Edition 8 March 2019, by Lisette Bosman
Government budget for 2020 contains tax income from remote gambling
Two (online) gambling bills have recently been passed by the Dutch Senate (Eerste Kamer). It was unlikely that the Senate would refuse to accept these bills – it usually goes along with decisions in the House of Representatives (Tweede Kamer). The government budget for 2020 includes tax revenue from remote gambling, which made it even more likely that the bills would be passed by the Senate. Legal online gambling will therefore be possible in the Netherlands from mid-2020.
Online gambling in government budget (2020)
The government’s budget (2020) contains information about the budgetary consequences of legalizing online gambling: on sports betting alone, the expected tax revenue is six million euro for 2020. For 2021, the government expects to receive twelve million euros a year in tax revenue. Tax income from other online gambling forms (card games and roulette for example) are not even included in these amounts yet. If the Senate had not passed the bills, the government would have missed out on this predicted tax revenue, which would have been very problematic for the ministry of Finance. A rollback would mean the start of a time-consuming, labor-intensive process, which would have included dreaded budget cuts as well. This makes it extra significant that tax revenue from online gambling was already included in the government’s budget planning.
Legalizing online games of chance
The Dutch government started the process of legalizing online gambling back in 2016, when a bill was passed by the House of Representatives. The bill breaches the monopoly held by gambling providers located in actual, land-based buildings, such as casinos. Thus, it ends the government’s monopoly on offering gambling, since the state owned these casinos. The bill was finally passed in the Senate on 19 February.
Advantages of the new gambling law
Modernizing the current, very outdated gambling law offers the government lots of advantages: extra tax revenue, more effective prevention of addiction and ensuring that only fair and licensed games can be offered. Online gambling is a growing market in the Netherlands: from 1,5 million players in 2016 to 1,8 million players in 2018. Each year, the government therefore missed out on up to 175 million euro in tax revenue derived from online gambling.
The new law will come into force on 1 July 2020. The law will commence at a time decided by royal decree. Afterwards, the Dutch Gaming Authority (Kansspelautoriteit, KSA) will still need at least six more months to issue the necessary permits to online casino owners. After this, online gambling will be legal in the Netherlands.
The bill shows that the tax liability for both land-based and remote gambling providers will shift from player to gaming provider. Gaming providers will pay 29% in tax over the ‘gross game result’ (the difference between deposits and paid-out prizes). Currently it’s the player who is taxable for gambling forms like sports betting. However, players were never taxed on prizes lower than 449 euro. By taxing the gaming providers instead of the players, a much bigger fish is targeted: tax revenue is expected to increase significantly under the new bill. The new gambling law will treat all types of online gambling (sports betting, poker, casino games) equally: the same 29% tax rate applies to all forms of online gambling. This way, a levelled playing field is created.