Dutch Gaming Monopoly Looks to Expel Foreign I-Gaming Sites

10 February 2003

Officials with Holland Casino in the Netherlands are looking to the courts to see exactly how far their monopoly stretches.

For years Holland Casino has operated a land-based casino. In early 2001, government officials went to the company and asked it to launch an online version of its games.

In the last couple of years, more and more operators have targeted the Dutch market through Internet sites of their own, and Holland Casino officials want to make it impossible for non-Dutch companies to have access to residents of Holland.

Earlier this month, Dutch lottery operator De Lotto turned to a lower court in the Netherlands and got a favorable ruling that requires British bookmaker Ladbrokes to block Dutch punters from gambling on its Web site.

On Wednesday Holland Casino will use the same argument as it tries to get officials with Casino Lux to stop tapping Dutch residents for its online casino.

"The monopolies got together and said, 'OK, you go after the bookmakers and I will go after the casinos,' and at this point they have been very aggressive. They want operators to make it impossible for Dutch inhabitants to play on the sites."
-Justin Franssen

Justin Franssen, a Holland-based lawyer who is working with Casino Lux, said the precedent that Holland Casino is setting as it goes after more and more online gaming operators constitutes a bad direction for any European country to take.

The impetus behind the court proceedings came from the Ministry of Justice, the same government office that approached Holland Casino in 2000 about launching an online casino. Amsterdam Mayor M.M. Cohen is researching how to expel foreign Internet gaming companies from the Netherlands, Franssen said.

"(The Dutch gaming monopolies) aren't too open about it, but I think they figured out that going after (Internet gaming companies) with penal law is very difficult," he said.

Instead, the monopolies will go after the foreign I-gaming companies with civil law, Franssen said.

To that end, Franssen echoes the sentiments of others in the industry who say Ladbrokes and Casino Lux are just the tip of the iceberg. There is a long list of foreign operators who could be targeted with similar civil court actions.

While Franssen said he could only comment on the big-picture scenario in Holland due it his familiarity with the Casino Lux case, officials with Ladbrokes said they couldn't comment on the situation due to "pending legal action."

The struggle, Franssen said, is trying to exert a government-sanctioned monopoly on the borderless Internet.

"The monopolies got together and said, 'OK, you go after the bookmakers and I will go after the casinos,' and at this point they have been very aggressive," he said. "They want operators to make it impossible for Dutch inhabitants to play on the sites."

Holland Casino is using the Dutch Gaming Act as its legal framework for going after foreign operators. Franssen said the act is very restrictive and is designed to protect consumers.

Whether or not these court decisions will have any staying power remains to be seen. Franssen said the initial ruling came out of the lowest court there is in the Netherlands. Higher courts may take a different approach.

"They tend to look at things more factual than legal," he said.

Tjeerd Veenstra, president of De Lotto's board and a member of the Executive Committee of the European State Lotteries and Toto Association, said in a statement that he hopes other countries that have licensed operators will take a similar approach to keep competition at a fair level.

"This will have a European impact," he said. "Now our lawyers will contact other Internet gambling organizations and we will summon them to stop their activities directed at the Dutch gamers."

Franssen is afraid of other countries taking the approach that "if it works for Holland, it will work for us."

Veenstra, meanwhile, said the ruling is the first in Europe in which a gambling site was ordered to bar foreign players. He said he is confident the ruling can be used to curb other online activities, too.

"With this court decision, we are able to block cross-border selling," he said. "We can stop all activities of international agents."

The various gaming monopolies, however, seem to be more concerned with their bottom line than with protecting the consumers.

"The Dutch gaming monopolies aren't really there to protect consumers," Veenstra said. "They are there to make money. They have a lot of freedom and can do a lot of advertising. It is a very hypocritical law."

No one can really expect the monopolies to survive the 21st century, Franssen said. He feels gaming operators in Holland want to get as much bang for their buck as they can during the final phase of their monopoly.

"I think the Dutch gaming companies feel that their time is running out and they feel like they are going to lose the monopoly in due course," he said. "They are just trying to block as many foreign operators as they can. From a commercial point of view, I can understand why they are doing it."

Instead of protecting consumers from foreign operators, Franssen said the court's approach may open the market to less-than-honest companies.

"They want the world to know 'watch out for the Dutch,' and they want to intimidate as many people as possible," Franssen said. "That is why I think they went after a company like Ladbrokes. What you are really doing, though, is putting the Internet gaming business back to 1995, when it was still a very entrepreneurial environment and you had people that didn't have the best of intentions. You are going to send operators to a less-reliable jurisdiction where the Dutch courts can't catch them any more."

That scenario leaves some to wonder what would happen to the Netherlands Antilles.

The small group of islands in the south Caribbean just off the northern coast of Venezuela is home to Curacao, a small island that has openly licensed and regulated online casinos and sports books.

Curacao has free reign over its licensees, but Franssen predicts a future in which companies abandon the region if the Dutch courts continue to side with the monopolies.

"They have kind of autonomous status, but they are one way or another part of the kingdom," he said. "There are treaties in place if a client gets fined in a court here, and if they need to execute such ruling in Curacao they will very likely find a way to get that done. On the other the hand, it collides with the licenses that were issued by the government. It is an odd situation to say the least."

There is little solace in European Union law for Ladbrokes and others who may find themselves the target of Holland casino and other monopolies. EU law allows each jurisdiction to decide how many, if any, games of chance they want to enact and gives them the authority to license operators.

Franssen, though, is convinced that it is just a matter of time before the EU and other cross-border groups start to put regulations for the Internet in place.

"This court ruling is crazy to say the least," he said. "It is unjust. You have Dutch judges that think they can decide what is going on on the Internet, and that is just as crazy as the Americans who say, 'Wherever you are on this planet, if you are offering games of chance to American nationals, we are going to get you.'"

Nobody knows where Kevin Smith came from. He simply showed up one day and started writing articles for IGN. We liked him, so we decided to keep him. We think you'll like him too. Kevin can be reached at kevin@igamingnews.com.