, and national sporting bodies, member states, and MEPs, are lobbying Brussels to recognise the 2000 Nice Declaration, which acknowledges the special status of sport in society.

“There is a move to embrace the Declaration of Nice” says Vlaemminck, “a move to go back to the grass roots of sport and to encourage the development of sport in society, and we see lotteries fitting into that.”

Vlaemminck also believes that the leaders of European sport will not ignore the financial elements when they make their alliances. “From a European policy side it is clear that they have to develop amateur sport and lotteries are the biggest funders of amateur sport. Private funding wants too much of a return on its investment.”

The code will also help the European Lotteries Association build on their long standing relationship with Uefa, European football’s governing body. Uefa is known to want the EC white paper to encourage the creation of Europe-wide legislation to ensure a system of sanctions against and prosecutions of improper betting and match fixing as well as increased protection of the intellectual property rights in fixture lists. Any new proposals to accomplish that will be welcomed.

“I hope they will listen to the world of sport,” Michel Platini, the Uefa president said in a recent interview. “It’s an important moment, and I hope they will understand what people want for the future of sport.”

On the announcement of the new code Christophe Blanchard- Dignac, Chairman of La Française des Jeux said, “La Française des Jeux pays out 2% of its turnover to fund sport for everybody, making the company the leading partner of sport in France. Sport is therefore an essential component of our business and not a pretext for entering the sports betting arena. This code confirms our commitment to defending sport and the values it cherishes. The aim is to release sport from the dangers that may arise from sports betting in order to enable pleasure and pure sporting commitment to take centre stage.”

As debate around the funding of European sport intensifies, very public initiatives such as the ELA’s new code will evidently play an increasingly large part in shaping a new sport betting landscape.

European lotteries association code of practice [3]

© Gambling Compliance Ltd 2006

The author of this article is Andrew Gellatly. This article was published on 01/06/2007 on GamblingCompliance.com (http://www.gamblingcompliance.com)

Links:

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[2] http://www.gamblingcompliance.com/author/29

[3] https://www.european-lotteries.org/data/info_1124/France_and_Finland___European_Code_of_Practice_for_Sports_Betting.pdf

The Netherlands – A Regulatory Overview

This article was previously published on GamblingCompliance.com (http://www.gamblingcompliance.com)

Gaming legislation in the Netherlands is restrictive, as it is in most of continental Europe. Based on the 1964 Gaming Act, monopolistic licenses are granted for most types of gaming.

Table of Contents

· 1. Background

· 2. Regulations

o 2.1. Introduction

o 2.2. The 1964 Gaming Act

o 2.3. The infringement proceedings on sports betting

o 2.4. The proposed Gaming Act

o 2.5. The proposed Online Gaming Act rejected by the Senate

o 2.6. Blocking of financial transactions and blocking of access to websites

o 2.7 The proposed Online Gaming Tax Act

· 3. Case-law

o 3.1. Introduction

o 3.2. Civil case-law: De Lotto vs. Ladbrokes

o 3.3. Application for a casino license: CFR vs. Minister of Justice

o 3.4 A different approach: Schindler vs. Minister of Justice

o 3.5 Pending case-law Betfair vs. Minister of Justice

· 4. Problem Gambling

· 5. Money Laundering

· 6. Summary

By Justin Franssen & Aernout Kraaijeveld

1. Background

The Kingdom of the Netherlands is a constitutional monarchy. Its governmental system is structured as a parliamentary democracy. The parliament is bicameral and consists of a Second Chamber (House of Representatives) and a First Chamber (Senate). Together with the government, the parliament is the legislator. The legal system is based on Civil law and consists of a number of Codes which are interpreted directly by the courts.

The 1964 Gaming Act is one of these codes. It contains a total prohibition on the offering of games chance, unless a license is granted. The only licenses that can be granted are licenses for specific types of gaming that are mentioned in the 1964 Gaming Act. It is not possible to obtain a license to offer online gaming, which is therefore prohibited. Over the past years, it has become common to extend gaming licenses upon expiration. A public tender after the expiration of a Dutch gaming license has not been held in recent history.

Dutch gaming policy is mostly upheld by gaming operators who possess Dutch gaming licenses. These operators have instigated dozens of civil injunction cases against operators of (online) gaming that do not possess Dutch gaming licenses and target Dutch residents. Although criminal prosecutions of violations of the 1964 Gaming Act are rare, operators of Call TV-programs (“participation TV”) have been raided in September 2007 by the public prosecution department and the Fiscal Investigation Department and are currently under criminal investigation for violation of the 1964 Gaming Act. The operators of online gaming that were summoned have all stated that the Dutch gaming policy is invalid because it infringes European law. Although there was a critical interlocutory judgment in a lower court, the judiciaries (including the Supreme Court) have been reluctant to either declare the sports betting policy to be incompatible with European law or to refer preliminary questions on this matter to the European Court of Justice (ECJ).

