Diminishing returns
New report points to failure of Dutch regulated market
Report says the tax take in the Netherlands is flat despite rate hikes.
In +More: Egypt looks to ban online gaming.
Predictions: Another former CFTC voice doubts the sports contract case…
+More predictions: … while the CFTC goes into battle in Kentucky, Illinois.
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Market failure
How could you pull the plug and leave me flatline? A new joint report from the Dutch gambling authority, Kansspelautoriteit (KSA), and the country’s Ministry of Finance shows the tax take from online gambling is flatlining, in a further sign that the regulated market is failing.
The tax rate on gambling rose in January to 37.8% from the 34.2% rate instituted the year previous.
Just two years ago, the rate stood at 30.5%.
Rolling in it: The state aim of the tax hikes was to raise an extra €216m from 2026 onwards, with an incremental €108m expected to be raised last year.
Instead, the report estimates receipts in 2025 came in just €2m above 2024 at €1.036bn vs. €1.034bn in 2023.
The 2026 forecast is for a tax take that will be just €57m higher than 2024 at €1.091bn.
Basic math: Faced with a near-flat result, the KSA and the ministry built a model to strip out the other things happening to the market at the same time – chiefly the player-protection rules introduced in October 2024 and the bump from Euro 2024 – and isolate the effect of the rate rise alone.
On that basis the report puts the isolated revenue effect of the rate rise at €83m in 2025 and €138m in 2026.
Even that flattering figure sits below target, and the report attaches “grote onzekerheid” – a ‘great uncertainty’ – to it, conceding the tax effect cannot be cleanly separated from everything else going on.
The reason the number is so low is that the rate rise has shrunk the base it is levied on.
The direct effect of the higher rate is partly canceled out by a €90m reduction in the base that the report attributes to the rise itself.
Losing at monopoly: A further damaging admission concerns the money the Dutch state collects by other routes. The Netherlands owns two operators outright – Holland Casino and Nederlandse Loterij – and earns corporate tax, license levies and dividends from both.
At Holland Casino, the report estimates pre-tax profit €27m lower in 2025 because of the rate change, and €54m lower in 2026.
That works through to roughly €7m and €14m less corporate tax respectively, plus €20m and €40m of dividend the company could otherwise have paid the state.
At Nederlandse Loterij, the combined hit to corporate tax, levies and profit is put at €16m in 2025 and €34m in 2026, against annual contributions and dividends to the state of ~€120m-€125m.
Net it all off and the picture is of a government taxing one of its own pockets to fill another, with very little left over once the foregone corporate tax and dividends are accounted for.
Shutting up shop: The market data tells a similar story. Visits to arcades and Holland Casino fell 11% YoY in Q1, from 4.6m to 4.1m, and the number of arcade venues has dropped steadily since early 2024.
The KSA noted that arcade operators JVH Gaming and Fair Play Casino have both closed sites, with the company in each case citing the tax rise as a reason.
Online GGR, by contrast, shows no clear fall, though it had already dropped sharply once the player-protection rules landed in late 2024.
Hostile environment: None of this lands in isolation. As reported by Compliance+More earlier this month, State Secretary for Legal Protection Claudia van Bruggen is preparing a total ban on online gambling advertising.
This on top of bonus restrictions, an overarching deposit limit and a tougher CRUKS self-exclusion regime.
Officials concluded the earlier partial advertising and sponsorship bans had not cut public exposure as intended.
Slip sliding away: Channelization is going the same way. The legal market’s share of online GGR has slipped, with trade bodies putting the black market at roughly a quarter of total activity from players based in the Netherlands.
The new report finds player-level channelization of 91-95% and falling, with the decline underway before the first tax rise.
It’s all going wrong: Taken together, the report and the news of the gambling ad ban describe a regulated market that is no longer delivering on any of its stated objectives. The tax rise has not raised the promised revenue and the advertising restrictions have not cut exposure.
Meanwhile, channelization is falling, operators are leaving and the good causes income the lottery model was built to protect is, at best, flat.
Face facts: The KSA and the ministry were careful to say the various effects cannot be untangled with any confidence, and they declined to pin the market’s contraction on the tax alone. But the direction of travel is hard to miss.
A market squeezed on tax, advertising, deposits and channelization all at once is not one being optimized.
It is one being slowly closed and, on the government’s own numbers, without even the revenue to show for it.
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+More
Stakelogic has agreed to pay £122,835 as part of a settlement with the UK Gambling Commission after 16 of its online slot games were found to have breached minimum spin-speed requirements. The regulator’s investigation found games operated faster than the mandated 2.5-second interval between spins, with some non-compliant periods dating back to 2021. The issue was linked to Stakelogic’s reliance on manual stopwatch testing. The company self-suspended affected games, reported the breach and has since implemented enhanced compliance procedures to prevent a recurrence.
Egypt: The Egyptian parliament is advancing amendments to the country’s Cybercrime Law that would explicitly criminalize online-betting applications, closing a legal gap that currently allows authorities to target illegal digital platforms without specifically addressing online gambling. According to iGaming Business, the proposed changes would introduce tougher penalties for operators and users involved in online betting. The move follows a broader crackdown on offshore gambling sites and app blocking measures launched earlier this year.
Austria: The planned online gambling liberalization is set to include a controversial ‘cooling-off’ period that would temporarily bar many gray-market operators from obtaining licenses when the new regime launches in 2027. Under proposals being discussed by the Ministry of Finance, operators found to have breached Austrian gambling laws within the previous five years could face a licensing ban of 24-36 months. Critics argued the restriction could undermine channelization by excluding major brands while doing little to deter unlicensed black-market operators.
