Denmark to allow offshore servers in “special cases”, regulator says

The revised clause states: “In special cases, the Danish Gambling Authority may allow part of the licensee’s gambling system to be located in a country that is not covered by a bilateral supervision agreement in accordance with subsection 2 if supervision by the Danish Gambling Authority of this part of the gambling system can be conducted in a satisfactory manner.”

Kristian Wind, senior technical adviser at the DGA, told eGaming Review that as the regulator’s current State aid case – currently being considered by the European Commission – had delayed the process of legalising online gambling the organisation had undergone a review examining whether or not it should allow operators’ servers to be located outside of its borders.

The official list of countries and jurisdictions to which this would apply has yet to be made official, he said explaining that the DGA is currently in discussions with various national regulators, but added this could include territories “where gaming companies already operate”.

“We played out various scenarios and looked at where various companies were situated today and what effect this would have on them and decided that some companies would not be able to operate in Denmark if we only allowed their systems to be located within Denmark,” Wind said.

He added that he hoped the European Commission would come back to the DGA before its annual August month-long break in order for the Authority to complete its review process. Only then, if successful, could regulation proceed and the market open up for business to foreign operators. “Until then we have no target date,” Wind added.

The EC is currently considering complaints by the Danish slot machine association and one of the country’s six land-based casinos – the Royal Casino in Aarhus – over proposed tax rates. The other five are said to not officially support the complaint. Both the slot machine association and the Royal argue the proposed online gaming tax rate of 20% on gross win compared to the 41% they pay amounts to unfair competition.

In December last year the Danish taxation minister told operators the government was aiming for the law to come into force “before next summer” instead of the originally planned date of 1 January, and that he was confident the complaint could be solved quickly as the tax rates were in accordance with EU law.

April Carr, senior associate in the EU & Competition Group at lawyers Olswang, said at the time: “It is difficult to estimate how long the Commission will take to deal with this complaint because there is no applicable deadline. It could well take a matter of months if the Commission takes the allegations seriously.”

While EU Member States have the discretion to implement taxes and tax rates within their territories, these are subject to “State aid” rules, which can apply if taxation levels are seen to give preferential treatment to certain commercial competitors.

In late January this year the Danish government reassured operators the complaint over proposed egaming tax rates would be resolved by June, and that the market would be open by the autumn, however this now looks more likely to be the end of this year or the beginning of 2012.