Blenheim Talks | Ondermijning
The Netherlands Gambling Authority (KSA) has published draft policy rules (the ‘policy rules’) for evaluating remote licence applications. This follows news of a new date for the entry into force of the Remote Gambling Act (Koa) due to delays caused by COVID-19. The Koa is now expected to enter into force on 1 March 2021. The online gambling market is expected to open six months later, on 1 September 2021. The KSA will be busy processing licence applications within this six-month period.
The Dutch policy rules on remote gaming provide guidance on the application procedure for a remote gambling licence. We have outlined, and provided the explanation behind, some of the key policy rules to assist online gambling operators in preparing their applications.
Paragraph 2 of the policy rules contains general points relating to the licence application. This includes the fact that licence applications have to be submitted in Dutch (unless stipulated otherwise) and must indicate which games of chance, of those that are outlined in Section 2.1(1) of the Remote Gambling Decree (Besluit kansspelen op afstand) are being applied for. The policy rules state that the KSA will make a decision on the application within 6 months of receiving it and can extend this period by a maximum of six months if a third party’s opinion or investigation is necessary.
Paragraph 3 of the policy rules outlines the strict conditions that apply to a licence, namely the integrity assessment of the applicant that is to be conducted. The paragraph contains information concerning several aspects of integrity assessments, including who advice may be sought from in conducting an assessment; what bodies/legal entities are involved; what documents can be requested and investigated; and what antecedents can be considered serious in the process of the assessment.
Of particular interest for applicants is article 3.8 of the policy rules. This article looks at how the (illegal) remote offering of games of chance prior to the entry into force of the law will be treated and assessed. This takes into account, amongst other things, the ‘Postema Motion’, a motion passed by the Senate to ensure that providers of online games of chance have not had specific and active offers targeted at Dutch consumers for at least two years. In order to assess this, when an entity applies for a permit, the Ksa will look back 2 years and 8 months from the date of application.
The policy rules outline that the mere fact that there was an illegal supply of remote games of chance in the past will not necessarily lead to the rejection of an application, as long as the supply fell within certain limits. One necessity is that the provider, when having registered participants after 31 December 2019, effectively verified the age of all players before those players could register with the provider.
In addition, in the 2 years and 8 months prior to the submission of the application, the offer of illegal games had to have met the following conditions:
Pursuant to Section 31g(4) of the Gambling Act (Wet op de kansspelen) the ‘continuity’ of the licence holder must be reasonably guaranteed during the term of the licence. This is considered important for players’ confidence in the Dutch licensing system.
Article 3.3(1) of the Remote Gambling Decree includes the cases in which the continuity of the provider of remote games of chance is not to be considered guaranteed. These are described as ‘fatal circumstances’. The onus is on the applicant to demonstrate that none of the fatal circumstances apply. To this end, paragraph 5 of the policy rules state that the applicant should provide the following:
Under Section 31l(2)(b) and Section 31l(3) of the Gambling Act, remote gambling providers must put in place appropriate safeguards to ensure that players' assets do not form part of its risk capital. This ensures that players' funds can always be paid out, even where the licence holder has financial problems, such as bankruptcy or suspension of payments.
Paragraph 7 of the policy rules outline that the preferred means of proving that the players’ assets are secured is through a bank guarantee or separation of the assets through the use of a third-party account, as well as the conditions for these that need to be met.
If the applicant opts for another means of proof, this must be submitted to an external expert with the question of whether this form offers sufficient guarantee that the players' assets are not part of the risk capital. In that case, the KSA can make use of the possibility of extending the decision period by six months. In this case, it cannot guarantee that a decision will be made on the application within six months.
Under Section 31c(1) of the Gambling Act, an application for a licence will be rejected if there is insufficient guarantee that the games of chance will be organised in accordance with the Wwft and that the supervision and that enforcement of the Wwft can be carried out efficiently and effectively. The Wwft contains a large number of rules that have to be complied with. However, paragraph 9 of the policy rules outline that the KSA’s primary focus will be on the applicant meeting the core obligations of the Wwft: carrying out customer surveys and reporting transactions to the Financial Intelligence Unit.
Paragraph 9 of the policy rules provides guidance as to the specific sections of the Wwft that must be met by a licence holder. Notwithstanding this, a licence holder will have to continue comply with all the provisions contained in the Wwft. If not, measures may be imposed pursuant to the Wwft and the licence may be revoked.
The basic principle is that providers of remote games of chance are free to outsource certain activities within the frameworks set by law and regulations. However, certain conditions apply to this. Paragraph 11 of the policy rules provide more detail as to the process of outsourcing activities.
In general, the provider of remote games is responsible or compliance with the law, the Wwft or the Sanctions Act 1977, also for the activities he has outsourced to third parties. Outsourcing work cannot detract from the requirements imposed on the applicant. Paragraph 11 of the policy rules outlines, among other things, the requirements imposed on an applicant when submitting their application, how the applicant’s outsourcing policy is to be assessed and the requirement for proof of the third parties’ knowledge of the applicable statutory regulations.
Pursuant to article 3.6(1) of the Remote Gambling Decree, a provider of remote games of chance must ensure a system of internal supervision. Internal supervision must be carried out by one or more competent officials.
Paragraph 14 of the policy rules provides guidance as to how an applicant’s system of internal supervision is to be assessed. The policy rules indicate that, as soon as the licence has been granted, the applicant is to provide an overview or plan of how the system of internal supervision is, or will be, set up and which officers are to carry out the internal supervision. In doing so, the applicant will also have to demonstrate that the officers and system of internal supervision meet the conditions in article 3.6(1)-(2) of the Remote Gambling Decree.
The final policy rules are expected to be published in mid-January 2021. In the meantime, the KSA has indicated which documents will be required for an application.
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