At the moment a totally revised Gaming Act awaits approval by the lawmakers. This newly proposed Gaming Act will replace the current 1964 Gaming Act. It does not contain a dramatic change in the current gaming policy. A different piece of proposed legislation, the Online Gaming Act, would have granted an exclusive but temporary license for online gaming to the state-owned casino-monopolist Holland Casino. This proposed legislation was rejected by the Senate on 1 April 2008. However, the Minister has made it clear that he now considers to incorporate regulations on online gaming in the proposed Gaming Act.

Several gaming operators that are licensed in other EU-Member States have applied for gaming licenses. The Minister of Justice so far refused to grant licenses to parties other than the current licensees. In appeal proceedings, the highest administrative judiciary (the “Council of State”) has so far rendered two remarkable judgments, one on an application of a license to operate a casino and the other on an application to operate a charitable lottery. In the last case, the Council of State made critical remarks on the impact of European law on the licensing system. In the pending Betfair vs. Minister of Justice case, the Council of State has referred preliminary questions to the European Court of Justice regarding the allocation mechanisms for the sports betting and horse betting licenses.

Dutch gaming legislation is also challenged by the European Commission because of claimed inconsistency with the EC-Treaty. The European Commission sent a Letter of Formal Notice to the Dutch government on 4 April 2006 and a supplementary Letter of Formal Notice on 21 March 2007. In its responses of 12 July 2006 and 13 July 2007, the Dutch government bluntly denies any inconsistency with the EC-Treaty. A Reasoned Opinion was sent to the Netherlands on 28 February 2008 but has not been made public yet.

2. Regulations

2.1. Introduction

The legal base of the Dutch gaming policy can be found in the 1964 Gaming Act. This act stipulates that offering games of chance without a license is prohibited. The act includes an enumeration of the specific games for which a license can be granted. The 1964 Gaming Act is further discussed in paragraph 2.2. Gaming machine operators are subject to specific regulations, which are not examined in this article.

The infringement procedure by the European Commission regarding the Dutch monopoly on sports betting attacks regulations that are incorporated in the 1964 Gaming Act. Because of its possible impact on the regulatory environment, it is discussed in this chapter. A brief introduction to the pending infringement proceedings is enclosed in paragraph 2.3.

Following previous developments in the gaming industry and the introductions of new games of chance, the 1964 Gaming Act has been altered many times since it was fist adopted. The Minister of Justice intends to replace the 1964 act with a new Gaming Act, which was published for consultation in November 2007. We discuss the new proposed Gaming Act in paragraph 2.4.

Paragraph 2.5 elaborates on the rejected proposal for an Online Gaming Act. Because the 1964 Gaming Act does not provide for a legal base to grant a license for online gaming, the Minister intended to introduce a separate piece of legislation, the Online Gaming Act. With this act, a monopoly on online gaming would be granted to Holland Casino. This act was rejected by the Senate on 1 April 2008.

On 29 February and on 4 March 2008, the Minister of Justice and his Ministry have made public statements on a new approach to counteract operators of online gaming. The Minister intends to counteract operators that are aimed at Dutch residents by blocking financial transactions between the operators and Dutch residents. He also intends to address Internet Service Providers in order to block the access to the websites and servers of these operators. These recent developments are discussed in paragraph 2.6.

In order to counteract operators of online gaming, the authorities plan to impose a tax duty on these operators. The proposed Online Gaming Tax Act is discussed in paragraph 2.7.

2.2. The 1964 Gaming Act

The 1964 Gaming Act states in article 1(a) that it is prohibited to “give the opportunity to compete for prizes or premiums, if the indication of the winner is subject to any form of chance, on which the participants generally can not exercise any predominant influence, unless a license is granted”. According to article 1 (b), it is also prohibited to promote the participation in such games of chance.

Following case-law, an online operator is said to be aimed at Dutch residents if the operator does not block access to its games by Dutch residents.

The offering of games of chance is a criminal offence and penalized under the Dutch Economic Offences Act. So far, the Dutch authorities have never prosecuted foreign operators of online gaming.

The 1964 Gaming Act allows monopolistic licenses for the State Lottery, casino games, lotto, sports betting and horse betting. Multiple, non-exclusive licenses can also be granted for charitable lotteries. No license can be granted for any other types of national gaming, which are therefore illegal. Besides the fact that licenses for games with a price pool higher than € 4500 are granted by the Minister of Justice, no provision for the application or allocation procedure or public tender for these licenses is included in the 1964 Gaming Act.

