Market focus: Denmark

The principle piece of legislation governing gambling in Denmark is the Danish Act on Gambling (2016) in tandem with eleven individual executive orders pertaining to individual types of gambling activities ranging from land-based to online gambling.

In addition to these orders, gambling in Denmark is subject to the Danish anti-money laundering act and rules on marketing contained within the Danish Marketing Act. In both cases, these pieces of legislation are designed to run in tandem with the main Danish act on gambling.

There are four aims to the gambling act, which are to ensure gambling is conducted at moderate levels, the protection of young and vulnerable people, to ensure fairness and transparency and the prevention of crime in gambling. Under the act, the following types of gambling are licensed in Denmark: Lotteries, Betting, Betting on horse and dog racing, local pool betting, land-based casinos, online casinos and gaming machines.

Recreational activities are defined as “games” under the Act if the participant has a chance of winning a prize and where the probability of winning is solely based on chance. This definition applies to lotteries and so-called combination games, but in betting this applies where bets are placed on the outcome of a future event or the occurrence of an event in the future.

The legal definition of online gambling is any activity which takes place between a player and operator which is carried out via “remote communication”. Expanding on this, remote communication is deemed as any communication which take place without the player and the operator meeting physically, including using TV, radio, internet, smartphone or email.  Any gambling service which does not meet these criteria cannot be called online gambling under Dutch law.

Population: 5.7 million

GDP per capita: €51,300

Internet penetration: 90%

Prime Minister: Lars Løkke Rasmussen

Principal regulatory body: Danish Gambling Authority (Spillemyndigheden), the Danish Ministry of Taxation and the Danish Consumer Ombudsman.

Regulation

The regulation of gambling in Denmark is divided between three entities, the Danish Gambling Authority (Spillemyndigheden), the Danish Ministry of Taxation and the Danish Consumer Ombudsman.

As a regulator, the Danish Gambling Authority (DGA) is a part of the wider Danish Ministry of Taxation and is responsible for the administration and granting of licences for betting, land-based casinos and online operators. It also holds overall responsibility for the monitoring of the Danish gambling market. Within this remit, the DGA is charged with ensuring compliance with the Danish Act on Gambling and all secondary associated legislation. It has enforcement powers to punish operators who are non-compliant with the act.

The Danish Customs and Tax Administration (SKAT) is a subdivision of the Ministry of Taxation and deals with the registration of licence holders, collection of gambling duties and the regular inspection of operators. Under Danish law, SKAT retains enforcement powers to sanction operators in matters concerning payment and collection of gambling duties.

At a broader level the Danish Ministry of Taxation handles matters relating to European regulation and deals with legislative issues which are related to gambling. Finally, the Danish Consumer Ombudsman works to ensure gambling operator compliance with the Danish Marketing Practices Act. To this end, the DGA and the consumer ombudsman have agreed to co-operate on an informal basis regarding the regulation of gambling related marketing.

Licensing

Under the Danish Gambling Act, there is no distinction between operators located inside Denmark and those located in other countries. Any company that wants to provide online gambling services to the Danish market must be established within the EU/EEA or have an appointed representative in Denmark.

There are three types of licences currently available to Danish operators: an online casino licence, a sports betting licence and a revenue restricted licence.

An online casino licence includes roulette, blackjack, poker, gambling on gaming machines as well as several other games which contain elements of chance. A betting licence covers both land-based and online betting. Both “regular” sports betting and betting exchanges are covered by betting licences.

The final, revenue restricted licence is primarily aimed at sports betting games which have limited annual revenue and a low stake repayment percentage. Under the terms of the revenue restricted licence, operator gross gambling revenues cannot exceed DKK1,000,000.

There are currently no limits on the number of licences to provide online gambling which can be issued, however the number of land-based licences is restricted. Online casino and sports betting licences can be valid for a maximum of five years, whereas the revenue restricted licence only lasts for a maximum of one year. All licences can be renewed and are subject to a less comprehensive renewal process. The DGA can choose to revoke a licence in instances where the operator is deemed to be unable to supply games in a sound financial and professional manner.

The DGA will assess whether this is the case based on several documents that must be submitted by the applicant for a licence. It will consider the overall picture and if it finds that the necessary requirements are met, will issue either a conditional or unconditional licence. Operators are subject to 11 duties, covering areas including player data, hardware and software. Some of these duties can be outsourced, however operators will retain full responsibility for management of risk, player contact and ownership of player data.

The current individual application fee for an online casino and sports betting licence is DKK273,500, however if the operator applies for both licences the combined fee is DKK382,900. Under Danish regulations online gambling operators must pay an annual fee for holding their licence based on their gross gambling revenues. Licence holders must also pay a monthly gambling duty, which is also based on their GGR.

Online casino operators must pay a duty amount of 20% of their GGR except in poker and other cases where the operators’ profit is the commission charged, in which case they are obliged to pay 20% of that commission.  Sports betting operators must also pay 20% of GGR in monthly duty, which is defined as received stakes minus paid out winnings. Betting exchanges are required to pay 20% of the amount charged in commission.

Under regulations, online gambling operators must monitor player activity and provide players with access to “cooling off periods” and enable them to register with the state operated Register of Voluntarily Excluded Players (“ROFUS”). Operators must also have their systems set up to check player registration with ROFUS every time the player accesses the operators’ site.

Restrictions

Under Danish law, all licenced operators must only receive payments into gambling accounts from a payment provider which is recognised under the Danish Payment’s Act. All gambling providers are required to conform to the 4^th Anti-Money laundering directive, conducting full due diligence on players.

The DGA can seek a court injunction to block the ISP of any unlicensed gambling website identified, with the URL of any blocked operator appearing on the DGA’s website.  It also has the powers to seek a court injunction requiring Danish payment providers to block unlicensed operators.

Any operator which breaches Danish gambling regulations can be sanctioned, with sanctions ranging from a written warning to up to two years in prison, depending on the specific offence. In most cases, the DGA will issue a warning or an order to correct the issue. As a regulator, the DGA cannot issue fines, but can pass information onto the Danish police, who will then issue a financial penalty notice. As a final sanction, the DGA can revoke the operator’s licence.

Opportunities

Denmark represents a challenging environment for many operators, but those that do run the gauntlet will find one of Scandinavia’s key markets is open for business. However, in as unforgiving a market as the Danish market, larger, more established operators will find it an easier road than their smaller counterparts.

As the regulatory record of the DGA over recent years has shown it will not hesitate to use the stick as a way of necessitating operator compliance with regulations, a stance which will undoubtedly continue unless there are significant shifts in the Danish market.

But with its nearest neighbour Sweden currently hoovering up licensed operators in a regulation exercise, the challenge for Denmark is retaining operators which may be tempted to swap one country for another. This may lead to a softening of regulations in the long term, which may open the doors for many other operators to enter the market in search of a more diverse Scandinavian gaming portfolio.