Denmark's Online Gambling Taxes Reviewed By ECJ

Published Friday, September 12, 2014 -
Denmark's Online Gambling Taxes Reviewed By ECJ

Denmark’s recent liberalization of its online gambling industry was a long time coming as it is in many European jurisdictions. Danske Spil, the 80 percent government owned monopoly had since 1948 controlled terrestrial and internet betting. Denmark began liberalization in 2008 when the monopoly was challenged by the European Court of Justice. Only after being challenged did the Danish government began the long process of creating a licensing and regulatory system that would open the online gaming market to other operators. Even when Denmark did finalize a legal open online gaming marketplace in 2012, Danske Spil still retained its monopoly over lottery, bingo, keno, and a variety of card and arcade offerings.

Now the European Court of Justice is once again ready to deliver its judgement on the tax system imposed by the new regulatory body. Danish gambling authorities currently set different tax rates between retail and online operators. The gambling tax framework reveals that retail offline operators pay as much 70% tax rates on operations, compared to the 20% imposed on online operators. The question of fairness was brought to the Court of Justice by Denmark’s Royal Scandinavian Casino. Royal Scandinavian challenged the authority under European business law and practices, for placing a lower rate of tax for online betting and gambling operators, who were targeting Danish customers.

In January 2013, The Danish Gambling Authority evaluated the performance of the online gaming licenses issued for their initial one-year period. Based on the review, they have extended the online gaming licenses to five years, affecting five local and 20 foreign gaming operators. The Danish Gaming Authority, said the market generated 870 million DK in online gaming revenue.

The ECJ judgement on the 26 September is expected to set a precedent which could be adopted throughout the European Union. Royal Scandinavian and other Danish land based operators appear confident that the ECJ will rule in their favour.




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