2.3. The infringement proceedings on sports betting

The current infringement proceeding by the European Commission focuses on the general prohibition and the articles that regulate the sports betting license. In the first Letter of Formal Notice the Commission states that it is of the opinion that the prohibition of games of chance not licensed in the Netherlands forms an unjustified restriction to the freedom to provide services (article 49 EC). The response by the Dutch governments led to the supplementary Letter of Formal Notice, in which the Commission states that it is of the opinion that both the monopolistic license for sports betting and the prohibition of games of chance that are not licensed in the Netherlands infringes article 49 EG.

It is clear that the existence of a monopolistic license for sports betting forms a restriction on the freedom to provide services contained in article 49 EC. Given the broad scope of this article, this conclusion is not surprising. In order to determine the validity of the national legislation on which this monopoly is based, it must be determined if the restriction can be justified. The EC-Treaty provides grounds for justification, but the restriction can also be justified by imperative requirements in the general interest. These imperative requirements are formulated in case-law by the ECJ. In the Gambelli judgement of 6 November 2003 (C-243/01), the ECJ confirmed earlier case law that stated that these imperative requirements include the protection of the consumer and the prevention of both fraud and the incitement to squander on gaming. In the Gambelli judgment, the ECJ added that the restrictions based on these grounds and on the need to preserve public order must also be suitable for achieving those objectives. The restrictions must serve to limit betting activities in a consistent and systematic manner.

The Dutch government states that its gaming policy can be justified by these imperative requirements because the policy is aimed at consumer protection, counteraction of fraud and criminality and the prevention of gambling addiction. The government intends to ‘channel’ the human urge to gamble by providing a safe and controlled gambling environment. To provide such a safe and controllable environment, it chose to create and maintain monopolies on several specific games of chance.

In its Letters of Formal Notice, the European Commission enumerates several arguments that state that the Dutch gaming policy is not consistently and systematically aimed at the limitation of betting activities and the policy is therefore not suitable to achieve the objectives of the gaming policy. Some of the Commissions arguments are as follows:

Despite the substantial marketing efforts by Dutch licensed gaming operators, which are often very persuasive, the Dutch government claims that the current gaming policy counteracts gambling addiction. The European Commission is doubtful of this claim. In its supplementary Letter of Formal Notice, the European Commission also criticizes the research material on which the Dutch claim is based. The Commission states that the Dutch Gaming Boards’ annual reports show different figures of the sums spent on marketing than the figures that the Dutch authorities provided to the Commission, and demands an explanation for these discrepancies.

A basic argument involving the aims of the gaming policy pops up when the financial aims of sports betting operator ‘De Lotto’ are examined. In several annual reports, De Lotto stated that its main aim is the procurement of funds. According to European case-law, financial interests cannot be used to justify a restriction on the freedom to provide services.

The Dutch government is of the opinion that the banning of foreign operators, even operators from other Member States who are licensed and monitored in their home countries, is justified by a general aim of preventing fraud, criminality and other illegal activities. The Commission disagrees. The Commission states that if an operator is subject to appropriate supervision, the prevention of fraud, criminality and other illegal activities cannot be used to justify an infringement of the freedom to provide services. The Commission emphasizes that the Dutch government did not provide any proof or indication of fraud and criminal activities by operators licensed in other Member States.

On 28 February 2008, the European Commission published a press release in which it announced that it had sent a Reasoned Opinion to the Netherlands. The Commission has formally requested the Netherlands to amend its laws. A Reasoned Opinion is the second stage of an infringement procedure. If there is no satisfactory reply within two months, the Commission may refer the matters to the European Court of Justice.

2.4. The proposed Gaming Act

The content of the current 1964 Gaming Act is largely maintained in the proposed new Gaming Act. In our perception, the most interesting change is the suggested replacement of the current Gaming Board with a new, more powerful Gaming Board. At the moment, the Gaming Board is an advisory body to the Ministry of Justice. In the legislative proposal, the Gaming Board will be responsible for licensing and will have the ability to fine breaches of the Gaming Act, which is currently not the case.

Furthermore, licenses will be limited to five year terms. After these terms they will expire and are eligible for renewal by the Gaming Board. At the moment, licenses are issued by the Minister of Justice. It may very well be that the licensing process will become less politically motivated. This may create licensing opportunities for the (remote) gaming industry.

It is possible that the Gaming Act will be enforced differently. Currently, the Gaming Act is largely enforced by the licensees via civil injunction proceedings, such as in the De Lotto vs. Ladbrokes and De Lotto vs. Unibet proceedings. Under the new Gaming Act, it is reasonable to assume that violations of the Gaming Act by online operators will be attacked by the Gaming Board via a system of administrative sanctions.

