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The introduction of online gambling regulation in the Netherlands was discussed as far back as 2009.

The operators licensed were different to what the industry had expected. International brands such as Bet365 and Tombola were among the local incumbents such as Holland Casino.

There were a lot of high-profile names that weren’t present. In order to accept bets from local consumers, the likes of Entain, Betsson, and other companies pulled out.

Director of digital transformation Jeroen Verkroost said that this led to a lot of players coming to Holland Casino.

Verkroost recalls that they were over the moon but completely understaffed and had to shift from first to fifth gear almost immediately.

Sam Depoortere, business director for NLO’s Toto sportsbook and casino, admits the private operators having to wait for licences was a pleasant surprise.

But it hasn’t completely stopped the illegal market. He says that channelisation is still affected by illegal operators.

There is still a lot of illegal parties that are not being discouraged from targeting the market, despite the fact that the goal was to have 85% channelisation.

The opening was Phased

The managing director of NOGA, Peter-Paul de Goeij, said that these factors led to a phased market opening.

He says that the intention was to punish the operators that had been breaking the prioritisation criteria rules before. Competition is affected by that in favor of the first wave.

He says that before, the expectation was that being available to Dutch customers during application was permissible.

From a bombshell letter sent by the Minister at the time, it became clear that the KSA would be instructed to enforce the rules more strictly. As a result of the launch, they were able to convince operators to leave the market until they had a licence to operate.

I don’t think anybody saw that coming, that was a surprise to the market. The first-to-market operators clearly have benefited from this, and there have been some effects.

Verkroost disagrees with the idea that the international brands were held back from the market. It wasn’t something that happened to them, it was their transgression. There is no reason to talk about companies being kept out of the market.

Holland Casino and NLO, as well as other established and visible brands in the market, were beneficiaries. BetCity, the local brand acquired by Entain, is often referred to as another brand.

According to the de Kansspelautoriteit’s report for the fourth quarter of 2021, gross gaming revenue came to 185.5 million.

Holland Casino reported online GGR of 40.4m, giving it a 21.8% market share from its launch to the end of the year. NLO generated 64.6m over the same period, generating a 34.8% share.

There was a last-minute dash

Prior to launching as a monopoly operator, Toto had an online presence, and had been in the market since 1957. It did not have a full product offering, with no in-play betting or casino.

He says that they couldn’t offer the best player experience because they were fighting with one hand behind their back. Was there a benefit to being the only legal provider in the market? I don’t think there was much of a benefit for the brand building, but in terms of the offering.

It had a market share of around 10% two years ago. From all the international operators, you can see that there was a massive black market.

The technical specifications for igaming came out six months ahead of launch, even though Holland Casino had a partnership with Playtech as far back as 2014, according to Verkroost.

He says that developers like to see the specifications before they launch something. Part of the specifications were released late 2020, and another part only followed in early 2021, so it took us until then to know what was allowed and what wasn’t, and what tests we would be subjected to before we could begin the work.

They were unable to cross-promote with their retail customer bases. Even for an incumbent like Holland Casino, this is a real disadvantage. Similar to the operators going through the cooling-off period, we did not have a database that we could reactivate. It was necessary to start from scratch.

NLO launched separate apps for its lottery and betting products more than a year ago in order to split retail and online.

They account for more than half of the market.. At the time of writing, the Kindred Group has been cleared for launch, but this could change as a host of private operators’ licence applications are approved.

Whether the first few months of activity have given the local operators a head start remains to be seen. Depoortere thinks it depends on which brands it is. Two or three international operators that were illegally active for a number of years have built good brand recognition, and strong player bases.

I think it is levelling out, rather than giving us a head start.

He doesn’t believe these brands will regain their pre-launch market share. Some players will return to their old habits, but they will never return to the way the market share was divided before.

There is advertising under threat

Stricter advertising regulations will make it harder for them to do their job. Minister for Legal Protection Frank Weerwind had to commit to stricter advertising legislation for six months.

