Q&A: Is Denmark still an attractive market?

While Denmark may not garner the same level of headlines as its nearest neighbour Sweden, the Danish gambling market has suffered its own tumult over the last five years as the industry struggles with the twin issues of problem gambling and unlicensed operators.

Earlier this month, the Danish Online Gambling Association (DOGA) unveiled its code of conduct, part of a wide-ranging agreement with the Danish government concerning the use of advertising, marketing and sponsorships by Danish facing gambling operators.

This was part of a wider arrangement with the Danish regulator, Spillemyndigheden and the seven Danish political parties, first agreed in June.

As one of the key voices in the Danish gambling market, DOGA members are some of the biggest names in the industry, including Bet365, Betsson, Betfair, Bethard, Danske Spil, Kindred Group (Unibet), and The Stars Group.

Drawing on their experiences of the Danish gambling market, Morten Ronde, head of DOGA speaks to EGR Compliance about the potential of Danish gambling and whether it might one day eclipse its Scandinavian neighbours.

EGR Compliance: Where are the biggest opportunities for operators entering the Danish market?

Morten Ronde (MR): The biggest opportunities in the Danish market probably lie in creating a business model which distinguishes itself from the models already in place. To enter a market as the market in Denmark, which is quite crowded heavily regulated, is not easy unless you can create a different user experience or find your own nice. Fortunately, we still see that it is possible to launch new brands into the market successfully.

EGR Compliance: Is the Danish gambling authority doing enough to ensure the development of a robust regulated market in Denmark?

MR: The legislative power lies with the Ministry of Taxation and the day-to-day supervision of the gambling market is carried out by the Danish Gambling Authority. We see that governmental bodies are adopting a stricter approach to regulation and supervision at the moment. The Ministry of Taxation has just published draft regulation which will apply stricter conditions on marketing and bonus promotions, and the Danish Gambling Authority have reported 15-20 gambling operators to the police for what seems to be minor breaches of the marketing provisions. While the actions taken by the government bodies may create a more compliant and less aggressive market, the industry fears for the profitability in the market going forward.

EGR Compliance: Does the “revenue-restricted” licence encourage smaller operators to target the Danish market?

MR: The revenue-restricted licence has allowed smaller outfits, primarily Danish companies, to enter the gambling market. But it is rare that you see these operators going from a restricted licence to a full/normal licence. It is a big step to go from restricted to full licence in terms of regulation and costs. I think the revenue-restricted licence mainly attracts operators who offer “for fun” type of games.

EGR Compliance: Are the current tax rates on online operators (20% GGR) harming the Danish market?

MR: I think the current tax rates are manageable for most of the online operators but it’s certainly not all operators who are making good money. It’s a fine balance where increases in taxation would hurt the industry and would drive some operators out of the market. We see the some of the parties in the Danish parliament are suggesting increases in the tax rate and if such tax hikes are implemented it could drive some of the operators out of the market.

EGR Compliance: Given the well-publicised failures of the Spelpaus self-exclusion regime in Sweden is Denmark’s ROFUS system achieving its self-exclusion aims?

MR: The ROFUS system seems to be working well and it is providing a very useful tool for player protection. I think the Danish Government by implementing this system has shown other countries a way forward and I note that since ROFUS was implemented, other countries such as the UK and Sweden have implemented similar systems.

EGR Compliance: What part are ISP blocking provisions having in protecting the licenced Danish market?

MR: I do not think the ISP blocking has played a major role in the success of the Danish gambling regulation, but it’s been appreciated by the Danish Gambling industry that the Danish government has used all the tools available to protect the legal, licensed, industry against unlicensed gambling operators. Today, the black-market share of online gambling is probably less than 10 percent which is one of the lowest levels of black-market share in the world.

EGR Compliance: Will the Danish government implement the proposed restrictions on bonusing?

MR: The proposed restrictions on bonusing are based on a political agreement made in July 2018 by a majority of the political parties in the Danish parliament. There is an obligation for the government to implement the restrictions. However, when the draft regulations were published in the beginning of the year were published, the Ministry of Taxation had proposed stricter provisions than those agreed upon by the political parties. The industry is hoping that some of proposed restrictions will be “relaxed” in the final version of the regulations.