ON JANUARY 1, 2012 THE NEW DANISH GAMBLING ACT CAME INFO FORCE

THE NEW GAMING LEGISLATION IN DENMARK

Existing law

According to the Pools and Lottery Act, Danske Spil A/S (Danish Gaming A/S) has the monopoly to offer games, lottery, and betting and thus nobody else is permitted to offer the games in question. The prohibition does not only include the Danish gaming suppliers, but also the foreign gaming suppliers who offer games on the internet and who directly directs their games to the Danish players, e.g. through marketing, despite the fact that they are physically situated outside the Danish jurisdiction. In connection with this it is also without due cause to advertise games offered in conflict with the monopoly of Danske Spil A/S (Danish Gaming A/S). For a long time, it has been discussed if the Danish Gaming Legislation is in conflict with the EU-law, but the New Gaming Legislation, cf. below, has now gone ahead of the EU-Court.

The New Danish Gaming Act

On 4 June 2010 the new Danish Gaming Act was passed by the Danish Parliament. With this act the Danish market of games is legalized, as the monopoly of Danske Spil A/S (Danish Gaming A/S) is repealed in certain respects. Particularly, it is interesting that a license to offer betting and to run online casinos may now be granted to commercial applicants. E.g. a license can be offered to online poker games where the Danish players can play against poker players from other countries in an open network. The games in the poker networks must observe the Danish legislation, must be controlled by the Danish Gaming Board, and the game suppliers must pay duties of the part of the gaming enterprises relating to the games of the Danish customers.  

License to provide games
The new law lays down a main rule according to which providing or arrangement of games requires a license unless you do not have to pay a stake to participate. Games are defined as lottery, combination game and betting. Activities neither including betting on the result of an event nor coincidental elements are not covered by the law. In order for an activity to meet the definition it is required that participants have a chance of winnings.
 

Criteria for licenses
License to provide and arrange games can both be offered to a natural person and a legal person and demands that certain specific criteria are met. In order for a company to obtain license it is requested that members of the management and the board of directors meet the same conditions as a natural person. This memorandum does not aim at covering all the criteria, but some of the more relevant must be mentioned:
 

- License can only be granted to individuals of 21 years or more.
- The applicant must not be convicted for a criminal offence giving justice to an obvious risk of abuse of the access to work with games.
- License can only be granted to applicants who are supposed to conduct games in an economical and sensible way.
 

During the inquiry an individual estimate will be made of the environments of the applicant and the extent of the inquiry depends on the kind of game for which the license is requested. E.g. a particular thorough inquiry will be made of applicants for licenses to provide betting and online casino. The inquiry might include evaluations of a company’s business plan, liquidity, ownership, previous activities etc.

If an applicant does not have a permanent address in Denmark or another EU- or EEC-country it is a requirement to be granted a license that the applicant has nominated an approved representative. This representative must live in or as regards legal persons be established in Denmark besides meeting the conditions valid for the applicant himself. 

Thus, an applicant will be checked carefully and the Danish Gaming Board is left with a wide estimate when evaluating if the license can be granted to the applicant.

Fees, duties and tax
To file an application to provide betting or online casino you will have to pay a fee of DKK 250,000.00 and if you apply for a license to provide both betting and online casino you will have to pay a fee of DKK 350,000.00. In addition to this, dependent on the expected turnover, you must pay a fee of DKK 50,000.00 - DKK 1,500,000.00 for the issuance of the permit. The fees are stated at the 2010-level.
 

According to the new Gaming Duty Law which is a part of the compound code in the gaming area, you must pay a duty of the gross gaming earnings dependent on the type of game. E.g. you must pay a duty of 20 % of the gross gamine earnings for online casinos, but the duty imposed upon inland casino is up to 75 % of the gross gaming earnings.
 

Besides paying duties and fees the gaming company based in Denmark is under an obligation to pay regular corporate tax which is 25 % in Denmark. The tax will be calculated after deduction of all of the required duties and fees.

Marketing of games
With the liberalization of the Danish Gaming Act there has been a clarification of the guidelines for the marketing of games; for one thing the chance of winnings must be presented in a correct and balanced way in order not to give the impression that the chance of winnings is bigger than it is in fact. Likewise, there are guidelines for the extent of the use of celebrities in the marketing. In addition, the advertisement and promotion of games is only allowed on behalf of game providers with a license to provide and arrange games in Denmark.

SMS-competitions
With the liberalisation of the Danish Gaming Act there is a risk that certain SMS-competitions will fall within the definition of a game for which you must have a license. As mentioned, the new law implements a system where the evaluation whether you need a license to provide a game among other things depends on whether you will have to pay a stake to participate in the game. In this connection you must now have a license to provide SMS-competitions where you must pay a fee besides the price to send a message etc. (so-called overcharge). During the reading in the Danish parliament this part of the new law was criticized, which gave rise to a minor hole for smaller competitions where the overcharge does not exceed DKK 5.00. However, this exception is very minor as it only applies to guessing competitions on the radio or on TV where the guessing competition is not the main content further each telephone number must only participate once a day. 

Commencement
At present, it is unknown when the new law will commence. The Danish Gaming Duty Law encompasses a duty system with a difference in the size of the duty you have to pay of online casinos and gaming halls and restaurants with slot machines. Therefore, the slot machine industry has filed a complaint with the EU-Commission claiming illegal government support. As it is a question of illegal government support the Commission has no time limit for their evaluation and the commencement of the law will apparently be delayed compared with the first announcement about commencement on 1 January 2011.

You are most welcome to contact us for any clarification of the law and you may contact our partner, attorney at law Mr. Niels Christian Døcker by e-mail ncd@lundelmersandager.dk or assistant attorney at law Ms. Stina Palmberg by e-mail spa@lundelmersandager.dk.