Anti-gambling politicians are putting pressure on the government to act in response to a perceived boom in gambling advertising. A decree prohibiting the use of role models in gambling advertising will come into force on July 1st, while a ban on untargeted advertising will come into force at the start of the following year.

There is a debate about whether there was a gambling boom. De Goeij doesn’t think it’s true. According to comments from the chair of the KSA, 634,000 accounts were created in the fourth quarter of the year.

The number of players on legal sites in the Netherlands is not as high as was said in March. An unknown number of players have accounts with several providers. So there are less than 600,000.

It seemed that the estimates of over one million online gamblers were exaggerated.

There was no boom, according to de Goeij. In regards to advertising, the perception has been quite different.

We went from a situation where there was no advertising, to a lot of ads from 1 October, a 100% increase.

The illegal market made advertising crucial, if state-owned entities such as NLO are to fulfill their goal of leading players to regulated offerings.

If you have a market that was illegal previously, you need to advertise to show who has a licence and who doesn’t. There was a huge amount of advertising for all the legal companies.

NLO was the only brand that appeared on TV previously. Nine more brands are competing for TV advertising and putting on their own promotions. You will definitely notice that. That’s a clear consequence of opening the market. Every company that puts in the effort to get a licence has the right to advertise.

Verkroost agrees with de Goeij that the industry has gone from zero to 100 in two seconds, but the public needs more time to adjust.

He says it has been a shock for some people but he thinks it is the right thing to do. It is not possible to build a safe space and not tell anyone about it.

That doesn’t mean that licensees and the industry haven’t taken action to roll back advertising. Holland Casino has never offered bonuses to under 24s, despite cutting advertising by 50%.

Verkroost says that some of their competitors are not backing down. I can see it eating into our market share, but we want to be the cowboy with a white hat, the guy you feel is on your side. The behavior we have shown is consistent with that ambition.

The TV companies not agreeing to a set number of commercials per advertising block is one of the reasons why there has been action at an industry level.

He says that they set up the Reclamecode Online Kansspelen because they are a member of the Vergunde Nederlandse Online Kansspelaanbieders (VNLOK). We only advertise from 10pm onwards, rather than 9pm, because there is no radio, print, or outdoor advertising anymore.

The self-regulatory measures were developed by VNLOK and supported by NOGA, and de Goeij sees them as addressing problems with the Remote Gambling Act.

There are rules about the contents of the advertising in the Netherlands. He explained that the total volume of advertising is not restricted by law. On the one hand, you want the operator to compete, fight for market share and be responsible, and on the other hand, you don’t want an aggregated volume that goes beyond a certain level.

It is almost naive to think that a market in which competition is ferocious, especially at opening, let the industry ensure that the total volume doesn’t get out of hand.

This could potentially limit the impact of the international brands as they finally secure licences, something he says could be a concern.

If you don’t have the chance of advertising in the market, it will be hard, so hopefully we won’t end up in a situation where there is no advertising at all.

De Goeij does not think this is possible. It would be an unwarranted restriction on freedom of expression. A ban would act on fear and assumptions, instead of facts and figures.

With a wave of newcomers on the horizon, there is still plenty of scope for upheaval, as the market approaches its first anniversary. According to Depoortere, there could be as many as 30 operators angling for a licence.

That could make the problems around advertising worse by testing the industry’s self-regulatory measures and the effectiveness of the government’s new measures.

Verkroost believes that high standards will help the industry settle into a rhythm. He says that they are trying to get to a place where online gaming is a normal part of society.

Society has to be aware that there are risks, but they are being monitored and mitigated by us in order to provide a safe environment for everyone.

Summary:

Jeroen Verkroost, the Director of Digital Transformation at Holland Casino, said that the online gambling regulation in the Netherlands was discussed as far back as 2009. “We were over the moon but completely understaffed and had to shift from first to fifth gear almost immediately, which came with some teething problems,” Verkroost said.