2.5. The proposed Online Gaming Act rejected by the Senate

At the moment, all offering of online gaming to Dutch residents is illegal. This prohibition includes the offering of online gaming to Dutch residents by operators licensed in other Member States. It is not possible to obtain a Dutch license for offering online gaming.

The proposed Online Gaming Act was a part of the governments’ fight against online gaming operators. If accepted and implemented, the Online Gaming Act would have created an exclusive but temporary license for online gaming. The Minister’s intention was that the temporary offer would be an experiment to gain knowledge on and experience with online gaming. The experimental license was supposed to be granted to State-owned casino monopolist Holland Casino. Holland Casino was supposed to offer a trustworthy and safe alternative for the estimated 400.000 Dutch residents that are currently gambling with other (“illegal”) operators. The proposed Online Gaming Act has met fierce criticism from the European Commission, high advisory bodies such as the department of legislation of the Council of State and members of the Senate. One of the points of critique was a possible infringement of European Law. Two rounds of debate were held in the Senate, and on 1 April the Senate voted 35 in favour and 37 against the proposed Online Gaming Act.

It is noteworthy that a majority of the Senators did neither show any concern of a possible infringement of European law, nor of provoking the European Commission to initiate a second infringement proceeding on Dutch gaming regulations. The main arguments uttered in the debate ranged from a wish by the conservative Christians and socialists for a total ban on online gaming, combined with a strict enforcement policy on illegal operators on the one side, and on the other side the liberals’ wish to admit more companies in the participation of the experiment.

However, the rejection of the proposed Online Gaming Act does not mean that the governments’ efforts to create an exclusive license for Holland Casino have come to a full stop. Minister of Justice mr. Hirsh Ballin stated that he now reconsiders his options, among which the incorporation of a new exclusive online gaming license in the proposed new Gaming Act. It is not yet known how he envisages this incorporation.

2.6. Blocking of financial transactions and blocking of access to websites

In a press release of 29 January 2008, the Ministry of Justice stated that it will “take a firm line” against financial institutions that facilitate unlicensed gaming operators. On 4 March 2008, the Minister sent a letter to the Senate which mentioned the Minister’s intention to address not only financial institutions, but also Internet Service Providers (ISP’s).

The Ministry intends to put together a black list of 30 online operators that are aimed at the Dutch market. This list will be issued this spring to the Dutch Banking Association (NVB). The Ministry expects financial institutions to refuse clients who are either operating illegal online gaming websites in the Netherlands, or clients who operate online gaming websites from abroad and are excepting Dutch residents as clients. The press release stated that the Ministry will take legal actions against companies who “nevertheless have relations with clients who operate illegal gaming websites in the Netherlands.” It is noteworthy that the press release was not issued by the public prosecution department but the Ministry of Justice. The Ministry itself has no authority to indict individuals or companies; it can merely file a complaint with the public prosecution department.

In the evening of 29 January 2008 a debate on the proposed Online Gaming Act was held in the Senate. Senators referred to the press release that was issued in the morning and asked if this “firm line” includes criminal prosecution, which the Minister promptly confirmed.

These statements by the Minister resulted in several critical reactions in the press from the Dutch Banking Association (NVB) and “Currence”, the operator of leading Dutch PSP “IDEAL”. A spokesman for Currence mentioned in a radio interview on 30 January 2008 that Currence is in principle unwilling to comply with the Minister’s request for as long as no judge has ruled that facilitating payment transactions to gaming operators is illegal. The NVB mainly pointed out the practical problems and stated that the debate on the acceptance of clients should only relate to Dutch accounts, held by Dutch companies with Dutch banks (meaning: licensed in the Netherlands).

The criticism from the NVB, as uttered on its website www.nvb.nl [22] may have been effective. In a letter to the Senate of 4 March, the Minister sharpness of the statements of 29 January was toned down. The Minister now states that only the provision of bank accounts to online gaming operators is illegal. The Minister also acknowledges that banks cannot completely monitor or block financial transactions between Dutch residents and online gaming operators. Dutch banks cannot prevent Dutch residents to transfer funds through a third party, such as an online bank account at a bank in another jurisdiction. The Minister explicitly mentions a Paypal account. Since Paypal has a banking license in Luxemburg, the Ministry stated that it cannot oblige a bank with a foreign license to break up its relations with online gaming operators.

Because of the fact that the blocking of Dutch PSP’s can be circumvented, the Minister stated on 4 March that he now intends to also address Internet Service Providers. These ISP’s can remove illegal websites, or block the access to illegal websites. The Minister states that the police and the public prosecution department can indicate this possibility to the ISP’s regarding online gaming operators. The Minister states that such an approach of illegal websites by police and public prosecutors often leads to a ‘positive action’ by ISP’s.

According to the Minister, the public prosecution department is willing to take action against operators of online gaming, and against intermediaries such as PSP’s and ISP’s that facilitate these operators.

