Gaming in Holland: “Black market takes 25% of Dutch player share”

Uncertainty and hope – two very different feelings present at the Gaming in Holland (GiH) conference, as the Dutch sector congregated to conjure an action plan in the face of political stillness.

Now that the Dutch government has officially collapsed, regional stakeholders are left with nothing but worry about the outcome of the political stalemate, which could prove either a blessing or a curse when the results of the next October elections are announced.

But every crisis inevitably leads to a sense of unity and camaraderie, which SBC News witnessed first-hand when it touched ground at GiH – courtesy of its founder, Willem van Oort.

In our multi-part coverage of the event, we will lay out what the Dutch sector collectively painted as the main challenges it is currently facing – starting off with the black market. 

The enemy of my enemy.. 

In a liberalised market such as the Netherlands, licence holders try to outdo their competitors as they chase leverage in the percentage of the market share.

However, when you have a significant spill of customers into the black market, it soon becomes apparent that the enemy is not the one who plays by the same rules as you, but the far greater danger of offshore operators – a threat to the sector as a whole.

“The Netherlands Gambling Authority currently estimates that only half of total online GGR is being realised in the legal market,” said van Oort in his opening remarks at the conference. 

“In other words, of every Euro being spent on online gambling in the Netherlands, approximately 50 cents ended up in the pockets of black market operators.”

It was further called to attention that Illegal gambling operators have a successful network of partnerships with leading media companies. 

Although not naming them, van Oort quoted what he called a “high level executive” in the offshore gambling space as saying: “We may be illegal, but our main customer acquisition partners sure aren’t.”

Lastly, van Oort’s speech highlighted that the integration of crypto as a viable payments offering by offshore operators serves as a potent tool not only to drastically increase their profits, but to also aggressively target Dutch consumers.

For instance, some crypto casinos can offer their affiliates up to €2500 for a single Dutch player. “If €2500 is a reasonable cost per acquisition, just imagine the profits,” van Oort concluded.

A heavy hitter chimes in

Next on stage to discuss the black market was Arjan Blok, CEO of the Nederlandse Loterij – the Dutch state lottery, which is no stranger to being at the heart of the most relevant discussions on gambling policies in the Netherlands.

“Channelisation, and therefore player protection, is under pressure,” he opened up with.

“Not even four years after the launch of the regulated online company market, €1.3bn is now floating abroad. As a consequence, we not only face very unfair competition, but most importantly – players receive no protection.”

To make the issue of player channelisation easier to digest, Blok provided some proprietary analysis from the Dutch lottery on illegal play participation rates.

“We estimate that more than 200,000 players are currently engaging with illegal operators.” 

In its Spring 2024 report, Dutch regulator Kansspelautoriteit (KSA) revealed that around 795,000 players were active with licensed providers in the first half of last year.

When factoring in these numbers, the Dutch lottery’s estimates represent around 25% of all legal online gambling –  leading to a significant cause for concern about undermining the regulated online market’s growth.

Blok further added that his lottery is now closely working with the KSA to devise a new methodology for calculating player channelisation rates, which he expects to see published for the first time in the regulator’s monitoring report around September or October.

“The door to the illegal gambling market is wide open. The gambling authority is doing exactly what it can to close and lock it, and we are happy to assist.”

Nederlandse Loterij is engaging directly with the efforts to lessen the impact of the black market, evidenced in its recent civil lawsuit against Lalabet from March this year, which Blok also commented on.

“We’re targeting not just the company. We’re also targeting the shareholders and the board of Directors. Our main aim is to protect our social responsibility, and take this black market website offline – permanently”.