Tax Rate High Says Danish Operators

Current 41% taxation of brick-and-mortar casinos in Denmark will not be applied to the much anticipated internet gaming tax rate of 20%. The chairman and chief executive of Danish Danske Spil said in an interview.

“The tax rate has never been lowered in Denmark’s history,” Hans Christian Madsen said, while also announcing that the monopoly has been divided into three separate divisions ahead of the proposed market opening in 2011.

December the 15^th eGaming Review reported that the European Commission (EC) investigated Denmark’s proposed tax rate for internet casinos and came to the conclusion that it would give them a head start over their land-based counterparts in the country.

Publicized in November that the market opening was planned for January 2011, won’t take place until next summer subsequent complaints by the Danish land-based casinos and slot machine association, irrespective of the claims made by the Danish Minister of Taxation that this matter would be rapidly solved. “We are not in support of these grievances,” Madsen said. “All in all land-based casinos should be in a different income tax bracket altogether.” The Danish slot machine association and land-based casinos complaints that the proposed internet gaming tax rate of 20% on gross win as opposed to the 41% is unfair and it may take months to come to a final conclusion, its attorneys mentioned.

April Carr, senior associate in the EU & Competition Group at lawyers Olswang said, “The land-based casinos will contest the projected tax rate for online casinos, which is against the law if imposed without the Commission’s consent”.  “We expect that Denmark will not apply this tax rate, in line with the alleged gambling legislation reforms, until such time the Commission has dealt with the grievance and ascertained whether or not the tax rate is a form of State aid.”

Organisational Restructure

Danske Spil divided its business into three segments, announcing various senior positions as part of its organisational transformation to prepare for the country’s liberalisation of internet gambling next summer. The three divisions of Danske Spil’s will include a “liberalised market” focusing mainly on sports betting, poker and casino, a division which will purely focus on the monopoly market such as lottery, scratch games, horse racing and bingo and the third on its 5,000 video lottery terminals (VLT) business. Madsen was not prepared to divulge which service provider the company signed an agreement with to supply its casino and poker software.

“We have prepared and trained our staff ahead of the partial liberalisation of the internet gaming market in Denmark, hopefully it would become a reality for us in mid-2011,” Madsen said. “Our preparations include the appointment of two managing directors of two recently established subsidiaries, offering games in both the liberalised and the monopoly market.”

Danske Licens Spil will be the liberalised market company, Jens Aaløse will be the managing director and the monopoly company is Danske Lotteri Spil and would be run by Mette Dyhr.

Additional appointments are: Søren Kofoed Weeke director of the IT development director; Dennis Kilian CFO in place of Allan Wahlstrøm. Lars K. Runov has been promoted from manager of internet at Danske Spil will now be the new customer and sales director of Danske Licens Spil; and Nina Uldal, promoted from manager of dealer sales at Danske Spil will now be sales manager of Danske Lotteri Spil.