Dutch gambling market channelisation falls faster than expected
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27 Nov 2024 •
Reading time: 3 minutes Analysts at H2 Gambling Capital predict that channelisation – the percentage of players who choose legal gambling sites – will drop below 80% in 2024. By 2029, it could even drop to 72%. For those who think it’s not that bad: these figures are far below the target of 80%, an important target from the Remote Gambling Act.
What’s behind this? Simple: the gambling tax is going up. From January 2025, it will increase from 30.5% to 34.2%, and a year later even to 37.8%. This puts considerable pressure on legal providers, who are finding it increasingly difficult to remain competitive.
Tax increase affects bonuses and players
Let’s be honest: tax increases rarely sound like good news. But for legal gambling companies in the Netherlands, it is a major blow. These companies have to pay gambling tax on their gross gaming result, including the costs for bonuses. This means that a bonus of €100, even if the player loses the entire amount, will cost the provider €37.80 in tax from 2026. Illegal providers, who do not pay tax, do not have this problem. You can imagine that they attract more players as a result.
What does this mean for players? Fewer bonuses. H2 outlines two scenarios: gambling sites reduce their bonuses by 19%, or in a more extreme case by 77%. Both options make legal sites less attractive, which makes players switch to the black market more quickly.
The black market is gaining ground
The tax burden is not the only problem. Illegal gambling sites continue to find ways to remain visible, especially through smart search engine optimization. While the GGL (Gemeinsamen Glücksspielbehörde der Länder) in Germany is achieving successes with measures against illegal providers, the Netherlands seems to be lagging behind.
According to H2 Gambling Capital, the black market is set to grow. By 2027, it could reach a value of €700 million. That’s bad news for the legal sector and for players who want to gamble safely.
Lessons from Denmark
The Netherlands can learn from Denmark, where the gambling tax was increased from 20% to 28% in 2021. The result? Lower gross gaming results and a declining channelization. If the Netherlands follows the same path, H2 predicts that the legal market will be 11% smaller in 2027 than previously thought.
Previously, H2 estimated that the Dutch legal gambling market would grow to €1.913 billion in 2027. Due to the tax increase and stricter regulations, that expectation has been adjusted. The new target is €1.57 billion – a big step back.
What does this mean for players and providers?
Players will notice the consequences immediately: fewer bonuses, stricter regulations and less attractive legal options. For providers, this means shrinking margins and more difficult competition with the black market. The government, which has always emphasized that channeling is crucial, must scratch its head. Are the right choices being made?
The now departed State Secretary Folkert Idsinga previously promised that the effects of the tax increase would be closely monitored. But if channeling does indeed fall below 70%, as H2 predicts, there is a good chance that the objectives of the Remote Gambling Act will not be achieved.