KSA hands record €24.8M fine, can it collect?

• KSA has fined two companies for running websites that were not licensed to operate in the Netherlands
• One of the penalties exceeds €24.8m and is the largest that has ever been handed down to a gambling company
• The regulator insisted that all things considered, these penalties did not properly reflect the severity of the infringements, suggesting the largest penalty should have been €100m instead

The Netherlands Gambling Authority, or Kansspelautoriteit as the regulator is known locally, has issued two fines to gambling operators that have been operating in the country without a license from the officially-recognized watchdog.

One of those fines is particularly hefty and runs a new record for enforcement action, with the KSA issuing a €24,846,000 penalty to Novatech, the company behind Qbet.com and 55bet.com, its largest ever.

The other operator, Fortaprime SRL, was handed down €1,795,000, although the company runs more brands, including amonbet101.com, supraplay.com, amonbet.com, bilucky.com, gxspins.com, kaasino.com, hiddenjack.com, and luckymax7.com, all of which are not licensed by the regulator and may not offer games of chance or other gaming products locally.

Getting off easy - the €24.8m fine could have been worse, says top regulator

The fine issued against Novatech is lenient in comparison to the company’s turnover, according to the KSA Chairman of the Board, Michel Groothuizen. The way these fines are determined is based on what the turnover of a company is, and by that token, Novatech could have been fined up to €100 million.

The total amount is usually predicated on the global turnover of a company, the regulator specified. The fines come at a particularly important period for the Netherlands, with VNLOK, a trade group, issuing a warning to lawmakers to try and factor in the real impact of tax hikes across the board.

In a recent statement, and ahead of today's planned discussion of further tax measures on the gambling industry, the VNLOK argued that tax contributions from the regulated sector have fallen down significantly, and black market operationsare now dominant in the sector.

The enforcement action comes amid a fraught time in regulated gambling

"We determine the fine based on the (estimated) turnover the illegal provider generated from players in the Netherlands. We are limited in this respect by the law, which stipulates that the fine may not exceed 10% of global turnover.

Novatech earned hundreds of millions from its illegal offering, primarily from Dutch players. A fine of 24 million sounds impressive, but without the 10% maximum, the fine would have exceeded 100 million euros; an amount that would be more appropriate for this offense," Groothuizen explained.

The KSA described the basis for its fines issued against the operators and the websites, explaining that the regulator was able to create player accounts, deposit funds, and play games.

There were no technical measures to stop players registering and playing from the Netherlands, nor was there a visible age verification. The regulator has reiterated that the penalties were not proportionate to the turnover generated by the companies, but were still tailored to hit against the operators.

Legal recourse - can the KSA obligate companies to pay up?

Novatech still has legal recourse here. Despite the significant amount, other companies have previously appealed large penalties slapped by the KSA. The argument runs that the KSA goes to extraordinary lengths, including the use of VPN, to prove that a website is not protecting its consumers.

In the case of Novatech, however, the regulator argued that a significant amount of the turnover registered by the company was derived from Dutch customers. Collection would be challenging, however, as neither Novatech nor Fortaprime SRL has assets in the Netherlands.

Mike de Graaff, chief compliance officer at BetComply commented on this inherent difficulty:"While the €24.8 million penalty announced by the Kansspelautoriteit is symbolically significant, the reality is that collecting administrative fines from offshore operators remains extremely challenging. If the operator is genuinely based outside the EU and has no assets within the European enforcement perimeter, the likelihood of actually recovering the full amount is relatively low."

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