Gambling in Denmark: Regulatory Landscape, Recent Market Performance and Future Trends

Gambling in DenmarkSince its inception in 1948, the state-owned company Danske Spil held a monopoly over the provision of gambling services throughout Denmark. The situation in Denmark was quite similar to the gambling regulatory landscape in the Netherlands. Calls from the European Union to end gambling monopoly and allow foreign operators to enter the Danish market resulted in a regulatory shakeup.

On 1st January 2012, the gambling industry was partially liberalized under the Gambling Act drafted two years earlier. The Danish Gambling Authority, formed in 2000, was tasked with establishing the licensing procedure and awarding licenses to offshore operators. Only one year later, 25 offshore operators were licensed to operate on Danish soil.

Under the Danish Gaming Act, they had to pay 20% of their gross gaming revenue (GGR). In addition, the gambling regulator introduced measures to block unlicensed foreign sites that were bypassing the law for years, accepting bets from Danish casino fans. In 2012, the Danish government reported having blacklisted 57 gambling sites.

Experts claim that the government did the right thing to regulate the industry. In this way, it not only prevents unlicensed operators from draining money away from the country, but it also better protects players from rogue practices. For Danes, the liberalization of the market means more online casinos to choose from and a greater gambling diversity.

Current Gambling Regulatory Framework in Denmark

Gambling Regulatory FrameworkThe main piece of legislation regulating the gambling industry is the Danish Gaming Act. Since 2012, foreign gambling businesses can service Danes only if they hold licenses from the Danish Gambling Authority. In 2018, the Gaming Act was amended to liberalize betting on horse, dog, and pigeon racing as well as online bingo.

At the moment, the Danish Gambling Authority, Spillemyndigheden, oversees the provision of gambling services across the country. Among its duties are ensuring the provision of gambling services in a socially responsible and fair manner as well as preventing vulnerable individuals and minors from gambling harm.

Legal Forms of GamblingSimilar to the Swedish market, the Danish gambling market is only partially liberalized. The Danish state-owned entity Danske Spil still keeps a monopoly on the operation of lotteries. If lotto games are not up to your alley, you should know that betting on sports and horse racing is legal in Denmark. As for online bingo, casino, and poker, these activities are also allowed within the territory of Denmark.

Games that do not require payments or stakes, also known as social games do not fall under the Danish Gaming Act and can be provided without a license. The same is valid for skill games, even though these fall under the Danish Gaming Act.

As far as land-based casinos are concerned, Danes are allowed to play at licensed gambling establishments. Here it is crucial to mention that there is a cap on the number of land-based casino licenses. In 2020, Denmark had 8 active licenses for brick-and-mortar casinos.

The presence of physical gaming machines in arcades and restaurants is also legal. However, gaming machines have to meet specific technical requirements and be licensed.

Types of Gambling Licenses in Denmark

Types of Gambling Licenses in DenmarkUnder the Danish Gaming Act, the provision of games that involves a stake from the player’s side requires a license. Generally speaking, Danish licenses fall into two main categories – a license for providing casino games and a license for sports betting.

The license for casino operations falls into two categories – online and land-based gambling licenses. The online casino license can be a betting license and a casino license. It is crucial to mention that the betting license covers the provision of online and land-based betting services.

As far as land-based casino operations are concerned, there are two types of licenses, and more precisely a casino license and a limited license. The latter allows licensees to place up to three gaming machines in arcades or restaurants. Here, we have to mention that while there is no limitation on the number of licenses covering gaming machines and online casinos, there is a restriction on the number of licenses for land-based casinos. In 2020, Denmark had 8 active licenses for land-based casinos.

Casino operators can also apply for a revenue-restricted license. Then, the GGR (the amount wagered minus the winnings returned to the players) should not exceed DKK1 million. Unlike the regular licenses that are valid for up to five years, the revenue-restricted licenses are valid for no more than one year.