However, if the approach as described above proves to be ineffective, the Minister also stated that he intends to propose legislation that blocks transactions to and from online gaming operators. This legislation will be similar to the American UIGEA. The Minister does not mention that similar regulations to the UIGEA that prevent financial transactions to and from online gaming operators have already been criticized by the European Commission as infringements of the free movement of capital as laid down in article 56 of the EC-Treaty. On 3 March, France has received a ‘Detailed Opinion’ from the European Commission following a draft decree similar to the UIGEA, and Germany has received a ‘Letter of Formal Notice’ because of the German Interstate Gambling Treaty. The Letter of Formal Notice contains criticism on the prohibition of financial transactions with online gaming operators. These documents are a clear sign that (eventual) Dutch legislation prohibiting financial transactions to or from online gaming operators can also be non-binding because such regulation potentially constitutes a violation of European law, notably article 56 of the EC-Treaty.

2.7 The proposed Online Gaming Tax Act

The proposed Online Gaming Tax Act (bill 30 583, hereinafter ‘OGTA’) was originally meant to be complementary to the Online Gaming Act. Despite the rejection of the Online Gaming Act, the authorities decided to pursue the legislative process of the OGTA.

The OGTA will impose a tax burden on operators of both domestic operators of online gaming and the individuals that have won prizes in foreign online gaming. For the participant in foreign online gaming, the tax rate is 29%, levied on the positive difference between the wagers and the prizes for each month. The participant is not subject to gaming tax in the Netherlands if a similar tax has been levied in the country were the operator is based.

The current tax exemption for prizes won at foreign gaming operators that do not surpass €454 is not maintained for winners of prizes with foreign online gaming operators. The increase of the tax burden goes even further. Gaming Tax is also levied on all valuable goods that the participants were given, because of their participation in a game of chance. In our opinion, the current text may even include a tax on promotional wear given to participants.

On 26 June 2007, the House of Representatives accepted the OGTA. The Senatorial Finance Commission examined the OGTA in a closed meeting on 20 May 2008, after which it sent a report to the government. The Commission has several points of critique, including doubts on the enforceability of the proposed legislation. It is not yet known when the government will answer the questions and critique raised in this report.

3. Case-law

3.1. Introduction

In most of the civil case-law, the operators that do not possess Dutch gaming licenses have taken the position that since the Dutch government does not pursue a coherent and systematic restrictive policy, the Dutch gaming act is irreconcilable with the EC-Treaty. This debate came to a provisional climax by the Supreme Court’s judgment of 18 February 2005 in the summary case De Lotto vs. Ladbrokes, in which the Supreme Court decided that the 1964 Gaming Act is a justified infringement of the EC-Treaty. At the moment, the proceedings on the merits between De Lotto and Ladbrokes are pending before the Supreme Court.

After the 18 February 2005 decision, administrative proceedings were also started regarding the allocation of the gaming licenses, which can also be seen as irreconcilable with the EC-Treaty. The highest administrative judiciary, the Council of State, gave two remarkable rulings in the cases of CFR vs. Minister of Justice and Schindler vs. Minister of Justice. In the pending case Betfair vs. Minister of Justice, the Council of State has referred preliminary questions to the ECJ.

3.2. Civil case-law: De Lotto vs. Ladbrokes

The De Lotto vs. Ladbrokes case was the first case in which the Supreme Court was asked to render a decision on the conformity of the Dutch gaming policy, in particular the sports betting monopoly, with European law. The judgment was rendered on 18 February 2005.

On 6 November 2003, the ECJ rendered the Gambelli-judgment, which is discussed above. The Supreme Court referred to this decision and the requirement that the national policy should be consistent and systematic, and therefore suitable for the achievement of its stated aims. In its examination of Ladbrokes’ claim that the 1964 Gaming Act is incompatible with European Law and therewith non-binding, the Supreme Court confirmed the evaluation of the Court of Appeal which concluded that the prohibition of all games of chance without a license is suitable to achieve the governments objectives. The main objective is canalizing the human urge to gamble whilst also protecting the consumer, counteracting fraud and criminal activities and preventing gambling addiction. Therefore, the Supreme Court considers the 1964 Gaming Act not to be an infringement of European law.

It must be noted that this case was a summary civil proceeding in a dispute between two private parties. It was not feasible to thoroughly examine the Dutch gaming policy. The judiciaries only conducted marginal examinations of the actual implementation of the government’s policy.

