Introduction to the Act on Gambling

Date 20 aug. 2010

On 12 February 2010, a draft for a new act on gambling was presented in public hearing.

 

The final bill was passed in the Danish Parliament June 4 and will come into force 1 January 2011 when the minister of tax puts it into force.

 

The act on gambling includes provisions to end gambling monopoly and to liberalise the market. Today, the Danish gambling market is regulated in such a way that commercial actors in principle are excluded, only allowing certain public benefit organisations and state controlled companies. The act will be part of a legislative package also containing an act on taxation of gambling, an act on gambling payments and an act on Danske Spil.

 

The act on gambling includes provisions on various aspects of the gambling market. This memo will focus on the act’s definitions of the different types of gambling which will fall within the act, as well as the provisions on licenses for providers of the different types of gambling.

 

The Definition of Gambling

Gambling provided or arranged in Denmark falls within the act, which defines and divides gambling into three main areas: Lottery, combined gambling and wager.

 

Lottery is defined as an activity in which a participant gets a chance to win a prize, and where the winner is decided solely by chance. Examples hereof are the National Lottery, Joker, state lottery, Bingo, and scratch games.

 

Combined gambling is defined as an activity, in which a participant gets a chance to win a prize, and where the winner is decided by a combination of skill and chance. Examples hereof are bridge, poker, backgammon, whist, and guessing competitions, if decided by a prize draw. However, any gambling based solely on skill may be comprised if an element of chance is added in determining the winner, e.g. a prize draw between the best players.

 

Wager is defined as an activity in which a participant gets a chance to win a prize by wagering on either a future event or the occurrence of a future event. Examples hereof are wagers on a race or a sports game.

 

Gambling Licenses

Providing any type of gambling as defined by the act will require a license. Licenses are granted by the Gaming Authority unless otherwise stated. An exception is made for gambling where no stake is paid in order to participate, in which case license will not be required. Additionally, license will not be required, if authorized within the act or another act.

 

The availability of a license is dependent on the type of gambling in question. Some types of gambling licenses are exclusive and only granted to a sole provider, whereas other types of gambling licenses may be granted to an undetermined number of providers. The duration of the various licenses vary as well and some can be granted indefinitely.

 

As some types of gambling resemble each other, the act in many cases states which types of gambling a license does not comprise.

There will be nine different types of licenses, these being the following:

 

  • A lottery license. The act states that license for providing lottery is granted exclusively to Danske Spil A/S who, up until the act becomes effective, has been granted the license to provide lottery pursuant to the Act on Tips and the National Lottery. The types of lottery comprised by the license will include Lotto, scratch games, Joker, Keno, Online Bingo, and Boxen
  • A state lottery license. The act states that licenses for providing state lottery are granted to the National State Lottery A/S, Landbrugslotteriet, and Varelotteriet, who, up until the act becomes effective, have been the three state lotteries to have licenses pursuant to the Act on State Lotteries and the Act on Prohibition of Lotteries
  • A non-profit making lottery license. This type of license will be non-exclusive. Today, pursuant to circular letter no. 147 of 1 August 1994, only associations domiciled in Denmark are able to obtain such license. The act will end this, making it possible for any non-profit association to be granted a license for the purpose of providing non-profit lotteries for charity.
  • A wager license. This type of license will be non-exclusive, and will be granted for a period of up to five years at a time. The explanatory notes suggest that the market should be open to new commercial actors, making them able to obtain licenses to provide wagers, both land-based and online. No specific types of wagers are determined in these provisions, opening up a wide range of possibilities, although certain limitations apply. Fixed odds gambling and live betting etc. will be comprised by the license, as well as land-based Trackside.
  • A horse- and dog wager license. The act states that such license is granted exclusively to Danske Spil A/S, who, under the name of Dantoto up until the act becomes effective, has been granted the license to provide horse- and dog wagers pursuant to the Act on Tips and the National Lottery.
  • A local pool wager on bicycle races on track, dog races on track, pigeon races, and horse races license. This type of license will be non-exclusive and will be granted for a period of up to three years at a time. The provisions on local pool wagers is a consolidation of Sections 1 and 1A(1) of Act on Local Betting, cf. the 22nd consolidated act of 16 January 2006, and no changes are intended.
  • A land-based casino license. This type of license will be non-exclusive and will be granted for a period of up to ten years at a time. The license will comprise establishing and running a casino providing roulette, baccarat, punto banco, black jack, poker, and gambling on prize paying gambling machines, but other types of gambling may be allowed as well. In addition, a license may be limited to only one or more types of gambling. Certain organisational requirements must be met by the provider in order to obtain the license as well as compliance with terms prescribed by the Minister of Taxation.
  • An online casino license. This type of license will be non-exclusive and will be granted for a period of up to five years at a time. The license will comprise providing roulette, baccarat, punto banco, black jack, poker, and gambling on prize paying gambling machines in an online casino, thereby in principal making it possible to provide the same types of gambling as provided by a land-based casino. The explanatory notes state that poker providers should be able to offer poker games, in which Danish players may play against poker players from other countries in an open network, in order to create a poker network with a large cash flow. Within these networks, the games must comply with Danish legislation, be supervised by the Gaming Authority, and the provider must pay duty of the part of the stake that relates to Danish clients. Other types of gambling may be allowed as well, including the online combined gambling provided by Danske Spil today (called “Zezam fællesspil”) will be comprised by the license, and may be provided by the license-holder, e.g. whist, hearts-free, yatzy, and ludo, as well as other games like bridge and backgammon. A license may be limited to only one or more types of gambling.
  • A prize paying gambling machine license for arcades and for restaurants owning an alcohol license. This type of license will be non-exclusive and may be granted indefinitely, contrary to current regulation pursuant to the Act on Prize Paying Gambling Machines. The license will comprise installing and operating such machines. Regulation on prizes, providing other types of gambling, entry requirements, and more will apply as well. As for restaurants, a maximum of three machines will be allowed per restaurant.

