Mr. Jesper Madsen
Managing Counsel

Jesper Madsen assists clients with issues within all aspects of IP law, marketing law, media and entertainment and various niche areas. Among other things, he has extensive experience with advising manufacturers and designers on the various rights existing in relation to industrial design. IP rights on the Internet and to software are also areas in which Jesper has experience.

Within media and entertainment, Jesper advises various Danish and international gaming operators, networks and other actors on the Danish gaming legislation and other rules applicable on the Danish market. Jesper helps providers and developers of ordinary computer and console games as well as game apps navigate Danish law. He has experience with advising on television rights and various rights in the world of sports.

Jesper solves many different tasks, among others, involving advice on applicable law, risk assessments, dispute resolution and the drafting of various types of agreements and standard terms and conditions.

Ms. Ida Wiborg
Assistant Attorney

Ida Wiborg assists Danish and international clients with advice within all aspects of IP law, marketing law and media and entertainment.

Within media and entertainment, Ida assists in advising, among others, various Danish and international gaming operators and other actors on the Danish gaming legislation and other rules applicable for such operators and actors on the Danish market. This includes assistance with obtaining Danish gaming licenses, drafting agreements and terms and conditions, advice on marketing of gaming on the Danish market and handling disputes.

GAMBLING LAW IN DENMARK: TENDENCIES AND DEVELOPMENTS

 Gambling in Denmark

In 2012, the Danish gambling market was partly liberalized. This entailed that it became possible for Danish and foreign gambling operators to offer a number of games in Denmark, which until then had only been permitted for the state-owned operator Danske Spil to offer.

The liberalization introduced a license regime. To market gambling towards the Danish market, a Danish gambling license is required. It is not prohibited per se for unlicensed operators to accept stakes from Danish players. However, without a license, they are not allowed to market their games towards Denmark.

A game marketed towards Denmark falls within the scope of the Danish gambling legislation and requires a license, if the following three criteria are met: (i) a player shall pay a stake to participate, (ii) the outcome of the game relies, in whole or in part, on an element of chance, and (iii) the player will have the possibility to win a prize that has a monetary value.

There are different licenses depending on what games are to be offered. For private commercial gambling operators, the primarily relevant licenses are the betting license and online casino license.

To obtain a gambling license, an operator must file an application with the Danish Gambling Authority and fulfil a series of requirements set out in the gambling legislation. A licensed operator is permitted to use third party suppliers, including suppliers of games. Until now it has in this case been the sole responsibility of the operator that its suppliers’ deliveries were certified in accordance with the Danish gambling legislation and otherwise compliant herewith.

In this article, we will look at three recent political and regulatory developments, which either already have or in the future likely will affect gambling operators’ and other relevant actors’ activities on the Danish gambling market or in the periphery hereof.

B2B-licenses

As mentioned, the situation has so far been that licensed gambling operators were permitted to use suppliers, while taking the full responsibility for the suppliers’ deliveries’ certification and compliance with the gambling legislation.

This is however about to change. In May 2024, the Danish parliament adopted a bill that will introduce game supplier-licenses (B2B-licenses) in Denmark. The new rules enter into force on 1 July 2024, however the inherent obligation for gambling operators to in the future only use suppliers, which hold a Danish B2B-license, does not have effect until 1 January 2025. This will give the operators a chance to ensure compliance with the legislation, and they will not have to immediately cease use of their current suppliers. This also entails that although the application process for B2B-licenses is intended to open immediately, issued licenses will not have effect until 1 January 2025.

The requirement for a B2B-license will apply to legal entities that supply gambling operators, which hold Danish gambling licenses, with online casino games and/or betting. With respect to betting, it is a condition that the supplier handles the execution and settlement of the bets for the operators. Otherwise, there is no requirement for a B2B-license in this case. Licensed gambling operators that provide their own online casino games or execute and settle bets themselves, will not also be required to obtain a B2B-license.

Only legal entities, e.g., companies, can apply for a B2B-license. If the supplier is established outside the EEA, a representative within Denmark shall be appointed. This representative must be approved by the Danish Gambling Authority.

A supplier shall in connection with an application for a B2B-license pay an application fee of DKK 62,100 (≈ EUR 8,325). An issued license will be valid for five years, after which it must be renewed. During the term of the license, the supplier shall pay an annual fee of DKK 41,400 (≈ EUR 5,550)

The supplier shall adhere to criteria similar to those that gambling operators applying for a Danish gambling license must fulfil. Among others, this entails that the supplier must not (i) have filed for restructuring, bankruptcy, or debt relief or be under restructuring, bankruptcy, or debt relief; (ii) have been convicted of a criminal offence that gives reason to believe that there is a clear risk of abuse of the access to work with gambling; and (iii) have unpaid, outstanding debt to the public sector. Further, the supplier shall ensure that its deliveries to licensed operators on the Danish market have been certified in accordance with the Danish Gambling Authority’s certification programme.

Pursuant to the bill introducing the new B2B-licenses, the purpose hereof is administrative. It will make the Danish Gambling Authority’ supervision of the gambling market easier, as it will be able to contact and perform inspection on suppliers directly, instead of having to reach out to licensed operators and asked them to obtain necessary information and documentation from their suppliers.

The new rules will also simplify things for licensed operators. Going forward, their administrative burden with ensuring certification of suppliers’ deliveries will be a lot easier, as they will just have to control that their relevant suppliers hold B2B-licenses and then register with the Danish Gambling Authority that they are using these suppliers.

Supplying online casino games or betting to gambling operators on the Danish market after 1. January 2025 without a B2B-license can be sanctioned by fines. The same applies to gambling operators on the Danish market that are caught offering online casino games or betting from suppliers that do not hold such licenses.

