Following a policy change from the Netherlands Gambling Authority, the Dutch iGaming market is seeing a departure of operators. LeoVegas and Betsson, the Swedish operator that recently invested $3m in sportsbook for real money online casino Canada, have both withdrawn completely from the market. The Netherlands opened its fully regulated market on October 1 of this year, but many operators who were previously allowing Dutch customers to use their services are finding themselves on the wrong side of the law with the official opening. Betsson and LeoVegas are just two of the companies that failed to secure licensing before the change in policy. Kindred Group and Entain are also facing difficulties with these new regulations in the Netherlands, and decisions about whether to exit the market have been conflicting.
Navigating a New Market
A regulated Dutch market has been in the works since 2013, but the recent rule targeting unlicensed operators came as a surprise. In late September, Minister for Legal Protection Sander Dekker announced that operators who were already subjected to a cool-down period would have to cease operations entirely in the Dutch market by the October opening. Previous policy had strict regulations regarding advertising, forcing a “cooling-off” period for unlicensed operators seeking a Dutch remote license that prevented them from actively targeting the Dutch market for 33 months.
Change and Confusion
By allowing operators to retain business with Dutch customers, the idea behind the first policy was to encourage companies to seek licensing and promote long-term market channelization while also protecting existing players. The abrupt change in policy seems to undermine the original purpose of the cooling-off period and has left many scratching their heads. With little more than a weeks’ notice, the response from operators has been mixed. Kindred Group initially asserted that they would continue offering services to Dutch customers, emphasizing their compliance with the former policy in a statement saying, “it is our understanding that there is no request from Dutch officials that international operators, post 1 October, block Dutch citizens from accessing their services”. By October 7, Kindred had reversed its decision.
Plans to Return
Betsson and LeoVegas, on the other hand, immediately took a different approach and are ceasing operations in the Netherlands entirely. Pontus Lindwall, outgoing CEO and President of Betsson spoke on the choice to cease operations, saying “Compliance with laws, rules and ethical standards in the countries in which we operate is a foundation for Betsson.” The market exit appears temporary, as both operators were adhering to the former cooling-off policy and planning to apply for remote licensing. Lindwall emphasized this, saying “We have a strong belief in the Dutch market, and we have a clear ambition to operate under the new Dutch regulatory framework in the future, making us able to yet again offer Dutch customers an outstanding and sustainable customer experience.”
Big Picture Costs
The sudden change in policy is not just inconvenient for operators. Withdrawing from the Netherlands will be a costly endeavor, especially when the timeline for their return is uncertain at best. Fines for violating regulations are pointedly high; Tipico received a €531,250 slap from the KSA in late September for offering game services in the Netherlands, despite not having actively targeted Dutch players. The cost of losing players from the Dutch market could stretch into the millions for LeoVegas and Betsson, however.
Crunching the Numbers
Estimates from Earnings+More show that Betsson is potentially losing out on SEK300m in EBIT or c. 27% of 2020 operating income of SEK1.13bn while LeoVegas would suffer a loss of £144m in EBITDA or c.52% of group EBITDA for 2020 of £274.2m.