Restricted-revenue license holders for online casinos are allowed to offer guessing competitions through the Internet, telephone, radio, and TV. Such games have to be based on both luck and skills, require a stake, and provide an opportunity to win prizes. Since such guessing games are provided only through various telecommunication systems, it only makes sense that people cannot obtain a license to offer guessing games at land-based gambling establishments.

Gambling Taxes in Denmark

Gambling TaxesAny person who wishes to operate on the Danish market has to apply for a gambling license and pay a fee. The application fee for a betting license or an online casino license is DKK285,800, while the fee for a combined license is DKK400,100. If someone applies for a revenue-restricted license, the fee is DKK57,200.

Another option is to apply for a license to place gambling machines in gambling arcades licensed to offer alcohol. By law, licensees can place up to three gambling machines in restaurants and arcades with an alcohol license. The application fee is DKK655 per gaming machine. It is crucial to mention that no other gambling activity except for gambling machines is allowed to occur in premises with an alcohol license.

In addition, online casino operators have to pay a monthly duty that was recently raised from 20% to 28% of the GGR. The duty that land-based casino operators must pay is 45% of the GGR. If the GGR is over DKK4,179,200, a 30% duty applies on the sum exceeding that threshold limit.

The monthly duty for operating a physical gaming machine in restaurants or gaming arcades is 41% of the GGR. A 30% duty applies on sums exceeding DKK262,200 GGR. Furthermore, operators of up to 50 gaming machines have to pay DKK3,100 per machine. If the number of gaming machines one operates is over 50, then the tax is DKK1,600 per gaming machine.

All licensed operators have to pay an annual fee that varies from DKK57,200 to DKK5,143,500. Applicants have to know that if the Danish Gambling Authority grants them a license, they have one month to pay this annual fee. The annual fee for operating gaming machines is DKK655 per machine. Licensees that offer horse racing betting are required to pay 8% of the GGR of betting on races that took place on Danish horse racing tracks. The fee is calculated on a three-month basis.

Advertising Rules on Gambling

Advertising Rules on GamblingGambling businesses rely heavily on marketing to promote their services. In recent years, the commercial gambling market has witnessed significant growth in gambling advertising. This trend has caused a political reaction in many European countries. Hence, many jurisdictions introduced strict advertising restrictions to prevent vulnerable people and minors from excessive exposure to gambling advertising.

In Denmark, gambling advertising is regulated by the Gambling Act, the Marketing Practices Act, and the Radio and Television Broadcasting Act. The Gambling Authority is tasked with monitoring whether its licensees comply with the regulatory guidelines in the gambling law. The Consumer Ombudsman is responsible for keeping an eye on compliance with media law, while the Danish Ministry of Culture is the authority responsible for monitoring whether the licensees adhere to the radio and TV advertising law.

Compared to some European countries, we have to admit that Denmark’s advertising framework is quite liberal. Under the Gambling Act, all gambling commercials have to clearly display the winning chances. In addition, such ads should not appeal to people under 18 years old. What is more, gambling ads should not use prominent celebrities and athletes.

Casino games have to be presented as a source of entertainment rather than a way to achieving financial success. Bonuses can be advertised only if their terms and conditions are explained in an unambiguous and comprehensive manner.

In July 2019, a voluntarily advertising Code of Conduct was introduced to limit the risk of gambling problems among Danes. Some of its key provisions aim at reducing pre-watershed TV gambling commercials. Under the Code of Conduct, gambling commercials should clearly display the legal gambling age that is 18 years old, include responsible gambling messages, and carry problem gambling helpline details.

Interestingly, the Code of Conduct calls for the introduction of time and spend limit messages in gambling advertisements. It also suggests the establishment of an industry body to deal with customer complaints. Currently, players who want to file a complaint against a casino operator have to send their complaint to the gambling operator. In other words, the Danish Gambling Authority is not authorized to settle disputes between players and operators.