At the moment, the proceedings on the merits are pending before the Supreme Court. De Lotto has won al cases in lower courts, obtaining injunction verdicts against Ladbrokes. As it was in the summary proceedings, Ladbrokes is ordered to block access to its websites from the Netherlands. The opinion of Advocate-General Keus, delivered on 4 April 2008 is noteworthy. Although several new judgments have been rendered by the ECJ on the national gaming regulations of Member States, and the European Commission has instigated infringement proceedings on the same issue that is at hand in the De Lotto vs. Ladbrokes case, the Advocate-General concluded that Ladbrokes appeals on European law should be rejected.

The reason for this conclusion is that A-G Keus considers the ongoing infringement proceedings between the European Commission and the Dutch government to be a more suitable framework for an examination of the compatibility of the national gaming policy with European law. Despite his conclusion that the appeals on European law should be rejected, the Advocate-General does propose drafts for two possible preliminary questions to the ECJ. A-G Keus refers to recently referred preliminary questions to the ECJ from courts in other Member States that are dealing with similar issues, most notably the joint cases C-316/07 (Markus Stoss), C-409/06 (Winner Wetten), C-64/08 (Engelmann), C-525/06 (Euro Millions), C-46/08 (Carmen Media Group) and C-42/07 (Liga Portuguesa de Futebol Profissional). Because of the broad scope of the questions referred by other courts, A-G Keus proposes different preliminary questions that may contribute to the debate on national gaming monopolies. He proposes one broad question on the applicability of the status quo in the Netherlands as described by the government. More interesting is the second question. This specific question emphasizes on the nature of this civil case. A-G Keus proposes to ask the ECJ if a measure by a judiciary, imposed in an injunction judgment in a civil dispute on the offering of remote gaming, also needs to contribute to the realisation of the aims of the national regulation. In other words: does a judgment that restricts the freedom to provide services also need to be justified by imperative requirements in the general interest.

3.3. Application for a casino license: CFR vs. Minister of Justice

The Compagnie Financière Régionale (CFR), a subsidiary of french casino operator Tranchant, applied for a license to operate a brick and mortar casino in the Dutch municipality of Bergen op Zoom. Because of the fact that the 1964 Gaming Act only provides for a single license to operate casinos in the Netherlands, and this license is already granted to (the state-owned) Holland Casino, CFR’s application for a license to operate a casino was refused by the Minister of Justice.

CFR objected to this refusal and appealed the Minister’s decision at the Administrative division of the District Court of Breda. In a surprising move, the District Court annulled the refusal on 2 December 2005. The District Court examined the marketing budgets and efforts of Holland Casino, and the expansion of the number of casinos. After considering that the expansion and the marketing policy of Holland Casino cannot be considered to be systematic and coherent, the District Court ruled that the Minister had failed to show that the legal monopoly is a justified restriction on the freedom to provide services.

The Minister of Justice and Holland Casino (that joined the Minister in the proceedings) appealed this decision at the Council of State, which annulled the judgment of the District Court on 14 March 2007 and decided that the Minister is allowed to refuse the application for a license to operate a casino. According to the Council of State the examination of specific aspects of the gaming policy cannot lead to the conclusion that European law is infringed: the national policy on casinos should be examined as a whole. Because of the fact that the limitation of casino operators serves the objectives of regulating and controlling the total supply of gaming opportunities and canalizing the urge to gamble, the Council of State considers the Dutch casino policy to be in full compliance with European law.

3.4 A different approach: Schindler vs. Minister of Justice

Four months after the CFR vs. Minister of Justice case, the Council of State ruled differently on the application for a license to operate a charity lottery. The number of charity lotteries is not limited in the 1964 Gaming Act. At the moment, three such licenses have been granted.

The Council of State gave two remarkable statements: first of all, it considered that the Minister failed to proof that refusing this single application for a license to operate a charity lottery is proportionate in order to achieve the aims of the government’s gambling policy. As mentioned above, those aims are canalizing the urge to gamble, with special attention to the protection of consumers, prevention of gambling addiction and the counteraction of fraud and other criminal activities. Apparently, the Council considers it possible that other measures, that are less restrictive on the freedom to provide services, are possible alternatives to the limitation of charity lottery-licenses to three.

Besides this statement on the proportionality of the refusal of this single license with regard to the freedom to provide services, the Council of State also criticizes the automatic renewal of these licenses to the existing operators. The Council of State also makes a remark on the fact that there is neither a form whatsoever of a public tender upon expiry of these five year-licenses, nor on the expiry of any gambling license named in the 1964 Gaming Act. According to the Council, this restriction on the freedom to provide services cannot be justified by the Ministers objective of keeping control on the gambling market, because this objective can also be reached by a licensing procedure that is based on objective criteria and with similar conditions for potential operators that are free to bid for a license.

