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EC Rules in Denmark Online Gambling Favor

By: Shirley Spicer, Wednesday September 21st 2011
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The European Commission (EC) took their time but ultimately ruled in favor of Denmark's online gambling proposal by dismissing the complaints against it. The complaint was filed by a Danish land casino and the Danish slot machine association. The essence of the complaint was that they were paying gross gaming revenue taxes between 45% and 71%. The licensed online casino operators would pay only 20% gross gaming revenue tax. This according to them was in breach of State Aid rules. Dismissing the complaint, the EC said, "This is because the positive effects of the liberalisation of the sector outweigh potential distortions of competition."

Now the Danish online gambling proposal is set to become law with effect from January 1, 2012. The first licenses will become operative from that date. Two different licenses are open to private gambling operators. The first type is for offering online and offline sports betting including fixed, pool, spread and exchanges. The second type is for offering online casinos that will include poker, blackjack, roulette, slots, backgammon, whist and bridge. Bingo and horse racing betting will be retained within the Danske Spil, the state owned monopoly.

This EC ruling has resulted in a favorable response across the online gambling industry. Betfair is one online gambling operator that has been in the forefront of legalization and regulation in Europe. Betfair's chief legal and regulatory affairs officer, Martin Cruddace, pointed out that Denmark's online gambling regulation is a perfect prototype for a pan European system. It benefits the Danish consumers, the international online gambling operators and the government of Denmark. Cruddace added that Betfair would apply for a license there as soon as possible.

The Betsson Group that had acquired the Danish online gambling operator Betsafe ahead of pending legalization and regulation also expressed its satisfaction at this turn of events. Richardt Funch, country manager Denmark, said that they would now concretize the strategy to market all their brands in the Danish online gambling market. In particular they would be able to implement the sponsorship agreements with the Danish premier league, which will be renamed the Betsafe League. He did comment that the 20% tax level was high, but that was something they would have to live with.

Clive Hawkswood, chief executive of industry lobby group the Remote Gambling Association (RGA), expressed his association's satisfaction with the EC ruling. He justified the differences in the rates of tax between land based and online gambling operators saying, "In essence, land-based operations compete within physical national boundaries, whereas online companies are part of a highly competitive international environment, and fiscal policy should be set accordingly." He also pointed out that those jurisdictions that sought to impose higher levels of tax on online operations should learn from this judgment.

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