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Legal Update: Denmark

Denmark didn't fight too hard for their gaming monopoly

Gaming laws across the planet are in a constant state of change as governments and private businesses hustle to grab revenues wherever they can. To help our readers keep up with these developments, CAP is taking a closer look at the current state of iGaming in a number of key markets including Germany and South Korea. This week we’re looking at Denmark which is being held up as an example of how gaming liberalization should work.

In Denmark gambling is divided into two categories, games of skill and games of chance. Games of skill such as poker and roulette (yes, that’s not a game of skill) are run by private companies licensed by bureaucrats. Games of chance, like Bingo, Lotteries and sports betting, are run by a company called Dansk Spil, which is 80 percent owned by the government.

When Internet gambling first emerged, Dansk Spil extended their gaming power to control that market, too. The move was intended to keep a lid on problem gambling and daily player limits were set at around €670 ($890 USD). To keep a tight lid on workarounds, the Danish Feds tightly regulated banking transactions

Not surprisingly, this didn’t sit well with European Union regulators. But what happened next strayed off the standard EU script of governments fighting to protect their gaming monopolies. In early 2011 Denmark went ahead and started opening gaming markets.

But this isn’t a Hans Christian Anderson fairy tale so things didn’t work out quite so easily.

Land Casinos Not Happy

While government officials embraced gaming liberalization, Danish land casinos weren’t quite as happy about the arrangement. Under the proposed liberalization scheme, land based casinos would pay as much as 75 percent taxes on gross revenue while Internet casinos were paying only around 20 percent.

The casinos took their case to the EU claiming that the lower tax rate amounted to state aid, but their claim was denied. EU regulators declared the tax structure to be in the spirit of liberalization and open markets.

The ruling was a big hit with igaming companies. In a statement to the press, Remote Gaming Association president Clive Hawkswood said, “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.”

European lottery trade groups were less enthusiastic, suggesting that it would lead to increased gambling addiction.

Moving Ahead

Despite the complaints of land based casino operators, international gaming companies are lining up to apply for Danish gaming licenses and are expected to be up and running in 2012.

Are you planning on marketing your sites to Danish players? Share your tips and tricks on our General Discussion Forum.