A trusted model: Danish Gambling Authority's director reflects on the market's 10-year anniversary

On 22 September 2011, Spillemyndigheden announced it was ready to start accepting applications for betting and online casino licences in Denmark. With licences issued from 1 January 2012, 2022 marks the 10-year anniversary of the regulated online gambling market in the Nordic country. Prior to 2012, betting and online casinos had been subject to a monopoly with only the state-owned operator Danske Spil permitted to offer these games. The liberalisation of the Danish gambling market aimed to crack down on the illegal market as well as generate increased revenue from taxes. In Q3 2021, the Danish Gambling Authority (DGA) reported gross gaming revenue (GGR) of DKK577m from betting (up 2.8% from Q3 2020) and DKK657m from online casino (up 17.3% from Q3 2020). In October 2020, the regulator published a report stating that in 2019 online gambling accounted for 54% of the total gambling market, an increase of 23 percentage points since the market was regulated in 2012. The liberalisation of the market has also led to a channelisation rate of 90% in 2020, putting Denmark behind only the UK, Italy, Spain and the Czech Republic, according to data from H2 Gambling Capital published on 4 February 2021. Here, EGR Intel discusses the Danish regulator’s success with driving down black market activity and how it has still maintained a high level of operator interest despite an increase in its GGR tax rate from 20% to 28% in January 2021.

EGR Intel: You became director of the Danish Gambling Authority (DGA) in November 2020. Is this your first role in the gambling industry?

Anders Dorph (AD): Yes, this is my first position in the industry. Before that, I worked for the Ministry of Justice and the police force in a variety of different chief positions. I was chief of asylum at the Danish Immigration Service for over four years and moving from that to the chief of a gambling authority has been a very steep mountain to climb in terms of knowledge and understanding. The biggest change has been the shift from a governmental position where I said yes or no to applications for asylum, to a new role where I make sure all suppliers of gambling in Denmark are able to operate in the country.

EGR Intel: What have been your biggest challenges to date?

AD: The biggest challenge has most certainly been having to understand a whole new area. I concentrate on leadership while simultaneously absorbing as much knowledge about the industry as possible so I can fully participate. At the DGA, I’m lucky to work alongside other very experienced and skilled chiefs such as Jan Madsen, chief of betting, online casino and market analysis, who has been here for over 20 years and was one of the individuals who formed the legislation of gambling. I have a lot of respect for the industry, just as I respect the gaps in my own knowledge, so I’m working hard to acquire the information I need. Starting as director during Covid has been another difficulty. A big part of this job is travelling to and gathering knowledge from other countries. Denmark is a small country. New developments don’t often start here. Not being able to travel and meet people directly has been tough, so I’m really looking forward to going to ICE, getting personally in touch with all my colleagues and learning from them.

EGR Intel: The regulated online gambling market in Denmark is 10 years old this year. What have been some of the milestones during that period?

AD: The biggest milestone was 10 years ago with the liberalisation of betting and online casino in Denmark. That was the start for the DGA, and we’ve had to develop and grow to keep up with this expanding industry. Six years later in 2018, Denmark saw the liberalisation of betting on horses, dogs and pigeons, as well as online bingo. In the same year, we introduced new initiatives against compulsive gambling including our StopSpillet helpline (officially opened in 2019), mandatory deposit limits, regulation of bonuses and a report on gaming and gambling. That was a big year for Denmark. There have also been moments of uncertainty, such as the raised tax on gross gaming revenue from 20% to 28% in January 2021, posing the possibility that some gambling companies would leave Denmark. The latest milestones happened in January this year regarding new and more transparent rules for charity lotteries and the strengthening of our supervision and efforts against match-fixing. I have high hopes for this because if we’re able to capture and develop data in very specific ways, we should be able to see how big a problem match-fixing actually is in Denmark, where it exists within the betting industry and on what types of bets.

EGR Intel: How would you describe your relationship with the Danish operators? What work do you do with them on a day-to-day basis?

AD: In Denmark we have a very open, dialogue-based approach to working. We are confident that the industry is very pleased with the way the DGA operates, the way we make operators aware of the rules, help them understand them and, most importantly, know how to comply with them. As an organisation, we are very service-minded and open. Every operator has a specific contact person on the legal side, on the technical side and so on. I consider that sort of cooperation to be quite unique. Covid aside, the DGA holds regular meetings with all operators to share what’s going on, what’s new and what’s coming up. We exchange a lot of valuable information through dialogue, all done in a very open way. We pride ourselves on not being an authority that slaps operators in the face when they do something wrong, instead we are an authority that makes every effort to ensure operators don’t make mistakes in the first place. It’s my opinion that operators want to adhere to the rules and don’t want to have problems with the authorities. We know this through talking to them, hence why dialogue is so effective. There are more difficult areas of course, such as money laundering or match-fixing, where operators have to fulfil certain requirements and/or more complicated regulations. Here, we put in even more effort on the service side to ensure they fully grasp what the situation is and how we can make sure they comply with the rules.

