Danske Spil Restructures Ahead of Regulation

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Even though the regulation of online gaming in Denmark has been delayed due to objections filed by the Danish land casinos, Danske Spil, the nation's monopoly operator, has announced its restructuring program.

Hans Christian Madsen, the chairman and chief executive of Danske Spil, said that a strategic decision had been taken to split the monopoly into three separate divisions. One division will handle the products that will participate in the liberalized market in competition with private operators. These products will include sports betting, poker and casino. The second division will handle the products for which the Danish government has retained monopoly. These include lottery, scratch games, horse racing and bingo. The third division will manage the 5,000 video lottery terminals owned by Danske Spil. Madsen said, "We have tried to use the time gaps in a positive way and adjusted the organization to prepare it and train our staff ahead of the partial liberalization of the gaming market in Denmark, which is expected to become reality in mid-2011."

A number of senior appointments have simultaneously been announced. The subsidiaries handling the liberalized and monopoly markets will be headed by new managing directors. The liberalized market company will be called Danske Licens Spil and the monopoly market company will be known as Danske Lotteri Spil. Other new appointments include information technology development director, chief financial officer and customer and sales director. It was hinted that Danske Licens Spil had entered into agreements with online casino and poker software providers, but Madsen refused to reveal the names for now.

Madsen also spoke at length on the dispute over taxation raised by the land based casino operators. At present the land based operators are taxed at 41%. The proposed online gambling regulation seeks to tax online operators at 20%. The land based operators have sought a reduction in the tax rates, which they want to be brought on par with the online rates. Madsen categorically ruled this out stating, "Never in the history of Denmark have we seen taxation lowered." Madsen added that he did not agree with these complaints. He said that land casino gambling was a different ball game and could not be compared with online gambling. The complaint is now with the European Commission because the land based operators have claimed that the lower tax rate for online gambling amounts to a subsidy and that puts it in the purview of the European Commission. Though the uncommitted time frame is mid 2011, experts opine that it could take much longer for the European Commission to give its decision.

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