The "Scandinavian Gambling Files" is a five-part series providing information on the operators and the main supporting companies of the North European countries: Norway, Finland (including the autonomous Åland Islands), Sweden, Denmark and Iceland. This is the fourth edition to the
series.
Kingdom Denmark is a country in northern Europe, between the North Sea and the Baltic. The country's total area is about 44,000 square kilometers. The Jylland peninsula is connected to the continent and has a 68-km land border with Germany. The rest of the country is made up of 406 islands, giving a total coastline of 7,300 km. Copenhagen is the capital and has a bridge-tunnel
link to connect with southern Sweden.
The Kingdom of Denmark also includes the world's largest island, Greenland, and the Faroe Islands, both in the north Atlantic.
With a population of 56,000, Greenland has an ice-free area of 342,000 square kilometers, or eight times the size of Denmark. Greenland joined the European Community together with Denmark but withdrew Feb. 1, 1985 after a referendum in 1982.
The Faroe Islands, with a population of 44,000, have an area of 1,399 square kilometers. The islands have had a self-governing home rule since 1948 and have never been a member of the European Community.
Number of Mobile telephones: 73 percent of the Danish families have got a mobile
telephone (2001).*
Forty-eight percent of the Danish families have got access to the Internet from their home
(2001). *
As of March 2001, 49.1 percent of the population reported to have been online within the last 14 days: 49.1 percent.**
The Danish Minister for Taxation established an inter-ministerial working group in December 1999 to pave the way for the modernisation and unification of the existing gaming legislation. In addition, the group was to assess the possibilities for maintaining national control of the Danish gaming market on the Internet.
The working group published on May 7, 2001 its conclusions and recommendations in the report "The Future of Gaming in Denmark - the Need for Unified Gaming Legislation" (www.skm.dk/pub1/internetspil/english). The report is primarily a discussion paper for a political debate.
To provide the gaming authority with an independent profile, the gaming authority should be established as an independent administrative unit under the Ministry of Taxation. This will ensure clear differentiation between the supervisory authority and the taxation authority, which would enhance acceptance of the authority. The operational costs should be financed through user charges.
Main elements in a reform of the gaming legislation
- Unification, modernization and simplification of the gaming legislation.
- Implementation of a national Internet strategy in the gaming area.
- Build-up of a central, specialized administrative agency.
Internet
The National Internet gaming strategy (www.skat.dk/pub1/internetspil/english/kap7eng.htm) is another report of the inter-ministerial working group which was published on June 18, 2001. The group was to assess the possibilities for maintaining national control of the Danish gaming market on the Internet.
Here follows a summary of the Danish National Internet Report.
National Regulation in Europe
The large majority of European countries have issued or are expected to issue permits for Internet gaming in accordance with a policy that allows regulated (and often state-controlled) gaming that is only directed at each country's own citizens. This European unanimity is expressed, for example, in connection with cases under the European Court where the countries' governments have made statements in support of preservation of their right to regulate their own gaming markets.
A significant exception is Great Britain, which has given its bookmakers unhindered access to direct their gaming business at other countries, e.g. Denmark. As mentioned earlier, the historical reason for this is that bookmakers have not been considered as gaming companies, but as ordinary businesses. Hence bookmakers are not regulated as gaming. In the gaming policy area itself, though, there is no doubt that Great Britain supports the principle of nationally regulated markets. The Gaming Board for Great Britain thus also participates actively in the meetings of the European gaming authorities' cooperation forum GREF (Gaming Regulators European
Forum). GREF (www.gref.net) has served as a forum for debate and exchange of information over the past 10 years.
One of GREF's main achievements is the drawing-up of an ethical codex at its 1998 meeting in Helsinki stipulating clear norms for the future behavior of the European states with regard to the Internet. One of the most important items in the codex states that Internet gaming should be directed solely at a country's own citizens, or alternatively only at citizens in countries with whom special international agreements have been entered into. The codex has no international legal standing, but is nevertheless a pronounced expression of the European countries' unanimity as regards the norms for regulating Internet gaming.
An Internationally Visible Internet Gaming Strategy
As mentioned earlier, the various countries' different gaming policies are starting to collide as the gaming markets begin to overlap each other because of the Internet.