EGR Intel: In a recent DGA report, Denmark reported a 90% channelisation rate in 2020, up from 88% in 2019. What do you attribute this uplift to and can you push it even higher?

AD: We are very happy with the numbers as it shows that the online market is well regulated and attractive to both gamblers and regulators. Through tackling the illegal side of the industry, we hope to push it higher. It is not illegal to gamble on a foreign site, but it is illegal for foreign sites to target Danish customers if they don’t hold a licence in Denmark. We aim to start dialogues with these sites: some will comply and stop, and those that don’t will simply be blocked. It’s not 100% effective but it’s definitely doing a job.

EGR Intel: Do you have a good relationship with the internet service providers (ISPs) in terms of which websites need to be blocked? Are Danish ISPs doing enough to block unlicensed gambling sites?

AD: We have very good cooperation with the industry’s ISPs and we work well together to have the best site-blocking process. Some cases require a court order and since 2012 we’ve blocked 145 websites through the courts. It’s extremely important that the providers of gambling in Denmark know we are keenly pursuing the illegal side of the industry and will do all we can to stop it.

EGR Intel: Just over a year ago, Denmark’s tax on GGR increased from 20% to 28%. What impact has this had on regulated operators?

AD: This is very interesting for us because a lot of our operators have had gambling licences in Denmark for five years from 2016, and many more have just started for five years from 2021. Eventually they will all have to apply for a new period, and for those that already have, we can see the market is still moving at a pace. We don’t have isolated numbers for the effect of the tax increase specifically, but we can clearly see we still have the same number of operators as before and that number is increasing. We can see that the rate of return has fallen slightly from 96.14% to 96.03%. But is that an effect of the increased tax? It’s difficult to say because we have seen the same in previous years. So, yes, it’s a balance but I’m happy to report there is still a lot of competition in Denmark.

EGR Intel: In 2020, the DGA made updates to the Danish Gambling Act’s technical requirements. What impact has it had on the market?

AD: The 2020 changes have had no impact on the market and we didn’t expect them to. We continuously assess whether we need to make adjustments and updates to ensure our technical requirements remain relevant. We still have a satisfactory basis for issuing permits and supervision. So, it was more or less just technical changes.

EGR Intel: The update also included customer protection enforcements like mandatory deposit limits. What effect has this had on problem gambling rates?

AD: We keep up with the latest research and I believe it has had an impact but we don’t have specific figures to show us whether deposit limits lead to fewer people developing problems or not. However, we do believe tools like this help individual players prevent their financial losses being as large as they could be.

EGR Intel: Over the past year, several operators have fallen foul of the Danish Money Laundering Act, particularly in areas of reporting and source of wealth checks. What are you doing as a regulator to stop this trend going forward?

AD: We have strengthened our number of employees in that area to increase focus on compliance and combat money laundering. We do a lot of work in guiding and talking to the industry about the rules. It’s a complicated area and possibly quite an abstract one for a lot of operators. Our guidance is extremely important.

EGR Intel: Denmark’s operators have embarked on a more self-regulatory stance over the last two years, most notably in the Danish Online Gambling Association (DOGA)-backed code of conduct. How do you view these efforts as a regulator?

AD: The operators’ stance is very positive and indicates that, as an organisation tasked with the power to say what is right and what is wrong within the industry, we are doing a good job. It’s really important that operators work together and help make sure everybody involved complies. Of course, black areas of the industry exist that don’t want to comply and leave other operators to do the right thing while they grab their slice of the market. That is why the DOGA code is needed and extremely important moving forward.

EGR Intel: Version 2.0 of the certification system for online betting licensing was submitted to the European Commission on 25 January. What changes do you expect to come out of that?

AD: The 2.0 version of the certification programme doesn’t only include online betting, it also includes land-based betting and online casino. We do not expect major changes as the obligations of the operators will, in general, remain the same. However, we do expect there will be some meaningful changes for the DGA, such as a higher quality and more individually targeted certification work for requirements for the accreditation of test houses in the future.

EGR Intel: How effective has the self-exclusion register (ROFUS) been and what are the latest figures for players signed up to it?

AD: Numbers are going up and we expect that to continue. We’re now up to 31,851, 24,109 of which are men (76%). I don’t think it’s right to assume that all of them have a gambling problem, but we can conclude we have 31,000+ people who like to use this tool to help control their gambling issues. In that respect, it’s very successful.

EGR Intel: What are your expectations for the Danish gambling market going forward?

AD: The tendency is that a larger part of the GGR comes from online gambling while currently land-based gambling is flat and possibly even going down a little. I think that will continue. We are very focused on such market trends and technological developments, both challenging areas that, as an authority, we must keep up with.