Responsible Gambling and the ROFUS Register

Responsible Gambling and the ROFUS RegisterIn January 2020, the Danish Gambling Authority, Spillemyndigheden, introduced a new guide on responsible gambling as an extension to the Danish Gaming Act. It states that the operators are responsible for protecting problem gamblers. They have to train their customer support representatives to identify problem gamblers and provide them with a professional piece of advice.

All web-based casinos have to carry an 18+ sign on their homepages and provide their visitors with access to a self-test to check for key indicators for gambling addiction. The guide elaborates that the operators are responsible for conducting thorough ID checks to ensure that new registrants are of legal gambling age. Operators are required to publish detailed information about all state-supported organizations specialized in helping people who are struggling with gambling problems.

What is more, gambling sites have to feature a clock showing how long the account holder has been playing. It should be displayed on the screen at all times even when the player scrolls down the site. From January 2020, the Danish Gambling Authority implemented mandatory deposit limits that should be set by everyone who wishes to gamble. The guide also states that players have to be free to select whatever deposit limits they are comfortable with.

Licensed gambling operators are also obliged to provide links to the Danish self-exclusion database – ROFUS. The Danish Gaming Authority is responsible for maintaining the database that can be found on the official website of the gambling regulator. Registration in ROFUS means that you voluntarily exclude yourself from being able to play casino games at land-based and online casinos licensed in Denmark. Individuals who register with ROFUS also give their consent to enter the “No thank you to marketing” agreement.

Upon signing up with ROFUS, casino enthusiasts have three options – to take a break from gambling of up to 24 hours, to exclude themselves for a period of up to 6 months, or to request a permanent exclusion. It is not possible to remove a permanent exclusion at least one year after signing up with ROFUS. In addition, permanently excluded players who wish to have the exclusion removed have to confirm their request 7 days after submitting it.

Growth of the Danish Gambling Industry after the Market Liberalization (2012-2019)

Growth of the Danish Gambling IndustrySince its liberalization in 2012, the gambling industry in Denmark witnessed a slow but continuous year-on-year growth. In 2012, the country’s GGR reached DKK4.32 billion. The year after, the figures show that the country generated a GGR of DKK4.5 billion. In 2014, the GGR kept on climbing to reach DKK4.86 billion.

In 2015, the GGR rose to DKK5.32 billion. The GGR in Denmark was DKK5.73 billion in 2016. The following year, Denmark enjoyed a GGR of DKK6.12 billion. In 2018 and 2019, the GGR amounted to DKK6.45 billion and DKK6.57 billion, respectively.

We have to mention that the gross gambling revenue from online casino operations also kept on rising during the period into consideration. In 2012, the online facet of the industry generated a GGR of DKK890 million. In 2019, online gambling accounted for DKK2.33 of GGR. In the table below, we would like to visually present the increase in online casino revenue from 2012 to 2019.

2012 DKK890 million
2013 DKK980 million
2014 DKK1.06 billion
2015 DKK1.31 billion
2016 DKK1.56 billion
2017 DKK1.81 billion
2018 DKK2.16 billion
2019 DKK2.33 billion
Source www.statista.com

The Danish Gambling Authority reported that the growth of the Danish gambling market is significantly propelled by the proliferating online gambling industry. In addition, the gambling regulator announced that a growing number of Danish players use their mobile devices to gamble. Industry insiders believe that if mobile betting keeps on growing at such a rapid pace across the country, it will soon be the primary source of total gaming revenue.

2020 Sees a Decline in Gambling Revenue

2020 Sees a Decline in Gambling RevenueIn 2020, the Danish Gambling Authority revealed that the gambling market experienced a year-on-year revenue decline of 8.7% for the first time since the market liberalization. The regulator announced that Danes spent approximately DKK6 billion on gambling activities in 2020, or 10% less compared to 2019. Admittedly, Denmark was not the only country that reported a decrease in GGR at that time. The reason for this was the Covid-19 pandemic that affected the economies of many jurisdictions.

