Danish Gaming Legislation

lawOn Friday April 23 the first hearing regarding the new Danish Gaming Law will take place in the Danish government. A rather comprehensive law is presented in the government and the majority of the Danish politicians seem to be for passing this through, despite the law has severe impact for minor and medium operators in Denmark. Let it be said that the law is not final yet, but it is quite likely that what is presented for the government will pass through without significant changes. Companies like BWIN, Ladbrokes, Betfair and many other organizations have tried to influence the Danish Gaming Law but without any further success.

License is needed

From January 1 2011 all operators need a gaming license to be able to operate within the borders of Denmark. A license is required for poker and casino and a license is required for sports betting. Bingo operators will not be able to apply for a license.

The initial price in regards of acquiring a license is in the area of €140,000 yearly for each gaming segment. This is a monster blow to all small operators since it simply will be impossible for any of those to create a viable business plan with such a huge upfront fee. On top of the license fee companies will need phyiscal representation in Denmark plus create reporting systems that satisfy Danish requirements in terms of the gaming taxes that need to be paid. The combined costs of just setting up the operation in Denmark the first year is well above €250,000 which makes Denmark by far the most expensive gaming jurisdiction in the world and this with a population of only 5,600,000 people.

Enormous taxes

The gaming taxes are going to be enormous since the suggested number is 20% of the Gross gaming for Casino and Poker. It seems to be almost an impossible task for most operators to enter Denmark with such steep taxes and license requirements, and Denmark has certainly created a scenario where the big boys PokerStars, Full Tilt Poker, Party Poker will have a significant advantage compared to smaller operators. All companies with a turn over of less than €350,000 need to carefully examine, if Denmark is a place to look for gaming customers. So far Full Tilt Poker and PokerStars has not been able to fully enter Denmark since winnings on those sites are taxable due to the fact that none of these companies holds an European Gaming License, but under the new Danish Gaming Law this fact will change and it is very likely that tons of poker revenues from Denmark will end up at the two biggest rooms in the world. Even companies that today have a solid player base in Denmark will be at risk of losing most of this to the aforementioned giants in the poker world.

Even worse is the fact that Denmark, in the period from the law becomes a fact and until January 1 2001, threatens to DNS block companies who has a Danish homepage, Danish support or advertise in Denmark. Thus all the coming license takers are without a real chance to maintain and build a player base and will basically be blindfolded in terms of estimating whether the proposed legislation is viable to deal with at all. Certainly these restrictions will benefit the Danish Gambling Monopoly- Danske Spil- who will be the only ones that for a period of 6 months legally can attack the Danish players without any risk. Danske Spil signed a contract with Party Poker earlier this year and will use the Party Poker and Casino platform in 2011. DNS blocking is something normally done by countries violating human rights and Denmark put themselves alongside China and Turkey in this respect. Shame on Denmark if this legislation hindering the public’s access to certain parts of the internet is passed.

Weird law

The law more looks like a protection of the existing monopoly than a liberalization of the gaming law. The law in its current form ensures to close out all minor and medium operators from the market and at the same time has a built in protection of the monopoly for 6 months including the lucrative period where the World Cup takes place. It is also hard to see the law differently than a protection of the monopoly, when the Danish government will pass a law that prevent future partners and license takers from actually operating their business for a full 6 months.

From a liberalization point of view the law is even worse. The major license fee will give Danish players very few choices when it comes to choose their operator of choice and even if medium operators go in to Denmark, then they will face strong competition since the big boys will have a lot stronger budget outlined for several years to come. Denmark will by passing this law create a new monopoly which this time consist of a few major players in the industry instead of the national Monopoly. The players are certainly not better off in this scenario since they will lose out on a lot of quality brands which now will be unable to afford the price to enter the market

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