In the opinion of the working group, these interstate conflicts can best be solved through negotiation on a common set of gaming regulations under the auspices of for example the OECD or the WTO.
In the light of European-American unanimity that the gaming market should be regulated nationally, the working group believes the development of an international consensus regarding the principle of restricted national markets as being realistic.
The working group shall therefore recommend that Denmark develops an internationally visible Internet gaming strategy with a view to promoting the establishment of a common set of norms in the international community and to contain the globalization of the Danish market that has already taken place and which will undoubtedly accelerate within a few years if the state does not take action against foreign companies illegally providing gaming to Danes via the Internet.
The Internet has placed the state in an awkward position as regards the possibilities to enforce the prohibition on the unlicensed provision of gaming in Denmark. As a result of the Internet, the territory in which the prohibition is to be enforced has potentially become global. This is due to the fact that if an action can be deemed to have an effect in Denmark, it falls within Danish legal jurisdiction. The problem is that it will not usually be possible to enforce the prohibition in the case of gaming providers located abroad. Thus the state will not be able to control the Internet gaming market through the threat of criminal proceedings against illegal provision of gaming.
In acknowledgement of this, the working group has investigated the possibilities for developing alternative control measures. The investigation was based on the observation that the markedly decreasing transaction costs associated with Internet sales and marketing are one of the chief reasons why the Danish market increasingly risks becoming the sales and marketing target of for example Australian gaming companies.
A means of containing the increasing globalization of the gaming market, at least in the short term, could be for the state to increase the transaction costs of the foreign gaming companies who are presently easily able to offer games to Danes.
Based on the above considerations, the next section presents the working group's proposal for a four-element Internet strategy:
1. Blocking
Under certain circumstances the state may make it obligatory for private organizations to carry out special supervisory duties to ensure that gaming is not provided via premium rate subscriber numbers. The working group has considered the possibility for introducing a supervisory duty with regard to gaming on the Internet. This could apply to those Danish Internet service providers who allow access to the illegal Internet gaming homepages. The working group recommends adding the illegal provision or promotion of gaming to the list of digital crimes in Denmark.
* - Application-level blocking
* - Packet-level blocking
Control of the Payment Stage
The key factor as regards the provision of Internet gaming is safe transaction of payments. The payment stage can thus be considered the illegal gaming providers' Achilles heel.
Inspired by the American political debate in the gaming area, the working group has investigated whether it is already technically feasible for the Danish financial sector to block credit card payments by Danes to illegal foreign Internet gaming providers.
The significance of this question lies in the fact that credit card payment's are presently the dominant payment form on the Internet gaming market, being the only global concept for consumer-level payment transactions. What is important for the gaming providers is to find payment solutions suitable for the often rapid games.
2. Danish Internet Gaming
Another important precondition for preserving a nationally regulated market is that the Danish gamblers are retained on the Danish market through the provision of regulated Danish games on the Internet. This recommendation should also be seen in the light of the long-term uncertainty of being able to block the payment to illegal gaming homepages.
In this connection the working group attaches great importance to the possibilities of the state-controlled companies--the public benefit lottery "Klasselotteriet" (www.klasselotteriet.dk) and the state gaming agency Dansk Tipstjeneste Group (www.tips.dk)--to pave the way in the launching of Internet gaming.
In February 2000, Klasselotteriet, the state lottery, became the first state gaming company to launch its lottery on the Internet. The gambler can now order his lottery ticket directly over the Internet. In addition the homepage also provides the possibility to make the payment via PBS.
Dansk Tipstjeneste Group has informed the working group that it has implemented a pilot project on the Internet where some 1,000 persons are invited to participate in one of its games. Thereafter it is planned to launch all of the group's games on the Internet. The time horizon is probably within a year of positive completion of the pilot project. Dansk Tipstjeneste Group has also stated that it is participating in various working groups concerning the utilization of WAP technology, and a new advanced TV studio has been established on Dansk Tipstjeneste group's premises that will be used in connection with digital TV productions. Even though Dansk Tipstjeneste Group primarily considers the Internet as a supplement to the existing sales channels via dealers, it will give positive consideration to the possibility of developing games specifically designed for the Internet in the longer term.