Spain: The trade association Jdigital has warned that the country’s planned joint deposit limits could unintentionally drive players toward unlicensed operators if not implemented carefully. The measure would aggregate player deposit limits across all licensed operators as part of broader responsible gambling reforms. Jdigital argued that overly restrictive controls risk reducing channelization and increasing black-market activity, particularly as Spain is already battling a growing unlicensed gambling sector.
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Predictions dissent
Dissenting voices: The roster of former Commodity Futures Trading Commission officials willing to question the regulatory basis for sports event contracts continues to grow.
The latest is Dan Berkovitz, a CFTC commissioner between 2018 and 2021.
He used an appearance on The Policy Protocol podcast to cast doubt on whether such contracts clear the economic-purpose test embedded in the Commodity Exchange Act.
Berkovitz recalled the commission’s handling of ErisX’s 2021 application to list NFL contracts, concluding that no economic purpose underpinned sports-betting contracts.
He was blunt about what the commodity markets are for: hedging, risk management and price discovery, rather than entertainment or the fostering of sports wagering.
The economic-purpose test, in essence, is the line separating a financial instrument from a bet on chance, and Berkovitz is not convinced sports contracts sit on the right side of it.
Trump card: Berkovitz has Trump-era pedigree. He was nominated by Donald Trump in 2018, and the President remains among the most vocal supporters of both sports event contracts and the CFTC’s authority over prediction markets.
Berkovitz was also still in post when Kalshi secured its designated contract market license.
But he was careful to note that the operator only launched sports event contracts in January 2025, more than three years after his departure.
He stopped short of dismissing prediction markets wholesale, saying they could add informational value and genuine hedging utility on questions of economic consequence.
Gray day: His skepticism rhymes with that of Gary Gensler, the former CFTC chair, who told Barron’s that betting on sports is gaming and that no lawmaker ever envisaged his agency policing it.
Recall, the CFTC has recently proposed rules that would formally accommodate sports event contracts within its framework, dissolving the gray area that states have been trying to exploit.
Should those rules land, the objections of former commissioners become historical footnotes rather than live constraints.
+More predictions
Going into battle: The CFTC has sued Kentucky, escalating the growing legal battle over prediction markets and federal versus state regulatory authority. The action follows Kentucky’s lawsuit against prediction market operators Kalshi and Polymarket, which the state alleges are offering unlicensed sports-betting products. The CFTC argues that prediction markets fall under its exclusive jurisdiction through the Commodity Exchange Act and that states cannot interfere with federally regulated event contracts. Kentucky becomes the ninth state targeted by the CFTC as the agency seeks to block state-level enforcement actions against prediction market operators.
Taken IL: Meanwhile, the CFTC has expanded its lawsuit against Illinois to challenge a new tax on prediction market trades, seeking a preliminary injunction before the levy takes effect next month. The CFTC argues that the federal Commodity Exchange Act grants it exclusive authority over prediction markets and event contracts, preempting state regulation and taxation. Illinois recently approved a per-trade tax of 1.75% to 3.5% on sports event contracts, while maintaining that prediction market operators are offering unlicensed sports-betting products, a position that previously led to cease-and-desist orders and ongoing litigation.
Indian restriction: Kalshi has added India to its list of restricted jurisdictions, preventing users domiciled in, located in or organized in the country from trading event contracts on the platform. The change was included in a June 17 update to the company’s member agreement and follows increased scrutiny from Indian authorities. India’s Ministry of Electronics and Information Technology has deemed prediction markets illegal, moved to block access to platforms including Kalshi and Polymarket, and warned VPN providers against facilitating access. The restrictions follow the implementation of India’s Promotion and Regulation of Online Gaming Act on May 1, which targets online real-money gaming activities.
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Illegal gambling research
The masquerade: Entain’s latest YouGov survey on illegal gambling is one of the more useful pieces of consumer-focused research produced by the industry in recent years.
The headline finding is that 74% of UK adults struggle to identify unlicensed betting promotions on social media.
This suggests that many consumers may believe they can avoid illegal operators but lack the practical ability to distinguish between licensed and unlicensed brands online.
Over to you, Mr Burnham: The survey, conducted among more than 2,000 adults in Great Britain, found that while 80% of respondents said they would be unlikely to knowingly use an illegal gambling site, only 10% felt it was easy to identify a licensed betting promotion on social media.
Meanwhile, just 7% believed current UK regulations were very effective at preventing illegal gambling.
One-third said the government was not doing enough to protect consumers.
We’ve come to a black-market site by mistake: The findings chime with the UK Gambling Commission’s own research that has identified “accidental tourists,” i.e. consumers who stumble onto unlicensed gambling sites without deliberately seeking them out.
The regulator has repeatedly highlighted that awareness of the legal status of operators remains low among some consumers.
Hiding in plain sight: Much of the debate around illegal gambling has centered on disputed market-size estimates and projections. By contrast, this survey examines awareness and recognition, areas that are arguably more relevant to consumer protection.
The results suggest that illegal operators have become adept at blending into mainstream social media environments, making it difficult for users to identify risk.
This is consistent with Entain’s separate research published earlier this month, which identified more than 30 unregulated gambling brands actively targeting UK consumers through influencers, sports content and social media channels.
Shoulder shrug: The challenge is whether any of this will materially influence public policy. Policymakers are well aware of the existence of the illegal market.
The Gambling Commission has commissioned its own research, while the government recently established an Illegal Gambling Taskforce.
Entain’s findings will likely reinforce existing concerns rather than fundamentally change the policy conversation.
Calendar
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