DANISH GAMBLING MONOPOLY CHALLENGED

27 June 2008

But by another state-owned enterprise....


Denmark's entrenched gambling monopoly through Danske Spil is not only being challenged by politicians with one eye on the European Commission....it transpired this week that the state-owned broadcaster TV2 has found a loophole in the national gaming laws that allows it to provide cash payouts to winners of its online skill games.

The definition of games of skill is central to the TV2 claim to a slice of the DK 11 billion gambling market in the Nordic country; games of skill rather than chance are not covered by existing gambling laws.

Lars Bernt, a director of TV2 commented to the Copenhagen Post newspaper this week: "We've looked into the legalities of this together with gaming officials. They differentiate between games of chance, which are covered by the monopoly, and games of skill, which are not."

After learning of the loophole, TV2 created a website offering 12 games such as backgammon, golf and pool. Once players create an account and deposit money, they are set to play and win - or lose.

The stakes - for TV2, Danske Spil, and the sports and culture organisations who receive most of the profits from gambling - are high, opines the newspaper. In 2007, Danske Spil's profits amounted to 1.6 billion kroner. Just over 1 million kroner of that was given to national culture and sports organisations. TV2, however, will be permitted to hold any profits it makes.

The state owns 80 percent of the shares in Danske Spil. The rest are held by two national sports organisations.

Tax authorities recognised that there was no specific definition of a game of chance, beyond whether payoffs were 'primarily determined by chance', but said that games were judged on a case by case basis. Tax Minister Kristian Jensen said: "TV2 isn't providing gambling. It is a competition, and that is regulated by gaming laws."

TV2 expects that the discovery of the loophole will result in a flood of new game providers based in Denmark. One of those companies could be Ladbrokes, which has lost court cases against the Danish state seeking to liberalise Danish gambling laws to bring the country into compliance with EU requirements.

The European Commission is currently involved in legal action against the Danish monopoly, which it says violates common market regulations.

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