The Danish Gambling Authority has successfully blocked 49 websites offering illegal gambling services in Denmark. This marks the ninth time the authority has taken such action, bringing the total number of blocked sites to 276 since 2012. The move signals a more aggressive stance against illegal online gambling.
The Scope of the Blockage
The blocked websites offer a range of gambling services, from traditional casino games like roulette and poker to betting platforms. Notably, 13 of the blocked sites are involved in “skin betting,” where virtual items in computer games are used for betting. The Danish Gambling Authority has been actively monitoring and blocking illegal websites since the partial liberalization of the gambling market in 2012. For the first time, the authority plans to block illegal websites twice a year, up from the previous annual frequency. A total of 276 illegal websites have been blocked since 2012.
The authority uses automated searches and follows up on reports from individuals and businesses to identify illegal gambling sites. Once identified, the sites are notified and asked to cease operations. If they fail to comply, the authority takes the matter to court for blocking. The authority collaborates with Danish ISPs to implement the blocking of illegal websites.
Implications for the Industry
The authority aims to protect consumers and ensure a level playing field for licensed operators. The increased frequency of blockages means that illegal sites will have less time to operate in Denmark, reducing their impact on the market. Licensed operators contribute significantly to the Danish economy, with the sector employing thousands and generating substantial tax revenue.
Financial impact of the illegal gambling sites on the Danish economy and on licensed operators
Illegal gambling activities have several types of economic impact.
- Revenue Loss for Licensed Operators. Illegal sites can siphon off potential revenue from licensed operators by offering similar services without the regulatory overhead. This can result in decreased profitability for licensed operators, which in turn can affect their ability to invest in new technologies or marketing.
- Tax Revenue. Illegal gambling sites typically do not pay taxes to the local government, which means lost revenue that could otherwise be used for public services. In a regulated market like Denmark, where the gambling industry was worth approximately DKK 9.8 billion ($1.5 billion) in 2020, even a small percentage of this market shifting to illegal sites could result in significant tax revenue loss.
- Consumer Protection. Illegal sites often do not adhere to the same standards of consumer protection as licensed sites. This can result in financial losses for consumers, which can have a broader economic impact if large numbers of people are affected.
- Regulatory Costs. The government incurs costs in identifying and blocking illegal sites, which is an economic impact in itself, albeit one aimed at long-term market stabilization.
Although there is no specific statistics, the financial impact of illegal gambling sites on both the Danish economy and licensed operators is likely to be negative and could be significant depending on the scale of the illegal operations.
Effectiveness of the Steps Taken by the Danish Government
The effectiveness of such measures can generally be assessed through several lenses:
- Number of Blocked Sites. The Danish Gambling Authority has blocked a total of 276 websites since 2012. The fact that the authority continues to identify and block sites suggests that the problem persists, but it also indicates an active regulatory effort to curb illegal activities.
- Frequency of Blocks. The authority plans to increase the frequency of these blockages from annually to bi-annually. This could imply that the previous annual blocks were effective enough to warrant more frequent interventions, or it could suggest a need for more aggressive action due to the persistence of illegal sites.
- Market Health. The overall health and growth of the licensed gambling market in Denmark could be an indirect indicator of the effectiveness of these blocks. A thriving, regulated market might suggest that consumers are choosing licensed options over illegal ones.
- Consumer Awareness and Complaints. The number of consumer complaints or reports about illegal gambling sites could also serve as an indicator. A decrease in such reports might suggest that the blocks are effective in reducing the visibility and accessibility of illegal sites.
- Legal Consequences. The imposition of fines or other legal consequences on operators of blocked sites could serve as a deterrent, making the illegal operation less appealing due to the risks involved.
The effectiveness of blocking illegal gambling sites in Denmark would likely be a function of multiple factors, including the number of sites blocked, market health, and consumer behavior.
The Future of Legal Actions
The Danish Gambling Authority will continue to monitor the market and is expected to carry out another round of blockages later this year. The ongoing efforts aim to curb illegal gambling and ensure consumer protection. The next round of blockages is expected to be carried out in six months, marking a shift to bi-annual enforcement.