Q&A: The Danish Online Gambling Association and its efforts to safeguard the Danish market

In compliance and regulatory circles, whenever an example is needed of a gambling market where practical regulations and a receptive government have combined to develop a successful and sustainable market, the default example is usually one of two markets: the UK and Denmark.

However, as we have recently seen, these beacons of regulatory tolerance and permissiveness aren’t always what they are cracked up to be. Observers need only look at the fracturing relationship between the regulator, operators and government over recent months to see examples of this in the UK.

“Something is rotten in the state of Denmark”. The bard’s line from Hamlet is perhaps apt given Denmark’s own descent into the mire of proscriptive regulation and taxation changes over the last 12 months. Where once there was amity, there is increasingly cracks – cracks which could lead to even greater schisms in this once paradigm of regulatory virtue.

Acting to restore the prior sustainable market, the Danish Online Gambling Association has been working feverishly over the last year, and indeed the period since regulation began, to ensure the Danish market doesn’t pass its best before date.

DOGA CEO Morten Ronde chats to EGR Compliance about the trade association’s roots, lobbying efforts and the potential future of the market should a planned rise in taxation to 28% of GGR become reality.

EGR Compliance: What for you is the core mission statement of the Danish Online Gambling Association (DOGA)?

Morten Ronde (MR): The mission statement for DOGA is really to create the best possible framework for the industry, communicating with all stakeholders to create the right environment for gambling in a responsible way. Once that environment is created and is successful, our role is to maintain the key factors that make the market successful while polishing the platform, so it becomes even better and even more responsible without changing it practically too much.

EGR Compliance: Can you explain a little of DOGA’s history and how the organisation is structured?

MR: DOGA was launched in December 2011, one year ahead of the Danish market going live, and there are currently 15 members of the association. DOGA is not the biggest trade group in Denmark. Over the years, I’ve tried to engage member operators on equal terms; there is a separation between full members and associated members and, of course, those which are full members of DOGA contribute more and have more to say. It’s not really a hierarchical structure – we don’t operate that sort of system. We do operate working groups occasionally to focus on important industry issues and initiatives. We’ve just concluded a working group aimed at producing a new TV campaign on responsible gambling, but we don’t have any permanent working groups as these are primarily on an ad hoc basis. As an example, we were working on the TV campaign over a three-month period.

EGR Compliance: How often do you meet with your members?

MR: We try to meet whenever it is possible, especially given the current situation in Denmark with the taxation rise. However, with this pandemic, it’s not been possible to do that, so our last AGM was virtual. Otherwise we meet up approximately three times a year at a board level. The board itself is made up of pretty much every member of the association. Covid-19 hasn’t really changed that much else of the way we work, as most of the operators are not established or have a physical presence in Denmark, so my work has pretty much always been remote. Of course, for an annual meeting, it’s just better to sit in front of people rather than trying to get a consensus in a virtual environment.

EGR Compliance: What dealings do you have on a day-to-day basis with the Danish Gambling Authority?

MR: I have quite a lot of communication with them, both with them and the civil servants for the tax ministry. The formal part of it usually involves me writing a letter to the minister on behalf of DOGA members, on something important that we’d like to hear his opinion about or indeed we’d like to complain about; that’s our official channels. We have a similar communication with the Danish Gambling Authority, usually on something that needs their attention. That’s the formal part.

Informally, we exchange information with both the ministry and the authority quite a lot, not only on Danish-facing stuff but wider international regulatory developments as well. For example, they might ask something about the UK market and since a lot of DOGA members are UK-facing as well, I can use our connections with them to get the information required. It wouldn’t need to be as formal as an actual letter, but just information on the specific piece, something which helps to maintain our relationship with the Danish authorities.

EGR Compliance: How does this line of communication help you in regulatory lobbying?

MR: Having that positive relationship with both the regulator and the government makes a big difference. As you know, as a consultant in the Swedish market we’ve still not managed to get even so much as a meeting, even though my firm works with half the industry. Operators in Denmark can just call the authority and request a meeting, often without the need for a lawyer or any other sort of special measures, something they can’t really do in Sweden, so it makes a big difference.

EGR Compliance: Is the Danish government doing enough to protect the Danish market and the licensed operators?

MR: It would be unfair of me to say that they’re not doing enough, but the measures that they’re taking are not the right ones. In respect of the tax increase that they’ve decided to implement, they’ve completely disregarded the adverse effects of the increase on the market and we’re finding it difficult to relay those effects to individuals in government. At the same time the minister is very adamant to decrease the volume of advertisements and increase responsible gambling among players, so these twin objectives are incompatible because the massive tax increase is sure to lead to a black market increase, which in turn reduces the amount of player playing responsibly and with full consumer protection.

EGR Compliance: How important for you is it that your members have an active voice?

MR: That is the raison d’être of the trade group and is essential to its existence. After all, why would anyone want to join a trade association if they did not have an active voice in its activities. That’s really the key thing for me – that I keep in touch with and have a good dialogue with the stakeholders. I really feel we’ve been listened to quite a bit by the authorities. Just as an example the inclusion of bingo and betting on horseracing within the Danish licensed market would not have happened had our members themselves not pushed for it through DOGA.

