European Commission approves Danish online gaming plan

The European Commission has approved the Danish plan for online gaming regulation. This is so, even though the plan would give online operators a lower tax rate than traditional casino operators, which could be seen as an unfair advantage.

Under the new Danish Gaming Duties Act, online gaming sites would have to pay 20 percent of gross revenue in taxes, as opposed to the 75% paid by some traditional, land based casinos. Some existing gaming operators claim that this constitutes state aid, since the substantially lower tax rates would give online gambling sites a distinct competitive advantage over land based operators.

The European Commission investigated the claims, but ended up ruling in favor of the Danish legislation. While the EC agreed that the difference in taxation would indeed give online operators an advantage over others, the act was approved because of other benefits brought about by the tax cut. As the commission stated in a press release: "After an in-depth investigation, the European Commission has concluded that a law liberalising gambling in Denmark and at the same time creating lower taxes for online casinos than for land-based ones is in line with EU state aid rules. This is because the positive effects of the liberalisation of the sector outweigh potential distortions of competition brought about by the measure."

The Remote Gambling Association, which represents the operators of online gaming sites and casinos, was excited by the ruling. The association says that online gaming sites operate in a much more competitive environment, because they compete with other online casinos around the world instead of being limited to a geographical area. Therefore, the market requires lower tax rates than traditional gaming venues.