Only months after opening its regulated online market, the Netherlands is poised to introduce sweeping online gambling advertising restrictions. These restrictions, however, will not be introduced overnight. There are strong indications that operators will still be able to effectively distinguish themselves from their competitors by launching a superior product.
What happened?
The Netherlands opened its regulated iGaming market on 1 October 2021. As was widely predicted, this event was followed by rapidly increasing online gambling advertising volumes. By far the biggest offenders in this regard were the state-owned operators Holland Casino and Nederlandse Loterij.
Initial attempts at industry self-regulation were feeble. Newly launched trade association VNLOK (which was founded by five Dutch land-based operators, including Nederlandse Loterij and Holland Casino) not only excluded the Netherlands’ other online trade association, NOGA (which mainly represents internationally licensed operators) from the negotiations with consumer protection organisations and media companies, but also came up with proposals that were somewhat limited in scope.
As a result, no binding gambling advertising code could be agreed upon prior to the opening of the regulated online market on 1 October. It took until 14 December before a more meaningful advertising code could be announced – just one day before a crucial parliamentary debate.
By that time, public and political irritation had, predictably, reached unsustainable levels, and a far-reaching motion calling on the Dutch Government to ban all “untargeted” online gambling advertising was adopted by a majority of the Dutch Lower House.
This motion was subsequently clarified to include a ban on all broadcast and internet commercials promoting online gambling. Currently, there appears to be no parliamentary majority for including sports sponsorships in these new restrictions.
Legal and procedural issues
To introduce such far-reaching advertising restrictions, new legislation will be necessary. This was recently confirmed by the Minister for Legal Protection, Franc Weerwind.
The fact that new legislation will be required means it will be impossible – normally, at least – to introduce these new restrictions before 1 April 2022, as is currently being demanded by the political group which tabled the parliamentary motion calling for an online gambling ad ban.
In the Netherlands, the introduction of new primary legislation usually takes around two years, although this process can, of course, be expedited. However, in the absence of genuine emergency situations, even the expedited process would normally take around one whole year.
Another issue is that major restrictions such as an online gambling advertising ban must be “consistent and proportional.” This means, for instance, it would be hard to ban online gambling advertising without introducing similar restrictions pertaining to equivalent land-based products. It is not inconceivable that this could mean legislators pause – or, at the very least – limit the scope of the advertising restrictions that will eventually be adopted.
Next steps
At the time of writing, the Dutch Ministry of Justice and Security is in the early stages of preparing legislation to ban or otherwise restrict online gambling advertising. It is currently not known what these legislative proposals will entail. However, as mentioned before, it will normally take at least a year before any new legislation can take effect.
In the meantime, the Ministry has initiated discussions with industry trade groups, requesting them to severely curtail their advertising efforts until the new legislation can come into effect. A potential trade-off for the industry is that any cooperativeness at this stage, before any bans could come into effect, could conceivably translate into milder additional advertising regulations. However, very little (if anything) is certain at this point.
Industry impact
Realistically speaking, traditional broadcast advertising will soon be closed off as a major avenue for acquiring new customers in the Netherlands. This, however, may not be the catastrophe it would initially appear to be. Financial statements that were released last fall by major international operators in the wake of their temporary withdrawals from the Dutch market show that the unregulated Dutch online market was significantly larger than originally estimated. Thus, the regulated online market could be quite a bit more mature than would normally be the case so soon after initial market regulation.
Mature markets contain savvy consumers who know what they want and, more importantly, where to find it. Conversations that we have had with experienced players and affiliate marketeers indicate that quite a few Dutch players are eagerly awaiting the return of the larger international operators and, especially, what they perceive as their “superior” product experience.
Thus, product quality rather than advertising power is likely the determining factor that will decide who will fail and who will succeed in the Dutch market. Even so, currently there remains quite a bit of uncertainty regarding how, exactly, Dutch online gambling advertising regulations will change in the future. However, more information is expected to be available soon. If you would like to know more, our upcoming 2022 Gaming in Holland Conference, which takes place June 20-21, could conceivably be of interest.