The working group believes that in view of the fact that Dansk Tipstjeneste Group can provide games of all types and has a good image as a safe gaming company that distributes its profit to charitable purposes, it should have good possibilities to move into the Internet market.
A consumer survey on the general attitude of Danish gamblers to the Internet shows that there is presently widespread distrust of foreign Internet gaming providers (ACNielsen AIM, 1999 report). The survey shows that Dansk Tipstjeneste Group is ranked higher on the confidence scale than any foreign firm. The same survey shows that the fact that Dansk Tipstjeneste Group distributes its profit to charitable purposes is one of the reasons why many gamblers choose the group's games.
Fischer & Lorenz believes that from a purely commercial point of view, the optimal marketing strategy on the Internet would be to enter the market as rapidly as possible in order to ensure a dominant position as early as possible. Fischer & Lorenz also considerd that Dansk Tipstjeneste Group has good chances of attracting Danish gamblers on the Internet if the group is given the possibility to take more risks on the market.
From the historical point of view, Dansk Tipstjeneste Group has previously solely had to make as much profit as possible in order to make allocations to the many public benefit activities supported. With the Internet and hence the threat of competition from abroad it becomes just as important that Dansk Tipstjeneste Group demonstrates an ability to retain Danish gamblers through the provision of attractive games with attractive prizes if the company is to continue to be able to allocate large sums to charitable purposes.
The Danish Gaming Providers and the Fear of Pathological Gambling
A negative consequence of gaming providers entering the Internet market is that gambling becomes more widespread in society with the consequent risk that easy access to gaming over the Internet can increase the frequency of pathological gambling.
As mentioned earlier, however, the working group believes that prohibition of Internet gaming is neither realistic nor desirable. In contrast, the Danish providers should take the risk of pathological gambling carefully into consideration. A lack of awareness of pathological gambling can lead to criticism that Danish gaming providers help to create new pathological gamblers.
The working group does not believe that it is presently possible to impose special requirements on gaming providers through legislation. The working group justifies this by the fact that the necessary scientific basis does not exist.
3. Monitoring, Information and Certification
The present subdivision of the gaming legislation among several ministries has hitherto hindered the establishment of a specialized administrative unit for the whole of the gaming area. The adoption of a unified regulatory act would enable the gaming authority already established pursuant to Act No. 462 of 31 May 2000 on Gaming Machines Offering Cash Winnings to take over the administration and control of the regulation of Danish gaming.
The future central gaming authority's responsibilities with regard to the Internet should include:
Monitoring of the Internet - Effective blocking of payment transactions as described here necessitates monitoring of the global gaming market on the Internet such that "black lists" of illegal foreign gaming providers can be kept up-to-date.
Official Internet Portal and Certification - The working group suggests the establishment of a portal for legal Danish Internet gaming on the authority's homepage. The direct link between the legal Danish Internet gaming homepages and the gaming authority should be in the form of certificates issued by the gaming authority. The certificates are the gamblers' guarantee that the homepage complies with Danish law.
Information Campaigns - The gaming authority will have to implement information campaigns, among other things concerning the known risks associated with Internet gaming. Corresponding information campaigns are already known from the tobacco, alcohol and narcotics areas. The gamblers should be informed that if they participate in foreign gaming over the Internet, they lose the consumer protection provided them through Danish law.
International Cooperation among Authorities - The Internet is not only synonymous with the risk of globalisation of the market, but also with the chance of a global and rapid inter-state exchange of ideas and strategies in the gaming area. It is important that the Danish authorities actively participate in the development of this exchange in organizations such as GREF and other relevant forums.
4. International Negotiations
As earlier emphasized, one of the working group's clear messages is that active international efforts in the gaming area should be accorded high priority.
Gaming can no longer be exclusively considered an aspect of Danish domestic policy. Because of the Internet, gaming should also be an aspect of foreign policy. As mentioned earlier, such an attitude is already expressed in the American Congress, and can be expected to be expressed in a number of countries that see their sovereignty in the gaming area threatened by other countries' policies.
