Dutch Gaming Authority imposes fines for targeting young adults with online advertisements

Legislation regarding online gambling activities in the Netherlands were amended per 1 October 2021 in order to (further) prevent gambling addiction, protect consumers and counter potential fraud and crime. That is why as of 1 October 2021 the Dutch Betting and Gaming Act (‘BGA’) allowed betting and gaming providers to apply for a licence from the Netherlands Gaming Authority (‘NGA’) that permitted them to provide online gambling services in the Netherlands.

From that moment, the Dutch consumer was able to participate in online gambling via legal platforms. According to the legislative history, the rationale behind the amendment was to combat illegal online gambling and to protect players.[1] The idea was that granting online gambling providers a license ensures a responsible, reliable and verifiable offering of online gambling activities.

This article takes a look at how the NGA has since dealt with the licensing regime introduced 1 October 2021, particularly in terms of enforcement.

The violations since then can be categorised into (1) offering online gambling services without a licence and (2) online targeting of players aged between 18 and 24 (young adults) for commercial purposes. These two types of violations will be discussed below based on decisions of the NGA rendered after 1 October 2021, in particular the Winning Poker Network case and Goldwin case with respect to offering online gambling services without a licence and the Bingoal case concerning targeting online gambling advertisements at young adults.

Winning Poker Network and Goldwin 

In two recent cases of Winning Poker Network (28 February 2023)[2] and Goldwin (20 April 2023)[3], the NGA found that parties offered illegal gambling services in the Netherlands through (one of) their websites. Evidently, these services were illegal because these parties did not own a licence that was required to provide online gambling services. The NGA’s main goal was to prove that Winning Poker Network and Goldwin targeted users that resided in the Netherlands by checking whether these users could access and use their websites.

The NGA-researchers’ report showed that there were several signs that pointed to Winning Poker Network and Goldwin targeting Dutch users, for instance it was possible to access their websites from the Netherlands. Also, users were able to create an online account, make payments with payment systems typically used in the Netherlands (such as iDeal) that directed the user to Dutch banks and the Netherlands was not excluded in both parties’ general terms and conditions. In case of Goldwin in particular, its website also offered an English customer service that automatically translated to Dutch and referred to English gambling addiction services that also had Dutch assistance present. Researchers found that it did not matter whether the Netherlands was selected as the home country when creating an online account.

When enforcing the BGA, the NGA first wrote to both parties (separately) that they were offering online gambling services in the Netherlands without having the required licence and that they were violating the BGA. Neither party countered the letter (extensively), except for Winning Poker Network responding that they would stop providing their services in the Netherlands.

Ultimately, the NGA was convinced that Winning Poker Network and Goldwin offered their online gambling services to the Dutch public and therefore violated the BGA. The NGA referred to Article 35 BGA in connection with Article 5:32b Dutch General Administrative Law Act (GAL) that provided the NGA the power to impose an order subject to a penalty (last onder dwangsom). According to Article 5:32b(3) GAL, the amount of this penalty must be in reasonable proportion to the gravity of the interests violated and to the intended effect of the penalty. The idea is that the penalty must be a sufficient (financial) incentive for the offender to end the violation.

The NGA considered that the daily revenue of online gambling providers can be high. It also took into account the goal of gambling regulation, that is preventing addiction, protecting vulnerable people, such as minors, providing a trustworthy gaming industry, secure payment and combatting illegality and criminality. Moreover, the NGA noted that the violation could be ended quickly.

For these reasons, the NGA decided to penalize Winning Poker Network with a fine of EUR 25.000 a week with a maximum of EUR 75.000 if they did not seize their activities in the Netherlands. The same applied to Goldwin, however, Goldwin’s penalty consisted of EUR 239.000 a week with a maximum of EUR 717.000.

These penalties are fairly significant. The NGA substantiated the high amount of both penalties by stressing the importance of a clean gambling industry. Still, the difference in the amount is also considerable. On the other hand, this difference can be clarified because the NGA also took the daily revenue of the gambling providers into consideration.

Bingoal

The other main ground for imposing sanctions after the amendment of the BGA was advertising to young adults, between the age of 18 and 24 years, by online gambling providers. A recent example dated 5 June 2023 is the Bingoal case where the NGA imposed a penalty on Bingoal in the amount of EUR 400.000 for sending advertisements to young adults, who, according to the NGA, belong to a group that is susceptible to and has a higher risk of a gambling addiction.

Dutch Media[4] sent signals to the NGA of gambling advertisements that were unlawfully aimed at minors and young adults. That is why the NGA requested information from all online gambling providers (with licences) that were active between 1 October 2021 and 1 April 2022 in the Netherlands, including Bingoal.