As the application process with the Danish Gambling Authorities will likely take months, suppliers of online casino games or betting to gambling operators on the Danish market, should already now begin to examine the new rules and the process for getting a license.

Skin betting and loot boxes

The Danish Gambling Authority has further increased its focus on the use of skin betting and loot boxes in relation to video games.

It is the Danish Gambling Authority’s assessment that skin betting and loot boxes in many cases fall within the definition of gambling in the Danish gambling legislation, i.e. fulfils the three criteria as set out above, and therefore may not be marketed towards Denmark without a relevant Danish gambling license. Further, the Danish Gambling Authority considers it to be an issue that skin betting and loot boxes are often contained in games, which are, among others, targeted towards people under the age of 18.

Skin betting concerns skins, which are virtual items that can be earned or won in video games, e.g., new clothing, accessories or weapons for one’s character in the game. In some video games it is possible to utilize such skins outside the video game and use them on specific online gambling sites as stakes in games. In some instances, skins can also serve as prizes on such websites.

Where skins can be transferred between players, they can also be sold, which gives them a monetary value. Games of chance that involve the use of skins as stakes and prize can therefore in the Danish Gambling Authority’s assessment fall within the definition of gambling in the Danish gambling legislation. This entails that such games may not be offered without a gambling license. The Danish Gambling Authority’s standpoint has been confirmed by Danish district courts in at least two cases, where the authority has succeeded in getting skin betting websites ISP-blocked in Denmark.

The situation is similar with respect to loot boxes, but here the ‘gambling’ element takes place within the video game. In some video games, it is possible to earn or purchase loot boxes. A player does not know the content of an obtained loot box beforehand. This is revealed after it has been earned or purchased and is based on randomness. In these boxes there are virtual items, e.g., skins.

Where a loot box is purchased for something of a monetary value, e.g., real money, virtual currency, or skins which can be transferred between players, and the items that can be found in the loot box are of monetary value, e.g., virtual currency, or skins which can be transferred between players, it is the Danish Gambling Authority’s assessment that the loot boxes may fall within the definition of gambling and thus require a gambling license.

When it comes to skin betting, the illicit gambling is offered by actual gambling operators. The Danish Gambling Authority does not preclude that such operators would be able to obtain a Danish gambling license and offer the skin betting games legally in Denmark. The situation is more difficult with respect to loot boxes, as this is often an integrated part of the video game. Thus, it will in this case be the publisher of the video game itself that will be considered to offer gambling illegally in Denmark. Ceasing these activities may limit the functionality of the video game, while it on the other hand is likely not possible for the publisher to obtain a gambling license that will make it possible to offer the loot boxes legally on the Danish market. Therefore, it might considerably impact a publisher’s possibilities to market its video game in Denmark, should loot boxes in the video game be found to be illegal gambling under Danish law.

There is currently focus on skin betting and loot boxes in many other jurisdictions than Denmark. For instance, in the spring last year, an Austrian court found that the video game publisher Electronic Arts had acted in violation of the Austrian gambling legislation by offering FIFA Ultimate Team packs, which is a type of loot boxes, in its popular FIFA video game series.

The Danish Gambling Authority is therefore within the area also cooperating with authorities in other countries, including for the purpose of establishing exactly when skin betting and loot boxes can be considered to constitute gambling.

There is in our opinion not a doubt that the Danish Gambling Authority will maintain its focus on skin betting and loot boxes in the coming years; in particular because skin betting and loot boxes are types of potential gambling which may attract children and young people.

We would expect that the Danish Gambling Authority together with its international counterparts in the coming years will put an effort into getting more clarification on when skin betting and loot boxes constitute gambling. This may also be a benefit to – among others – video games publishers, which will then have a better chance of navigating the legal landscape and avoid being considered to offer illegal gambling (to minors).

Potential new restrictions on marketing

Politically and in the public eye, there is a lot of focus on gambling operators’ marketing in Denmark. Hence, there is a lot of debate on whether the operators’ marketing is too extensive and aggressive.

On the one hand, it is claimed that gambling operators’ marketing is leading people, especially young people, into problematic gambling. On the other hand, it is pointed out that a Danish gambling license is, as stated in the introduction, primarily a marketing license. Thus, with each restriction on the possibility to market gambling in Denmark, it can easily be argued that the value of a Danish gambling license is heavily reduced.

Political winds have for a couple of years been blowing towards further restrictions on gambling operators’ possibility to market themselves and their games, and it is in our assessment therefore also only a matter of time before additional restrictions will be introduced. With that being said, it might take years, before the rules are changed.

Besides a full ban on marketing for gambling, less severe and more specific restrictions have also been suggested. Back in September 2022, the Danish Ministry of Taxation published a document with 9 suggestions for prevention of gambling addiction. Many of these suggestions relate to gambling operators’ marketing. Among others, a ban on marketing for gambling right before, during and right after tv transmissions of sports events was suggested. Further, it was suggested to ban bonusses, the use of professional athletes and other authorities in marketing of sports betting, and marketing for gambling during specific times and via selected channels where many young people will see the marketing.

None of these suggestions have so far been implemented into law, and to our knowledge so far, no concrete plans for implementation of them has been drafted. Notwithstanding, we consider it likely that the restrictions on the possibility to market gambling, which we expect to be introduced in the future, would be inspired from this document.

When such restrictions might be introduced, it will of course be interesting to see how they are received by the licensed gambling operators, i.e., if they will still consider it worth upholding their rather expensive Danish gambling licenses, when their possibilities for benefiting from them are significantly reduced, and the gap between them and unlicensed operators are getting narrower.