Casino Enterprise Management

The new Danish Gambling Act has been long under way. The act was unanimously passed by the Danish Parliament in June 2010 and, after an in-depth investigation, approved by the European Commission on Sept. 20, 2011. The act will put an end to the current monopoly and liberalize the market. It will come into force on Jan. 1, 2012 (all references to the act are at the time of press).

It is the Danish Gambling Authority that oversees the Danish gambling market. This includes, among other things, issuing licenses, administration of the Danish Gambling Act and monitoring the market. To cope with the new tasks and expanded area of responsibility, we at the Danish Gambling Authority have significantly expanded our capacity over the past year.

What Will Change?    
Historically, the gambling market in Denmark has been monopolized by Danske Spil A/S, but as a result of the new act, it will be liberalized starting Jan. 1, 2012. This means that operators can now be licensed to legally operate in the Danish market for betting and online casino game services. Thus, the lottery and class lotteries such as bingo, scratch cards and drawing lots remain monopolized.

Our main priority at the Danish Gambling Authority is to protect players from unfair and illegal gambling, especially young and vulnerable people. By Jan. 1, players will have the option to voluntary exclude themselves—temporarily or permanently—from online gambling by registering in the Register of Self-Excluded Persons (ROFUS). Another significant change is that we have a comprehensive range of tools to regulate the gambling market, including blocking websites and credit card payments to non-licensed operators, and enforcing the advertising ban. However, our best tool is to encourage as many operators as possible to apply for and be issued a license, and thus enter the legal market.

Requirements
In Denmark, it is possible to obtain four types of licenses. (See Figure 1.)



A license for betting includes both the online and land-based sale of betting. With a license for online casino services, operators can provide the games of roulette, baccarat, punto banco, blackjack, poker and games on gaming machines offering cash winnings. The term “online casino” is broader than games offered in land-based casinos and includes combination games, which are games in which the outcome is determined by a combination of chance and skill. Combination games include games such as chess, backgammon and quizzes. It is also possible to apply for a combined license to offer both betting and online casino games. Furthermore, operators can apply for a restricted revenue license, which is a license for a fixed term of one year and a gross gambling revenue limit of approximately $180,000 (USD).

Individuals and companies both may apply for a license to offer betting and/or online casino games. We do not require applicants to be a resident of or established in Denmark; however, it is a requirement that the applicant has a fiscal representative in Denmark.

It is our priority that operators in Denmark operate their gambling activity in an appropriate financial and professional manner. For example, in relation to the applicant’s financial position, we attach importance to ensure that 1) the company will be in a position to pay out all potential winnings; 2) the budgets are consistent with the target defined in the business plan; and 3) sufficient funds are allocated to operate the company. For the purpose of assessing and monitoring operators, we have several technical requirements with regard to gambling data and systems.
 
The Application Process
We had been preparing the application process for quite a while, devising a number of scenarios based on various dates we might have received the go-ahead from the European Commission. When the decision came in late September, we published a number of application forms, pointing out that all applications received by Oct. 17, 2011, would have the opportunity to enter the market on Jan. 1, 2012. To ensure a constructive dialogue with applicants, we also stated that applications could be submitted in stages if only the completed material had been received in duly filled-in conditions before the deadline.

From our side, it was quite clear that we had to use a two-phase model from our initial scenarios if we wanted the market to open by Jan. 1. In line with this model, we issue time limited licenses, valid for 2012 only. By doing this, we are able to postpone some of the non-essential scrutiny and focus on the inevitable aspects of the due diligence during the initial application process running from the middle of October to late December. We will use 2012 to review our preliminary findings as well as to complete the examinations we initially had to push back. Upon successful completion of this second phase, a full five-year license will be issued.

By doing this, we also accommodate our applicants, as we allow them to put off a number of compliance requirements for 2012, which in the end helps them to be better prepared for Jan. 1, 2012.
We have organized the process around the applicant, giving each an account manager and a technical advisor to help them through the course of the application process. We have found that this approach ensures smooth and fluent interaction with the applicant, which is essential given the timetable.

Behind the scenes we have a number of product managers, each responsible for one of the compliance processes across all the applications. This serves the very important purpose of ensuring uniformity and consistency in the processing of all applicants as well as specializing our compliance officers, making better use of the limited time frame we are working under.

One of the biggest challenges both to us and to the applicants has been the technical side of things, as this is both a very complicated as well as comprehensive aspect of online gambling and, thus, our regulatory framework. However, this has also been a good example of how we try to work with the industry, and we have been quite successful in doing so. Operators have had access to our test environments since late 2010, and their feedback on our systems and processes has been invaluable. Though obviously we have not been able to accommodate the industry in every respect, a number of key aspects of the regulations have been altered along the way because of this relationship.

Expectations for 2012
In 2012, we will continue to encourage and support operators to legally enter the gambling market in Denmark as well as strengthen supervision and compliance with the new Danish Gambling Act. Moreover, to achieve a fair, transparent and accountable gambling market, we will continue the already ongoing dialogue with operators and players as well as with trade organizations and other stakeholders.

We will do our utmost to protect players from illegal gambling through active engagement, and we will, in particular, place emphasis on effective compliance, focusing on inspection, monitoring, service and information. It is our priority to ensure that only licensed operators are able to operate in the Danish market and that they have good conditions to thrive. As a means of learning and knowledge sharing, we will also prioritize producing statistics on how the Danish gambling market develops and make them available on our website, which will continue to be our main channel for external communication.

Finally, we anticipate strengthening our international engagement through increased participation and knowledge sharing in relevant gambling forums. In 2011, we signed a minor number of bilateral agreements with regulators of common interest. With respect for the laws, we view bilateral agreements as an important element in our work against illegal gambling in Denmark as well as optimizing our possibilities for information sharing across borders.


Birgitte Sand, Director of the Danish Gambling Authority, started her career in the court of taxation and moved on to a wide range of positions and tasks in the Ministry of Taxation. She has been head of the central IT department and a member of the board covering the nationwide planning of the tax production. She took up her current position after several years as a member of the Executive Board of the Copenhagen Tax Center.