Update on Denmark Online Gaming Regulation

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In an interview to eGaming Review, Richardt Funch, Ladbrokes Nordic country manager for Denmark, outlined the likely timeline for the regulation of online gambling in Denmark to fall in place. He also elaborated on certain key aspects of the Danish proposal.

As announced the gambling bill regulating online gambling is scheduled to be issued on January 1, 2011. However it is unlikely that this will happen as planned. As of now Denmark has referred the proposed bill to the European Commission for their approval. There is a standstill period involved during which the Danish government cannot take any steps to implement the regulatory framework. This will expire only on October 11. Then the government has to go through the process of issuing licenses. So far some of the requirements that the applicants will have to meet are available. But the complete and comprehensive details are awaited. Once the application process is opened it is expected that anywhere between 20 and 30 online gaming operators will immediately apply. For the last 50 years the Denmark government has had to deal only with one operator and that too an operator it owned. Hence carrying out due diligence on so many applications, and that too for the first time, will be an onerous task. Hence according to Funch it would be closer to April 2011 before the Danish online gaming regulatory mechanism is on stream.

The regulatory mechanism in Denmark, as per the present draft, will allow operators to offer two forms of gambling services for which licenses will be issues. One license will be for sports betting both online and offline. The other will be for online casino and poker. The online casino games permitted will be blackjack, roulette, slots, backgammon, whist and bridge. The state will charge a flat tax rate of 20% on gross win across all products. In addition the state will charge an application fee of €36,000 per license and an annual license fee in the range of €7,000 to €200,000, based on gross win. Those operators applying for licenses under both categories will have to pay an application fee of €51,000.

In the current proposal, lottery, bingo, scratch cards, keno and horse racing will not be open to private gambling operators but will be retained by the Danish monopoly. Of these the most contentious product is horse racing. The government has justified this on the grounds of protecting the profits of the local horse tracks. Funch has indicated that this provision is likely to be challenged by operators because horse racing bets are an important component of their business. However this will happen only much later after the regulatory mechanism has been established. The operators do not want to risk losing what they are being given.

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