EGR Compliance: Which other Danish-facing trade associations and operator bodies do you work with?

MR: There are no other gambling-related trade associations specifically for online gambling in Denmark; we’re the only one and this is because of the relatively few Danish egaming firms. There are other trade groups for land-based casinos and for gambling machines which operate in Denmark and we work with them on a regular basis. In countries where there are a lot more online gambling firms, such as Sweden, there’s scope to have more trade association bodies. If you compare us to something like the Betting and Gaming Council in the UK, we’re minuscule. It doesn’t mean that we don’t have the same resources as them; they are just spread over a smaller group. This means as a member, you may have more influence than you would if you were in a larger trade association.

EGR Compliance: Is the Danish government risking an exodus of operators from the Danish market if it greenlights the 8% tax increase?

MR: I’m quite sure some will leave the market following the tax increase because as it stands some operators are just breaking even while others are over-invested within the market. It puts these firms in an impossible position because if you are already in a minus position then the tax increase will effectively mean that it’s game over for your firm. I don’t know if it’s going to be a massive exodus of operators. I’m more concerned about the exodus of players, because clearly the tax increase will mean that you have less money to spend on advertisements, bonuses and things like that. This means there’s an increased likelihood that licensed operators will be less visible and that the products they offer will deteriorate. Something like that the players will inevitably pick up on and look for alternatives elsewhere in the online market, even the black market.

EGR Compliance: Sweden’s government has been accused of ignoring the facts surrounding rises in gambling during Covid-19 and the impact of new measures on channelisation. In your opinion is the Danish government paying enough attention to operator concerns?

MR: First, the Danish government has not taken any measures related to Covid-19, so there’s no restrictions being imposed on either products or the operators during this period. Instead, the authorities have gathered evidence which shows that there has not been any increase in the gambling market during this period. This evidence for me illustrates why there would never be that sort of discussion in Denmark. The other measures taken were partially initiated before the crisis began and it’s as if they have not noticed the effect of Covid-19 on the industry, which is essentially on its knees. You only have to look at the betting operators who have lost 60% of their deposits.

New restrictions coming in will pretty much be picking on operators which are already losing the fight. On top of that, there were new advertising restrictions which came into force in January, the effects of which we’ve not even seen or have been measured. So, the government is adamant that they want to make changes and there seems to be no deviation from that, despite the fact the industry is suffering and is set on ignoring the facts.

DOGA CEO Morten Ronde

EGR Compliance: In what ways has DOGA been working to lobby against this increase on behalf of its members?

MR: The problem here is that the tax increase is already decided so basically it’s just the enactment of it that has been postponed. So, it’s not as if we can turn it back – we can only influence the process by lobbying for stakeholders to take a second look at the increase and maybe change the debate. We’ve been negotiating with those stakeholders and with those political parties who are behind the agreement. They’re very dismissive. They just say no we don’t want to do that and they don’t want to even listen to facts or anything.

What we’re doing instead is even though the decision is made, it still must pass through the Danish parliament and an analysis of the impact will be included in that by the Danish tax ministry. Instead of speaking to the politicians who were very dismissive at this point, we’ve been speaking with the tax ministry and we’ve commissioned a report made by H2 Gambling Capital that shows essentially the impact of the tax increase. This has been communicated to the Ministry of Taxation, and we’ve had meetings where we went over the report and we’re hoping to find some common ground and that they will adopt some of the report’s conclusions.

EGR Compliance: What for you are the longer-term consequences towards channelisation?

MR: The report forecasts an increase in channelisation to the black market from the current 8-10% we currently have today up to 25%, so that’s a massive increase, and that would really mean an exodus of the players. What it also shows is that the decrease in channelisation to the licensed market won’t all go to the black market. Some of the revenues are just lost, and when it’s lost it doesn’t contribute to the Danish government anymore. Of the 25%, not all will go straight to the black market, only about 14% will.

EGR Compliance: Based on your experiences of both the Danish and Swedish markets, how have events in Sweden over the last few months influenced your approach to Danish lobbying efforts?

MR: There’s a lot of spillover between Denmark and Sweden with some of the restrictions coming into force in Denmark originally coming from Sweden or were very similar to Sweden and vice versa. The Swedish law is of course based on the Danish law originally. Because of this similarity between the two laws, it’s easy for the governments to compare the two markets and pick and choose the measures they want to take from each other’s legislation. Things that are instituted in the Swedish market can potentially affect the Danish market quite a bit as a result.

EGR Compliance: What does the immediate future hold for DOGA?

MR: It’s been a super busy year because of the tax increase and the new restrictions on advertisements which came in earlier this year. I should add with one week’s notice. Right now, we’ve been working on amending our code of conduct, communicating to our stakeholders and focusing on our responsible gambling campaigns. This autumn, Denmark’s political parties will meet to discuss further restrictions on the market and the tax increase, so really for the rest of the year there’s going to be so much activity on the regulatory side of the market. It’s all to play for at the moment.