Terms for obtaining licenses

The act states that licenses may be granted to persons and companies etc.

 

Persons will have to comply with a set of requirements set forth in the act.

 

A person must be at least 21 years of age.

 

A person may not be under guardianship or co-guardianship pursuant to Sections 5 and 7 of the Guardianship Act.

 

A person may not have applied for an administration order, filed a petition for compulsory composition, bankruptcy, or debt rescheduling, or be under administration order, have gone into bankruptcy proceedings, debt rescheduling, or compulsory composition.

 

A person may not be convicted of a crime which may substantiate obvious risks of abuse of the possibility to work with gambling.

A person may not have government debt which is due for payment. This does not include instances where a repayment arrangement has been made or where security has been provided.

 

Companies etc. will have to comply with the same requirements as persons, although not including the requirements concerning age and guardianship/co-guardianship, as these are irrelevant. However, members of the management and the board of directors must comply fully with all the same requirements that apply to persons and any changes of personnel within these groups must be notified to the Gaming Authority.

 

A license may be granted to companies which are established within Denmark or another EU- or EEA-country. A license may also be granted to companies established within a non-EU or non-EEA-country if a representative domiciled within Denmark is appointed by the applicant. This representative must be authorised by the Gambling Authority and comply fully with the same requirements as personal applicants. Such authorisation may be revoked if certain requirements are no longer met.

 

Licenses may only be granted to persons and companies etc. if it is presumable that they are able to provide gambling in an economically safe way and are professionally qualified. A license may not be granted if a conduct causing reasonable doubts about the propriety in the running of the company has been shown by the applicant itself, members of the management or the board of directors, or others who may exercise controlling influence on the running of the company.

 

Public order and the size and location of the venue may be taken into consideration when considering applications for land-based casino licenses and prize paying gambling machine licenses for arcades.

 

Terms may apply to a license.

 

The Gambling Authority supervises persons and companies etc. who have been granted a license pursuant to the act.

 

Licenses may be revoked by the Gambling Authority under certain conditions, e.g. if the license holder or his representative seriously or repeatedly violates the provisions of the act.

 

Licenses may also lapse under certain circumstances, e.g. if requested by the license holder or if the license is not actively used within certain time-limits.

 

 

If you have any questions or require additional information on the new act on gambling, please contact Attorney Claus Molbech Bendtsen (cmb@mwblaw.dk) or Attorney Dan Moalem (dmo@mwblaw.dk).  

 

The above does not constitute legal counselling and Moalem Weitemeyer Bendtsen does not warrant the accuracy of the information. With the above text, Moalem Weitemeyer Bendtsen has not assumed responsibility of any kind as a consequence of a reader’s use of the above as a basis for decisions or considerations.