KSA: Dutch KOA market has reached maturity

René Jansen, the outgoing Chairman of Kansspelautoriteit (KSA), the Gambling Authority of the Netherlands, has commented on the changing makeup and dynamics of Dutch gambling.

As detailed by Jansen in his latest KSA blog post, “changes in permits” reflect the new landscape of Dutch gambling and its array of businesses competing for market share.

In 2021, prior to the launch of the KOA marketplace on 1 October, which regulates online gambling, KSA teams were “inundated with applications”, with permit requests continuing until “just before the expiry of the ‘leniency scheme’ a year later”.

The market’s launch period saw approximately one-third of applications being granted a KOA permit by KSA teams. However, as anticipated, in 2023 KSA registered a sharp decline in new applicants, with the trend expected to continue into 2024.

Observing the changing dynamics of the KOA marketplace, Jansen detailed two major changes requested by incumbents.

Existing licence holders have requested to expand the game range allowed by the KOA market to include additional categories of online gambling under their current licence.

The other change is led by mergers and acquisitions (M&A), as smaller licensees are merging to strengthen their position, while larger ones are acquiring smaller ones. Investment companies and large foreign providers without a KOA licence are also acquiring smaller licensed providers.

Jansen detailed: “In terms of takeovers, we see from questions that are asked that small licensees are joining forces and moving forward together to strengthen their position and that larger licensees are taking over smaller licensees to get ahead of the competition.”

Additionally, foreign operators who were previously unsuccessful in obtaining KOA permits are now entering the market by acquiring smaller licensed providers, especially those with expertise in meeting specific regulatory requirements like the Control Database (CDB).

From a competition perspective, the shift from businesses seeking permits to those aiming to gain market share signifies that the KOA marketplace is reaching maturity.

“This development, from mainly requests to mainly changes, shows that the market is starting to reach a certain degree of maturity,” said Jansen. “It is no longer so much about conquering a position but mainly about strengthening the competitive position and increasing market share.”

Competing within the changed dynamics of Dutch gambling, Jansen reiterated his warning that licensed operators cannot neglect their duty of care in protecting customers.

He advised: “That is a logical development in a relatively young market, but one that we are closely monitoring. After all, a major competitive push can also cause providers to pay less attention to crucial aspects such as duty of care. However, that attention should never, ever slacken.”

Jansen will end his six-year tenure as Chairman of KSA on 1 July 2024. “I therefore propose that providers include in their good intentions for 2024 that, when they want to work on their growth, they do not lose sight of the commitment to safe playing,” he said.

Dutch gambling awaits further ministerial changes as a new coalition government led by the Freedom Party, headed by Geert Wilders, who won the most seats in the General Election on 22 November, has yet to be formed.

Prior to the General Election, the Christian Democratic Appeal (CDA) endorsed a private members bill to terminate the KOA Act and launch a new regulatory framework for online gambling.

Meanwhile the Ministry of Justice continues to review the recommendations of the National Rapporteur on Addictions (NRV), which provided 22 recommendations to be adopted by KOA Act including an overarching playing limit system to be imposed on licensed online operators.