The differences in these two judgments, which were delivered by the exact same Councillors, may be found in the fact that licenses for charity lotteries are not exclusive, and the casino-license is. CFR applied for a license besides the license of Holland Casino, while the casino-license is exclusive. Also, the license to operate casinos in the Netherlands is granted for an indefinite period, while the licenses for charity lotteries and most other types of games of chance are granted for five-year periods. A definite answer to the reasons why these two judgments led to different outcomes may be given in the pending Betfair vs. Ministry of Justice case.

3.5 Pending case-law Betfair vs. Minister of Justice

At the moment, the case Betfair vs. Minister of Justice is pending before the Council of State. On 14 May 2008, the Council issued its referring judgment, in which it refers preliminary questions to the European Court of Justice.

This case differs from the CFR vs. Minister of Justice and Schindler vs. Minister of Justice cases in the fact that Betfair applied for the sports betting-license that is now granted to De Lotto and the horse betting-license that is now granted to Scientific Games Racing. Both CFR and Schindler had applied for a separate license, besides the existing licenses. Therefore the allocation of the existing exclusive licenses, which was briefly mentioned by the Council of State in the case Schindler vs. Minister of Justice, can now be thoroughly examined.

Because of the possible consequences for their operations, both De Lotto and Scientific Games Racing decided to join the Minister in the proceedings. At the moment, two hearings have been held in this case, the first on 30 August 2007 and a re-opening on 10 November 2008 after the judgment by the European Court of Justice in the case European Commission vs. Italy, C-260/04 of 13 September 2007. The Council decided to re-open the proceedings to allow the litigating parties to express their views on the consequences of the judgment in case C-260/04 to the case at hand. The Council referred to the ECJ with questions on the mutual recognition of licences, a question on the equal treatment of potential candidates and the transparency of the allocation procedure and a question whether, and if so under what conditions, the exclusion of third parties in the allocation of gaming licenses is justifiable.

4. Problem Gambling

In 2005, the Dutch Ministry of Justice commissioned a detailed study to establish the problem gambling prevalence rate in the country. Conducted by the Addiction Research Institute (Centrum Verslavings Onderzoek-CVO), the study revealed a significant drop in the numbers of problem gamblers in the country. While a previous scientific study from the same institute of the University of Utrecht had shown there were over 70,000 problem gamblers in Holland in the mid-1990s, the new study showed this number had fallen to less than 40,000 in 2005. However, the new study has a very high margin of error, with the authors admitting in the preamble that the number could be anywhere between 21,000 and 59,000.

This amounts to a 0.3 percent problem gambling prevalence rate for the population aged 16 or over. Compared to the USA and Canada, which have rates of around 2-3 percent, this is amongst the lowest recorded prevalence rates in the world, with only Sweden having a lower rate of 0.2 percent.It should be noted that the prevalence rate is subject to much debate amongst industry insiders. The fact that the previous figures were ten years old and no follow-up had been conducted means that the reasons for the decrease are more speculation than fact.

Another problem lies in the notion that this report was ordered and paid for by the government, which also holds a monopoly on gambling. While the impartiality and integrity of the CVO is not in question, the monopolistic nature of the industry means that the authorities, by having a certain control over the access the CVO had to data and the actual gamblers to be questioned, could have had a certain impact on the study parameters.

The results of the study are also in contradiction with other observations. For example, the number of problem gamblers seeking help was increasing at the same time the problem gambling rate was supposedly decreasing.For example, after a sharp decrease following the ban of fruit machines, the number of addicts rose 7 percent in one year. This was made clear from figures of the foundation, Stichting Informatievoorziening Zorg (SIVZ) published in 2003.

The SIVZ numbers are an indication that the 0.3 percent rate might not reflect the real situation, especially given that sports betting and lottery players were not taken given much consideration in the calculation of the CVO prevalence rate study.The CVO study did come to the conclusion that problem gambling measures taken by the state had been very effective, most notably the self-exclusion program at Holland Casinos. Another important action by the government against problem gambling credited for the decrease was the removal of fruit machines from certain types of restaurant venues.

Although the preventative measures taken by Holland Casino and gaming machine operators have made a substantial contribution, the same cannot be said for amusement centre and bar staff, whose training is limited.

Other findings from the study revealed that despite a low problem rate, the country had a high participation rate. For example 80 percent of the population admitted having bought lottery tickets, 31 percent bought a instant lottery scratch card, 35 percent have played on a slot machine and VLTs and 25 percent had been to a casino. In all, 87 percent of the population a partaken in one form of gambling or another in the 12 months preceding the study.

Other forms of gambling proved less popular. Only 4 percent of the population had participated on horse race betting and, another 4 percent admitted to have gambled illegally. A dismal 1 percent of the population had gambled on an internet casino or betting site.At the European Association for the Study of Gambling conference held in Slovenia July 1-4 2008 Johan van Kastel, head of security for Holland Casino, gave a detailed overview of his company’s problem gambling policy.