Together with the other European countries and the United States, Denmark should work toward placing the topic on the agenda in the OECD and WTO, perhaps in connection with other negotiations on topics within the economic and financial areas, with the aim of placing pressure on countries who see an economic interest in a global gaming market on the Internet.
On the bilateral level, the Ministry of Foreign Affairs should communicate Denmark's attitude to those countries that refrain from hindering their gaming providers from providing gaming to Danish citizens.
The reports were submitted to a public hearing following its release.
"However," explains Peter Sehestedt, head of section in the department of the Ministry of Taxation, "the report has not been debated in parliament. I may add, that it is not custom to debate a government report in parliament. Normally parliament chooses to make the report the topic of a question to the government. However this has not been the case either. We are at the moment finalizing the work on a new single regulatory act as well as a single act on taxation with regard to the Danish gambling market following the recommendations in the report. The two drafts will be submitted to a public hearing next month. Following the hearing, and depending on whether the prime minister calls for a general election or not, we expect to be able to introduce a bill in the Danish parliament in December."
Last August Denmark's minister of taxes, Frode Sorensen, declared that anyone owning and running a Danish Web site which shows a banner from a foreign bookmaker linking to the site, could run the risk of going to jail and facing charges from the ministry of taxes. One of the Danish newspapers has been charged for posting a link to a foreign bookmaker. The editor is now facing a possible jail term. The news Web site will also lose DKK 100,000 (EUR13,333) as a result of running the linked ad.
Total Gaming Market 2000
(Turnover in million DKK)
Tips 12 + Tips 13: 313
Oddset: 769
Saturday Lotto: 2,771
Wednesday Lotto: 718
Dusino: 78
Joker: 545
Instant Games: 821
Total Dansk Tipstjeneste: 6,015
Total DanToto (horse race) (July 1-Dec. 31, 2000): 201
Dansk Tipstjeneste (including Dantoto): 6,216
Horses and Dogs Race (Jan. 1-June 30, 2000): 189
Class Lottery: 283
"Class Lottery" (Agriculture): 71
"Class Lottery" (Trade): 71
Humanitarian Lotteries: 160
Bingo*: 1,000
Foreign Bookmaking*: 130
Casinos**: 270
Premium Bonds: 85
Gambling machines*: 2,100
Total other gaming companies: 4,389
Total gaming market in Denmark: 10,605
* Estimated turnover.
** The amount is calculated on basis of the duty paid to the Treasury. The turnover of each casino is not known.
Operators
Klasselotteriet: www.klasselotteriet.dk
In Denmark, the oldest lottery is "Klasselotteriet" established in the 18th century. Besides, there are two smaller lotteries, "Varelotteriet" and "Landbrugs-lotteriet." These lotteries were entirely or partly run by state management, however, a few years ago "Klasselotteriet" was given the same constitution as Dansk Tipstjeneste. The annual turnover of 2000 was for Klasselotteriet DKK 283 million and for the two smaller lotteries each DKK 71 million. The profit of "Klasselotteriet" goes to the Treasury, while the profits of the two others go to agricultural and trade purposes.
Klasselotteriet's new Web site has been developed by the CSC Consulting Group Denmark. The site allows users to check their winnings and to buy new lottery tickets. In time, the functionality should be expanded to include WAP technology.
Dansk Tipstjeneste AS (The Danish Pools and Lotto Company Ltd.): www.tips.dk
Dansk Tipstjeneste is a limited liability company with a share capital of DKK 500,000 and was established in 1948 according to legislation and under the jurisdiction of the Ministry of Taxation. The state owns 80 percent of the shares of the company and has five of 15 representatives at the Board of Directors. Another five Board members come from sports organizations, whilst the remaining five are staff representatives.
According to the legislation adopted by the Parliament in 1992, expansion of the game assortment of Dansk Tipstjeneste can take place following board decisions (however, Dansk Tipstjeneste is not allowed to establish casino games).
In 2000 Dansk Tipstjeneste became a group comprising Dansk Tipstjeneste AS, DanToto A/S and Dansk Automatspil A/S. Since Dansk Tipstjeneste took over DanToto A/S all betting on horse and dog races is handled by Dansk Tipstjeneste.
