Dutch Gambling in Detail: How Will New Regulations Impact It?

By | September 6, 2021

The launch of the Netherlands’ online market has been much discussed in the news about the gambling legislation worldwide. However, many questions still remain open and lack explanation.

Karin Beumer, Business Development Manager at EM Group Netherlands, has explained what the segregation of players’ funds is, whether it is difficult to obtain a Dutch gambling license, and how increased gambling taxes will influence operators.

Please tell Login Casino readers more about the Netherlands’ regulatory regime in the gambling industry, especially about the obligatory separation of a player’s funds.

As most readers will know, the Netherlands is in the process of opening up its online gaming market. The new license will launch as of October 1st of this year, and the Dutch regulator (the “KSA”) has placed much emphasis on the protection of players. Not only from an addiction prevention perspective but also with regards to protecting their online and financial position. Therefore, operators applying for a Dutch license must adhere to strict regulation, which is slightly different from regulations in other jurisdictions.

One important aspect that has been heavily discussed by those involved, is the separation of player funds from the operator’s own risk baring capital. Although the requirement is not that uncommon, the options provided by the Dutch regulator to obtain this separation are somewhat unknown.

Operators may choose to separate their players’ funds by means of a banking guarantee, by means of a third-party account (in Dutch: derdengeldenrekening), or a third-party funds foundation (in Dutch: stichting derdengelden). And then there is the option “other”, which gives the operators the possibility to find another solution. In the last case, however, the Dutch regulator reserves the right to postpone their decision, which might cause the operator license not to be ready when the market opens.

To continue the previous questions, what difficulties will operators face with funds segregation?

The difficulty with the options provided by the KSA is not the options themselves. They are clear and understandable and provide strong measures to separate the players’ funds from those of the operator.

The issue is that the separation options are difficult to obtain as banks in the Netherlands, as elsewhere, are hesitant to enter into a professional relationship with companies related to online gaming. Keeping in mind that, for most of the options, a Dutch bank is required, or at least a bank with a license to operate in the Netherlands. When a gaming company or its corporate structure does not have an existing relationship with such a bank, it is difficult to obtain such a guarantee.

When the bank is willing to provide the operator with a guarantee, other factors come into play: who will be appointed as beneficiary(ies) of the guarantee, and also the costs: when you have a company with EUR 2 million in annual outstanding player funds, a guarantee could set you back EUR 50K per year, no other services included.

The third option is the third-party funds foundation. At first sight, this option seems to be the most time-consuming and difficult option to many. In our opinion, this is the safest, most structurally sound, and maybe the least time-consuming option for operators, as they would not have to do much after the incorporation of the foundation.

Leave a Reply

Your email address will not be published. Required fields are marked *