The NGA found that Bingoal had violated the BGA and underlying legislation, in particular Article 2(4)(a) of the Gaming recruitment, advertising and addiction prevention decree (GRAAPD). This Article forbids gaming providers to aim their advertisements at, among others, young adults.

In their defence, Bingoal argued that they did send emails but they deny that these were specifically aimed at young adults. According to Bingoal, they sent out general advertisements to all of their users, but they never targeted young adults specifically. Bingoal claimed that the law is multi-interpretable on this matter, which is detrimental to legal certainty and Bingoal blamed the NGA for not clarifying this issue beforehand. Finally, Bingoal also argued, if they were to be penalized, a large penalty would not be justified because Bingoal tries to adhere to the law unlike illegal gaming providers.

The NGA did not agree with Bingoal. According to the NGA, the law is clear about aiming gambling advertisements at young adults. For example, the NGA refers to Article 2(3) GRAAPD which states that it is forbidden to aim advertisements at minors. If Bingoal’s argument was correct, they would also have thought that targeting minors would be lawful. Furthermore, the NGA refers to Article 12 of the Regulation on recruitment, advertising and addiction prevention for games of chance (Gambling Regulation) and its legislative history which obligates gambling providers to describe the way they prevent that their advertisements are aimed at young adults. This means Bingoal should already have some kind of internal regulation in place that prevents them from sending advertisements to young adults. Moreover, the NGA points to Bingoal’s responsibilities as licence holder and its duty to know the applicable laws and regulations regarding providing gambling games. The NGA criticises Bingoal for not intervening when it was technically possible and feasible to do so, especially since they knew the ages of their users since their registration. 

In deciding the penalty, the NGA looked at the weight of the violation against the amount of accountability of Bingoal. The NGA stressed the importance of Article 2 GRAAPD, because young adults have a higher risk of addiction. It also emphasized how short odd-gambling games, such as online sport bets and online casino games, are more addictive than long odd-games, like lotteries. To that end, the NGA refers to the lack of direct contact between the consumer and the operator, the easy and permanent access players have to the games that are offered on the internet, the large volume of games, played in an environment characterised by isolation of the player, in which the player acts anonymous and any social control is absent. This means that the negative social and moral consequences of gambling are less visible.

For these reasons, the NGA imposed a fine of EUR 400.000 on Bingoal. The amount of the fine is similar to other decision of the NGA against TOTO Online B.V. on 8 November 2022[5], Joi Gaming Limited on 10 January 2023[6], Hillside New Media Malta Plc on 24 February 2023[7] and Betent B.V. on 4 April 2023[8].

In conclusion 

What is striking is that the NGA is accelerating in terms of handing out fines for targeting young adults or sending out advertisements to young adults in general. No earlier similar cases are published on the website of the NGA before the TOTO Case[9].

This could have several reasons, such as a larger capacity within the NGA to address these kinds of issues, greater awareness attached to preventing young adults from gambling addiction or simply media attention. However, by handing out almost one fine a month (which could be considered a lot, since the NGA first conducts a research), the NGA is picking up its pace.

For these reasons, online gambling providers should keep in mind that even if they are not located in the Netherlands, they still need a permit if there are factors that show that they do target Dutch consumers. Signals that point to this are if it’s possible to make an online account from the Netherlands, if a Dutch payment system is in place that redirects users to a Dutch bank, whether the Netherlands is excluded in the general terms and conditions, whether the customer service or addiction prevention service is accessible in Dutch and whether the website is blocked for users that state they are from the Netherlands.

It is also important to keep in mind that, even if an online gambling provider has a licence, it needs to adhere to the applicable gambling regulation. At the moment, the NGA is predominately penalizing providers for targeting young adults with their advertisements. It is not sufficient for providers to state that the law is not clear on this point, because there are reasons that point to the opposite and the NGA assigns online gambling providers a high responsibility given the important of preventing addiction in young adults.

As can be seen from the cases that were discussed above, the penalty of not conforming to the gambling legislation can lead to fairly significant fines.

Moreover, as per 1 July 2023 the GRAAPD was changed by the Decree on untargeted advertising of remote games of change. This change of legislation intends to protect vulnerable groups, like young people, from gambling addiction by banning all untargeted advertising for online games of chance, like advertising on radio and television commercials and billboards on the streets. Under strict conditions, it is still possible to advertise on the internet. However, if online gambling providers do not adhere to these rules, they can expect a significant penalty from the NGA.