Kindred Communicating With US Regulators About Norway Situation

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Kindred Group has been given unequivocal instructions by the Norwegian gambling authority Lottstift to stop serving Norwegian players. Unless Kindred complies by October 10, Lottstift will begin fining the Stockholm-listed company the equivalent of about $120,000 daily. That adds up to $42 million annually, a figure Norwegian authorities estimate that Kindred earns yearly from those customers.

Tranel’s Unibet is licensed in the US, with legal online casinos in Pennsylvania and New Jersey. Kindred has indicated that it will continue to offer its services to Norwegians regardless while fighting the fines in court.

Lottstift director general Atle Hamar told Bonus:

We find Kindred’s behavior in Norway very disrespectful. Disagreeing with the law does not give you the right to ignore it and do as you please.

However, Kindred’s communications director Alexander Westrell said that Lottslift is misrepresenting the situation:

Trannel International (Kindred Group’s subsidiary) is a Maltese company not active in Norway. The Norwegian Gambling Authority claims that we are active in Norway, which is not true.

That’s a matter of framing. Kindred doesn’t operate servers in Norway. However, using its Maltese servers, it does serve the market in an offshore capacity.

Kindred’s attitude is reminiscent of that of international poker sites like PokerStars after the passage of the Unlawful Internet Gaming Enforcement Act in the US in 2006. That didn’t end well for those operators, with the Department of Justice seizing their domains in 2011, in what the industry calls Black Friday.

There are some critical differences between the situations, however. For one thing, the Norwegian government doesn’t have as much reach as the US. For another, Kindred feels that Norway’s policies – which grant the government a monopoly on real-money gambling – are contrary to European Economic Area (EEA) law.

Will US Regulators Care About Kindred’s Non-compliance?

The fight dates back to 2019. That’s when Lottstift, which supervises and controls all private and state-operated lotteries and gambling activities in Norway, first informed Trannel to stop doing business in Norway.

It has been Lottstift’s position that Trannel, a Kindred subsidiary, does not have any sort of license to operate in Norway. Kindred appealed the order, taking its case to the Oslo District Court. The court rejected Kindred’s arguments, ruling that Lottstift’s decision was valid. However, the case is now in appeals.

While that battle continues, Trannel’s Bingo, Storspiller, Maria Casino, and Unibet brands are still accessible to Norwegians. It has been Kindred Group’s position that its operations in Norway are not illegal because it is not illegal for people in Norway to accept and participate in cross-border services, including gambling.

Kindred points out that the Malta Gaming Authority (MGA) licenses are highly regarded. However, numerous competitors also holding Maltese licenses have complied with Lottstift’s wishes. Apple has also gone along with the country’s wishes, removing all gambling apps from its App Store for Norwegian customers.

According to Hamar, Kindred could suffer repercussions in other regulatory jurisdictions, in addition to the fines:

Several U.S. states who regulate to open their markets have a previous history of respect for national regulation in other states as terms for obtaining a license—i.e., New Jersey. This has similarly been the case in Europe when the Netherlands opened their online gambling market a few years ago.

At least in the US, however, there has been a discrepancy between theory and practice in this regard. Though companies’ non-compliance in other countries has come up in licensing hearings, there haven’t been any notable cases of an operator being denied a license on that basis. One close call was for Entain (then GVC), which received its Nevada license only by a split 2-1 vote due to the illegal activities of one of its subsidiaries in Turkey.

Westrell told Bonus that US regulators are aware of the situation and that Kindred isn’t worried about repercussions:

Unibet/Kindred has always been transparent with its U.S. regulators and has consistently communicated with them about the situation in Norway, which remains legally complex and nuanced. We have no reason to believe this will cause any issues in our U.S. markets.

We value our relation with our U.S. regulators very highly and we believe that we gain most by being transparent with them. We have always communicated openly with them about Norway (and other markets) and we will continue to do so.

Every State is a Different Ballgame

The regulators Norway is currently talking to are presumably the Pennsylvania Gaming Control Board (PGCB) and the New Jersey Division of Gaming Enforcement (DGE) since those are the states in which it operates. However, inaction by those agencies may not guarantee that the issue doesn’t come back to haunt Kindred later.

That was the message last week from Nevada Gaming Commissioner Ben Kieckhefer. Despite voting in favor of granting Bally’s the right to take over the Tropicana, Kieckhefer not-so-subtly warned the company about the gray market activities of its subsidiary Gamesys.

Bally’s had told the Nevada Gaming Control Board (NGCB) that it has been applying the DGE’s standards when determining whether or not to enter a gray market. Kieckhefer said:

That seems like a deviation from what has been Nevada policy in the past.

In other words: What the DGE was willing to tolerate, the NGCB might not be.

Kindred probably doesn’t have any plans for Nevada at the moment. However, there are several states likely to legalize online gambling in the coming years. Any of these could conceivably produce a regulator more inclined to take a hard line.

Why Does Kindred Believe Norway’s Policies are Illegal?

Kindred’s issue with Norway centers on the fact that its Gambling Act gives the Norwegian state-owned company Norsk Tipping and private trust Norsk Rikstoto exclusivity over gambling in the country. Rolf Sims, Kindred’s public affairs manager for Norway, has debated the legality of such a monopoly in the EEA.

He also claims on the company’s website that it can’t possibly be illegal for Norwegians to play on Kindred’s offshore sites, “in the same way that it is not illegal for Norwegians to shop with eBay or Amazon.”

Even now, black market operators serving the US often make similar claims. Unlike Kindred, however, they don’t attempt to test such claims in US courts.

Sims cites the “incompatibility” between Norway’s laws and those of the EEA:

In failing to organize a transparent licensing regime and conducting a truly consistent gambling policy, we feel that the fundamental freedoms within EEA law are systematically being violated by Norway, to the Norwegian government’s advantage.

Westrell reiterated that argument to Bonus:

We are convinced the Norwegian monopoly is not enforceable as there is neither a non-discriminatory and transparent licensing system nor any grounds for a monopoly based on EEA law.

Kindred Urges Norway to Follow the Swedish and Dutch Example

Norway continues to take the high road, hammering away at its responsibility to its citizens. Hamar told Bonus: 

We have evidence confirming that Norwegian regulated games cause less gambling problems than illegal gambling. We aim to clean our country for all kinds of illegal gambling operators in order to continue our fight to reduce the harms from gambling.

Westrell insists that Kindred would like to obtain a license to serve Norway legally but has been denied one unfairly.

We always follow local license regulations and have over 80% of our revenue from locally regulated markets. In those markets where there is a local license scheme and we for various reasons don’t want to apply, we have left the market or stayed out, for example in Spain and Germany.

He also brings up Sweden and the Netherlands as examples. These, he says, are countries that adopted a non-discriminatory and transparent licensing scheme. A scheme, Westrell stresses, that they have been asking for in Norway.

About the Author

Devon Jackson

Devon Jackson is a freelance writer with Bonus. He’s written for many different magazines and newspapers, from The New York Times and People to Sports Illustrated and Bloomberg. He has also worked as an editor—for The New Yorker, the Santa Fean, The Village Voice, and Discover, among others. Jackson likes to focus on the broader ramifications of the gaming industry—issues such as responsible gambling, the effects of cryptocurrency, or crossover between gambling and esports. In an era of fake news and truthiness, Jackson tries as best he can to leave the opinionating to the talking heads and give as big a picture as possible to the reader.

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