To prevent the spread of the disease, authorities introduced tight lockdown measures. Highly-attended venues such as restaurants, pubs, bars, and of course, casinos had to cease operations for unlimited time. Major sports events were canceled and postponed, leaving punters with almost nothing to bet on. As a result, revenue in almost all gambling sectors significantly shrank. The only gambling sector that reported a revenue increase amid the coronavirus outbreak was online casino gambling.

In 2020, online casino gambling accounted for the lion’s share of the revenue. The figures show that the GGR from online casino operations reached DKK2.45 billion in 2020, reflecting a 4.5% increase from the previous year’s yield. The Danish gambling regulator explained that many casino enthusiasts switched to online gambling amid the Covid-19 lockdown as land-based gambling facilities remained closed for a long. The authority further explained that the increase in revenue from online casino gambling was lower than the average annual increase of approximately 13%.

Online Casino Market Reported Record Revenue Growth in Q1 2021

Online Casino Market Reported Record Revenue GrowthThe situation drastically changed in Q1 2021, when the online gambling market witnessed a record-high increase of 28.7% compared to the same period in 2020. To be more accurate, the revenue generated from online gambling operations reached DKK717 million. Experts claim that the coronavirus lockdown might be not the only reason that caused a substantial jump in the revenue from online gambling activities.

A curious fact is that in Q1 2021, the number of Danes who registered with ROFUS kept on increasing. By the end of Q1, a total of 27,962 individuals decided to self-exclude themselves. Out of this number, 18,050 decided to permanently exclude themselves from gambling, while 9,912 excluded themselves for a limited time. Furthermore, Denmark’s problem gambling helpline received a total of 1,305 calls in Q1 of 2021.

Although the online gambling segment registered unprecedented growth, the total GGR kept on dropping down. According to information released by the Danish Gambling Authority, the gambling revenue for the first three months of the year plummeted to DKK1.31 billion, representing a 15.3% year-on-year decline. The fact that land-based gambling premises remained closed for the most part of the first three months of the year is the reason for the near-zero GGR generated from land-based casinos and gaming machines.

Which Games Generate the Most Revenue

Which Games Generate the Most RevenueAs we already mentioned above, the iGaming industry in Denmark experienced a boom amid the Covid-19 lockdown. Based on statistics from 2020, slot machines accounted for up to 74.41% of the total online gambling revenue in Denmark. In fact, this is not a bolt from the blue having in mind the affection of casino fans from all over the world to online slots. These games require no special skills, the stakes are reasonable, and the rules are easy to grasp.

The other most popular gambling product according to its revenue share is roulette. The game was reported to have generated 9.47% of the online casino revenue. Blackjack is in third place based on its contribution to the total online casino revenue, accounting for 6.8%. The GGR generated from other online casino games such as baccarat and poker is 3.7%.

Will Tax Hikes Affect the Future Performance of the Danish Industry

Tax HikesIn 2019, Danish lawmakers agreed to introduce a 40% online gambling tax hike as part of its 2020 State Budget. From 1st January 2021, licensed online casino operators have to pay 28% of gross gaming revenue instead of 20% of GGR. Legislators hope that the new tax rate will raise DKK150 million in tax revenue and guarantee a fairer tax regime for both online and land-based casino operators.

Industry insiders believe that the tax increase will certainly boost the revenue, but it will come with some side effects. A recent analysis from H2 Gambling Capital found out that the new tax regime will result in lowering the channelization level from 88% to 76% by 2024. In other words, the online gambling tax hike will drive a lot of players to the unlicensed gambling market.

In 2020, it was reported that 16% of Denmark’s gambling activity occurred at offshore websites. Hence, licensed casino operators are likely to experience a significant revenue decline by approximately 25%, or DKK4.5 billion. This, on the other hand, may result in many licensed operators rushing through the door. The experts from H2 Gambling Capital suggest that the optimal tax increase would be 22% instead of 28%.

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