Dutch iGaming Market Set to Miss Target
In its latest report, the Netherlands’ main gambling authority, the Kansspelautoriteit (KSA), has shown how the country’s online gambling market will fail to meet its projected goal of an 80% channelization rate by 2024. It combined reports from both H2 Gambling Capital and Regulus Partners in estimating the total size of the Dutch iGaming market.
Difference in Bonuses is Reason for Discrepancy in Figures
The chief gambling authority and regulator in the Netherlands, the Kansspelautoriteit (KSA), recently admitted that the country’s soon-to-be launched online gambling market will likely fail to reach its 80% channelization rate goal by 2024.
In a recently published report, the regulator employed reports published by both H2 Gambling Capital and Regulus Partners in its estimation of the current size of the entire Dutch online gambling market.
For their part, Regulus Partners predicted that by 2024, which would be three years after the official launch of the legal Dutch iGaming market, the combined licensed and unlicensed market size will be €827 million when excluding bonuses.
Alternatively, H2 Gambling Capital predicts a market worth upwards of €1.08 billion including bonuses.
This fairly significant discrepancy in the figures predicted by Regulus and H2 Gambling Capital respectively is almost wholly due to the difference in bonuses, with Regulus choosing not to include them in their estimates, with H2, on the other hand, choosing to.
When taking only the legal gambling market into account, H2 Gambling Capital predicted a revenue of €757 million by 2024.
Regulus, on the other hand, did not split regulated revenue from the predicted total generated by offshore gambling.
The result is that approximately 70% of revenue is expected to be channeled into legal gambling offerings, which falls well below the Kansspelautoriteit (KSA)’s target goal of 80% — at least for now.
Tax Rates Still Stand as “Major Obstacle” to Dutch Channelization
In attempts to account for the reasons behind the Dutch online gambling market’s potential failure to reach its channelization goals by 2024, H2 Gambling Capital emphasized how tax rates still stood as a “major obstacle.”
Under the current proposed regime, the tax rate for Dutch online gambling is to be set at 29%, which is significantly more than Sweden’s rate of 18% or even Denmark’s — which currently rests at 20%.
In its prognosis report on the future of the Dutch iGambling market, Dutch regulator the Kansspelautoriteit (KSA) predicts that gambling providers will attempt to partially pass on this gambling tax to players.
The Kansspelautoriteit (KSA)’s worry here, then, is that this passing along of the gambling tax will make the legal offerings across the Dutch iGaming market that much less attractive to players — likely pushing them into the hands of offshore operators.
The KSA stated in their report that, “currently, illegal providers pay no gambling tax in the Netherlands. This gives price-conscious players an incentive to play with an illegal provider.”
Seeing as Regulus Partners chose not to consider revenue in their channelization projections, the KSA made a point to emphasize their prediction that 90% of players would switch over to the regulated market once it launched.
This, however, is largely dependent on relaxed and balanced advertising regulations, and not overly strict ones.
Channelization Could Also Be Influenced by Other Factors
Yet disproportionately high and misdirected tax rates might not be the only reason for lower-than-expected channelization within the Dutch iGaming market.
According to the KSA, it in fact largely depends on the gambling vertical in question.
One example is that poker players might be more inclined to play through gambling websites that have strong liquidity. Sports bettors, on the other hand, tend to look for the best prices around, while casino players enjoy trying to find the best bonuses on offer.
The KSA then went onto note how Regulus Partners showed higher predicted revenue for the entire online gambling market for 2021 at €544 million.
This was compared to H2 Gambling Capital’s slightly lower projection of €513 million.
However worth noting here is that H2 predictions demonstrate a much faster-growing market, in which during 2020, for example, it estimated revenues of €416 million compared to Regulus’ prediction of only €394 million.
These different approaches and discrepancies in estimated figures prove “that there is (and will remain) uncertainty about the exact figures, especially for the illegal part of the market,” said the KSA.
Dutch iGaming Launch Still on Course for October 1st Launch
The KSA’s revelations concerning the Dutch iGaming market’s likely failure to reach its channelization goals by 2024 arrive in light of the incoming launch of the market, currently scheduled for October 1st, 2020.
The official launch of the iGaming market and its corresponding Dutch Remote Gambling Act (KOA) is a saga in and of itself — having already been delayed three times.
The latest delay arrived as recently as January 2021, when Minister for Legal Protection in the Netherlands Sander Dekker pushed the date the KOA legislation comes into effect back to April 1st, 2021, and the date the market itself opens back to October 1st, 2021.
The reasoning behind Dekker’s last-minute decision was that the implementation process was taking a little longer than expected, with the delay now enabling the relevant authorities to be much better prepared for the market launch in October.
In November 2020, the Kansspelautoriteit (KSA) revealed further details on the licensing process awaiting gambling operators once the iGaming market finally launches.
Strict regulations concerning the avoidance of aggressive advertising practices, along with the need for operators to demonstrate comprehensive plans aimed at preventing gambling addiction, are among the several requirements outlined by the KSA.