Van Kastel mentioned that the mandatory identification of players before they are allowed to enter the casinos makes it easy to track gambling behaviour and act if problems are detected. For example, he stated that if a player visits casinos more than 10 times within a single calendar month, this player will receive an advice slip from the reception counter mentioning the various problem gambling resources available in the country. If a patron visits the casinos more than 15 times in a month, a mandatory interview with a specially trained employee is conducted.

Floor managers are also trained to detect behaviour such as long uninterrupted periods of playing or aggressive behaviour suggesting distress. These managers invite the player for a “screening interview” to establish the depth of the problem. If a serious problem is detected, the manager then refers the client to the security department for a “confrontation interview”. The result of the confrontation interview is often a ban of 6-months to 1 year. This can be as a result of a demand for self-exclusion or based solely on the security officer’s opinion.

If the client wants to come back after the ban a “return interview” is given in order to ensure that the problem has been resolved and that it is safe for the player to return to the gaming floor. Multiple “follow-up” interviews can be conducted to assess the player’s situation, especially if large sums of money are lost after the return. Van Kastel mentioned that 20,000 of the above mentioned interviews are conducted every year, out of a total casino visitor number of nearly 1 million.

In recent years, Holland Casinos has also developed a working partnership with the Human Assistance Network for Daily Support (HANDS). HANDS is an independent organization which provides a telephone helpline for problem gamblers. Leaflets and posters are scattered throughout the venues and staff have been trained to divert people to HANDS when problematic behaviour is observed. This is in addition to many health department and private services offered to problem gamblers.

5. Money Laundering

At the same EAGS conference in July 2008, Johan van Kastel also gave a presentation on Holland Casinos’ anti-money laundering frame work. First and foremost, he explained that his company was giving extensive training to all employees who handle cash on how to identify suspicious financial transactions. This is often done by keeping records of people who convert large denomination bills (€500) without playing for a long time or people who arrive with large stacks of small bills and also do not play and convert their chips back to cash or cheques.

This process, which is known as “layering” or “splitting”, is usually identified by cashiers and video surveillance personnel.Van Kastel mentioned that while money laundering in Holland Casinos did take place, most criminals in Holland used another process called “integration”, which consists in buying cash businesses such as restaurants and bars and declare false revenues, thus integrating the “dirty” money into their accounting practices.

While van Kastel agrees that his casinos are not free of money laundering, the elaborate security measures implemented in the last decade have been deemed successful in reducing illegal financial transactions, especially in the foreign currency side of the business. Any transaction of €15,000 triggers a special reporting method where the client is obligated to fill a special form which will be kept as a record.

The Disclosure of Unusual Transactions Act (Wet Melding Ongebruikelijke Transacties) came into force in the Netherlands in 1994. The Act created an anti-money laundering reporting agency, the Office for the Disclosure of Unusual Transactions . Under the Act, casinos are required to report to the Office any transactions which they unusual or suspect. This obligation is required of casinos as they are quasi-financial service providers.

The security department of Holland Casinos also conducts background checks on players who exchange large amounts of money at its venues. For example, van Kastel mentioned the story of an individual, Reinier S., who had been excluded after losing large amounts of money and threatening the staff. Reinier had been defrauding his employer to cover gambling losses and later killed his wife when she confronted him about his actions.

Another example given by van Kastel is the case of a client who played with bags of money that was soiled and had a bad smell. When asked by security why his currency was in this state, he replied that he had lots of money buried and could always get more. A thorough background check of this person revealed that he was an eastern European crime boss alleged to be involved in large-scale drug trafficking in his home country. He was later banned from all casinos in the Netherlands.

As a result of its efforts in combating problem gambling and money laundering, Holland Casinos received the international award for ‘Socially Responsible Operator of the Year” at the 2008 Gaming Awards ceremony held in London.This award is by no mean an indication that Holland Casinos has gotten rid of problem gambling and money laundering on its premises, as can be attested by a number of scandals and media stories published in recent years on both issues. However, the company has come a long way since the opening of its first casino in the mid 1970’s.

6. Summary

Dutch Gaming law is still restrictive in nature, and the Minister intends to pull financial institutions and internet service providers into his struggle with online operators. The government shows no move whatsoever towards liberalization of the Dutch gaming market.

On the other hand, the government received serious setbacks: the European Commission instigated an infringement procedure regarding the monopoly on sports betting. The Senate rejected the proposal for a new state-monopoly on online gaming. In a pending administrative procedure, the ECJ will rule on the conformity with European law of the current automatic renewal of gaming licenses. The conformity with European law of the sports betting monopoly as such is under examination by the Supreme Court, while it is possible that the European Commission will instigate a procedure on this very same subject with the European Court of Justice.

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