Dutch Council of State upholds fines imposed upon two illegal betting operators

On 26 September 2018 the Dutch Council of State, the highest appeal court in administrative matters, upheld (in two separate decisions) fines imposed by the Dutch Gaming Authority (DGA) in 2014 and 2015 upon two illegal betting operators, Onisac/Mansion and Co Gaming, respectively.

Each operated a website that offered online casino games to Dutch consumers. The DGA ruled that doing so was prohibited in the absence of a licence, and fined Onisac/Mansion and Co Gaming EUR 150,000 and EUR 180,000 respectively. On appeal, the decisions were found to comply with gambling regulations and therefore upheld by the district court.

Both parties appealed – separately – the decisions of the district court before the Council of State. The operators used similar arguments in both cases and claimed that the Dutch gambling regime is in breach of the EU principle of freedom of services, as well as being applied inconsistently and therefore disproportionately. Furthermore, the operators stated that the DGA did not provide sufficient evidence of breach of the gambling legislation by the operators, and that the fine itself would be disproportionate. The Council of State rejected these arguments and confirmed the district courts’ decisions.

Both operators claimed that the Dutch gambling regime violates the principle of freedom of services as it prevents betting operators from providing their services (i.e. offering betting services) in the Netherlands. The DGA, however, justified this by stating that such regulations are necessary for preventing gambling addiction, protecting consumers and preventing fraud and crime. According to the Council of State, these underlying reasons constitute an exception to the principle of freedom of services, which is permitted under EU law since they are overriding reasons of public interest. The view of the Council of State was in line with previous decisions by the European Court of Justice and therefore does not come as a surprise. With regard to the argument of inconsistency of application, the operators were not able to persuade the Council of State that the Dutch gambling regime is inconsistent and disproportionate; the fact that a different regime applies for different games was held to be insufficient in itself to show that the Netherlands lacks a consistent gambling regime and is disproportionate.

Interestingly, the operators argued that there was not sufficient evidence that Dutch consumers could bet on the operators’ websites as the DGA, among other things, failed to open a Dutch player account and to deposit money into such account. However, the Council of State ruled that the circumstances of the cases were sufficient to conclude that the operators did in fact offer casino games to Dutch consumers, such circumstances being (among others):

• the operators offered their website in the Dutch language;
• a Dutch customer service was available; and
• the website offered payment methods popular among Dutch consumers (i.e. iDeal).

Finally, the Council of State found that the amount of the fine was properly calculated by the DGA in both cases and – in light of the circumstances of the case – suitable and appropriate.

The decisions of the Council of State do not come as a surprise as both operators had clearly targeted the Dutch market, and the DGA had legitimate reasons for prosecuting these operators.

That the DGA took action against these operators was held to be in accordance with the criteria that the DGA applies when determining which operators it should pursue (the so-called 'prioritisation' criteria). These criteria include focusing on games of chance on websites with an .nl domain, gaming websites being written in Dutch and gambling sites advertising via Dutch media. Since 1 June 2017, the DGA has also focused on websites that specifically target the Netherlands (e.g. by offering payment methods that are popular among Dutch consumers, such as iDeal, or that do not block certain Dutch IP addresses). This recently led to a fine of EUR 312,500 for the betting operator Mr Green (please see our previous article here for more information).