The influence of the ministry of taxation primarily takes place through its representation at the board of directors, whilst the ministry, with the exception of certain control procedures, exercises no influence on the daily running of the company, its financial transactions, etc.
In May, the Danish Parliament passed an act on gaming machines offering cash winnings. The act came into force on Jan. 1, 2001. One of the consequences of the new act is that Dansk Tipstjeneste, through a subsidiary, can establish arcades in open competition with other market players.
Key Figures 2000
Full-time employees: 211
Part-time employees: 71
In the financial year 2000, turnover (including horse race) amounted, record breaking, to DKK 6,216 million (6.7 percent increase compared with 1999: DKK 380 million), with a revenue of DKK 945 million directly to the Treasury. On top of this revenue a large number of sports, cultural and youth purposes receive subsidies from the profit of Dansk Tipstjeneste. Purposes which, to some extent, otherwise had to be financed directly by the state. In 2000, these purposes received a total of DKK 1.452 million.
At present, Dansk Tipstjeneste operates the following games:
1. Lotto
The game was introduced in Denmark in October 1989 and is played every Saturday. The formula is seven of 36 with two bonus numbers, and there are five prize categories: For seven correct numbers, six correct plus one bonus number, six correct numbers, five correct numbers, and four correct numbers. 45 percent of the stake goes to the players as winnings. After deduction of costs, duties, etc., the profit primarily goes to sports purposes, but also humanitarian and cultural purposes get their share. The payback rate (45 percent) as well as the distribution of profits is the same for all of Dansk Tipstjeneste's games. The turnover of the calendar year 2000 amounted to DKK 2,771 million.
2. Viking Lotto
Parallel with the ordinary Lotto game, Dansk Tipstjeneste is one of the six companies behind Viking Lotto, a Wednesday Lotto game started in March 1993...The formula is six of 48 with two bonus numbers, and there are five prize categories: For six correct numbers, five correct numbers plus one bonus number, five correct numbers, four correct numbers, and three correct numbers. The fact that prize money for the first prize is pooled from Estonia, Iceland, Finland, Norway, Sweden and Denmark makes Viking Lotto the first regular pan-European joint venture in the gaming business. The turnover for 2000 was DKK 718 million.
3. Dusino
In August 1997, Dusino was launched. Dusino is a Lotto-like game developed in cooperation with the Danish television channel DR1, and the draw is broadcast each Sunday afternoon in DR1. The formula is 12 out of the figures 1-24 in the same field of a board. There are four prize ranks: For 12, 11, 10 and nine correct numbers. The turnover for 2000 was DKK 78 million.
4. Joker (number game)
Joker was launched in January 2000. It is an additional game bought together with Lotto, Viking Lotto, Dusino, Tips 12 or Tips 13. The formula is two Joker numbers including each seven figures. There are six prize ranks: seven, six, five, four, three, and two figures in the right succession. The turnover for 2000 was DKK 545 million.
5. Tips 13 (football pools)
The football pools are the oldest of Dansk Tipstjeneste's games. It started in 1949 and is also played weekly (Saturday). The total turnover of 2000 was DKK 224 million. There are four prize categories, i.e. 13, 12, 11, and 10 correct forecasts.
5. Tips 12 (football pools)
This game was launched in August 1998 and is also played weekly (on Sundays). There are four prize categories, i.e. 12, 11, 10, and nine correct forecasts, and the turnover for 2000 was DKK 78 million.
6. Oddset
Oddset was introduced in April 1994 and consists of four games: "Den Lange" (The Long List), "Matchen" (The Match), "Vinderen" (The Winner) and "Resultatet" (The Result). The turnover for 2000 was DKK 769 million.
7. Instant Lotteries
The first instant lottery, "Quick," was introduced in September 1992. The instant product range now includes Quick, MiniQuick, Bogstavjagt, Stifinder and various event games. The total turnover for 2000 was DKK 821 million.
8. Horse Race
On July 1, 2000, Dansk Tipstjeneste took over the Danish horse race company DanToto, which then became a subsidiary company to Dansk Tipstjeneste. The turnover of the 6 months amounted to DKK 201 million.
