Europe could fine social media companies over illegal gambling ads but needs a tight case, Dutch regulator suggests
Comparing social media platforms to “bandits”, KSA’s chair warns that they won’t give up illegal gambling adverts easily and have “practically inexhaustible financial resources”.
Key takeaways:
- The Dutch gambling regulator is preparing for a potential legal battle with Big Tech over illegal gambling ads. Kansspelautoriteit (KSA) chairman Michel Groothuizen said regulators should continue seeking voluntary cooperation from platforms while simultaneously preparing legal action if those efforts fail.
- Big Tech’s financial incentives are seen as a major obstacle. Groothuizen argued that social media and technology platforms generate significant revenue from illegal gambling advertising, making it unlikely they will voluntarily impose strong restrictions without regulatory pressure.
- While warning that legal action could take years and face fierce opposition from well-funded tech companies, the KSA is already working with European regulators, Google and Meta through a joint task force, including plans for an EU-wide whitelist of licensed gambling operators.
The Netherlands.- The chairman of the Dutch gambling regulator Kansspelautoriteit has suggested that it’s time for authorities to start preparing for a possible legal confrontation against large social media platforms that fail to tackle illegal gambling adverts. Writing on the regulator’s website, Michel Groothuizen asks the question of whether authorities should try to “seduce or fight” the tech giants, and suggests the answer may be a bit of both.
The regulator suggests that big tech companies are unlikely to give up the revenue they receive from illegal operators easily, but said the KSA would keep pursuing voluntary action while it prepares potential legal measures. The comments come after the Dutch gambling industry association VNLOK took matters into its own hands by pursuing legal action against Facebook. In June, VNLOK submitted a complaint against Meta to the European Commission.
“Big Tech earns an enormous amount of money from the advertisements of illegal gambling providers, in the Netherlands, in Europe, and worldwide,“ Groothuizen writes. “This is a multi-billion dollar industry that contributes significantly to their profitability. Voluntarily giving this up or imposing substantial restrictions on themselves goes squarely against their business model. Yet that is what we demand of them, preferably amicably, if necessary by force.”
Groothuizen argued that evidence of the lack of action on the matter was readily available, but recognised that the tech companies were likely to try to drag out any legal proceedings.
“We can gather sufficiently convincing evidence that these companies facilitate prohibited activities in the Netherlands and everywhere else in Europe. A torrent of filth advertisements for illegal gambling confronts you on all social media platforms.
“Advertisements explicitly targeting vulnerable people who have registered in exclusion registers in various European countries, or advertisements that also target children are not an exception and are easy to find. And it is not just the occasional one: there are thousands, if not hundreds of thousands. Both our own Dutch law and the European Digital Services Act offer ample grounds to punish such behaviour”.
He employed the simile of a “sheriff stepping through the saloon’s swinging doors” but warned that “a sheriff who shoots and misses, or one who turns out to be shooting with a toy cap gun, gives the bandits a free pass.”
“The fact that we have a case does not automatically mean that we must initiate it now,” Groothuizen says. “A lost procedure is worse than one that has not yet started and only makes matters worse. To me, a fine is a means, not an end. Starting a procedure (national or, through the Commission, a European one) means engaging in a confrontation with an opponent who possesses practically inexhaustible financial resources and who, as experience in other cases shows, is prepared to fight all the way to the highest court, while constantly throwing a spanner in the works, so that a final judgment by a judge could easily have a horizon of five years.
“A judgment in which it is always uncertain whether the judge will be willing to follow us across the board. I am very pleased with the legal quality of my KSA colleagues, but every piece of evidence will be litigated, every position of ours contested. After all, the stakes are high. The outcome is uncertain, whereas the long duration of a legal procedure is, in any case, a certainty.
The KSA’s chairman said the regulator has not given up on working with the tech companies, however. He said the regulator was still “trying to make agreements that encourage them to voluntarily behave better and take responsibility”.
He mentioned the meeting between European regulators and Google and Meta held in Dublin earlier this year. “We now have a joint task force that is, for example, working on drawing up a ‘white list’ (together with Google) of all legal providers in the EU,” he said. “All other operators are then by definition in violation and can be banned by Google. Hopefully, we will turn off a main tap with that. But there are undoubtedly more ‘main taps’.
However he warned: “There is no question of us having permanent allies in the big tech companies. Their interests are often diametrically opposed to what we want from them. If we find that the VLOPs are not making sufficient effort for us, or are insufficiently effective despite their voluntary efforts, the legal route naturally always remains open.
“All Western governments, particularly the European Commission, are performing a complex dance with Big Tech on a multitude of dossiers, ranging from dropshipping and illegal medicines to vapes, sometimes to seduce them and sometimes to force them into socially desirable behavior,” he added. “Seduction is therefore by no means an exclusive alternative to fighting. It is what we do while simultaneously preparing for a possible confrontation. If agreements with Big Tech yield too little, we will not hesitate to enter the arena against one of them.”