Future
From Jan. 1, 2001, Dansk Tipstjeneste has got the permission to run gambling machines on the same terms as other suppliers and expect to open a number of gaming venues in 2001. Dansk Tipstjeneste has developed a concept for a gaming cafe with a gambling hall combined with a section for gaming machines. The new game shop concept, which has been named "PitStop," focuses on creating a special environment for the players to enhance sports games and horse racing in particular. Dansk Tipstjeneste will use Icelandic Betware's Interactive Gaming System and purchase professional services regarding the setup and maintenance of the Interactive Gaming Center from Betware. By offering Interactive gaming solutions, Dansk Tipstjeneste's goal is to strengthen its competitive power and offer an alternative solution to its current "On-Line" setup, which in turn will lead to an increase in the total gaming revenue and will introduce new interactive games.
2001
The sales figures for the first half of 2001 for the main categories of Dansk Tipstjeneste games:
Lotto games: DKK 1,682,660,456
Number games: DKK 296,482,910
Sports games: DKK 510,615,309
Instant games: DKK 375,143,290
Total: DKK 2,864,901,965
Horse Racing: DKK 211,934,000
Dansk Tipstj. Group: DKK 3,076,835,965
Memberships
Dansk Tipstjeneste is active member of the World Lottery Association (WLA; www.world-lotteries.org) and the European State Lottery and Toto Association (ESLTA; www.european-lotteries.org).
Casinos
Casinos were established in Denmark in 1991. Calculated on the difference between the stake amount and the prize amount, the casinos the first three years paid 65 percent duty to the state. In 1994, the duty was made progressive, i.e. the casinos now pay 45 percent of gross revenues up to DKK 4 million, and 75 percent of revenues exceeding DKK 4 million. The total gross revenue before duty amounted in 2000 to about DKK 300 million (the number of casinos being six).
Bet24: www.bet24.com
Bet24 is a new Internet betting company, operating from the UK, that utilizes the potential of the PC and the Internet for gambling on sports - primarily football. Bet24 is founded by Holger Kristiansen. Kristiansen is no novice in the betting--and football--trade. He was the man behind the Oddset concept introduced by the Danish pool services in 1994--a betting concept that had a turnover of 769 million kr. in 2000 (approx. 100 million US$). For five years Kristiansen was responsible for amongst other things defining odds for the pools service. In 1999 he created the football Internet site bold.dk that has manifested itself in its first year as the preferred online football magazine for Danish football enthusiasts. In September 2000 he resigned at bold.dk and the following month opened up Bet24.
Site languages are: Danish, Swedish, Norwegian, Finnish, English, German and French
The number of employees in odds and administration (in Central London) is eight. The chief odds compiler in London is one of Holger Kristiansen's old odds compilers from when he was in charge at Dansk Tipstjeneste: Mikkel Petersen.
Holger Kristiansen said, "We have outsourced all our IT to the Icelandic company, Parspro. Parspro is driven by Sigurdur Baldursson, who, as myself, for 10 years was in the state-owned betting business. Sigurdur was the managing director of the Icelandic 'Tipstjeneste,' Getraunir, which were the first state owned company selling on the Internet.
"Bet24 believes that our product-developments (increasing odds, superior system bets and what will follow) combined with our knowledge on the different local betting markets and many years experience in this business will give us an unique position on the internet sportsbetting market. We will try to attract the 'combination punters' and let all the rest fight for the 'single punters.'
Every week we increase our number of customers with 10 percent. Although we, at this point, are biggest in Denmark, we of course have international strategies and plans. We are currently having customers in 44 different countries. Our plan is to take one country at a time; next in line are countries as Norway, Sweden, Germany and Finland.
Of course our biggest advantage towards the monopolists is our higher odds. When a year is through we should ideally have paid out 82 percent to the customers while Dansk Tipstjeneste's aim is 52-55 percent. But being in a market where things--and especially the IT--are changing very fast, it is a big advantage to have a small and flexible organization. To get a decision through the state owned companies can literally take years."
Competition
Casinos
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Other online casinos carrying the Danish Language: