The Hungarian government last week submitted its amended online gambling law to the European Commission, to ensure plans meet with Brussels’ approval. Regulations propose 20 percent annual tax and one-off licensing fees for operators, whilst players will be exempt from tax on their winnings.
Alongside the annual tax on gross profits, licensees would be required to pay a HUF100m (US $461k) concession fee for each type of game they could offer, which includes sports betting, card games, casino games, horse and greyhound racing.
Operators would also be required to pay a regulatory supervision fee equivalent to 2.5 percent of their net quarterly revenues, capped at HUF50m (US $230k). Licenses would be granted for five-year terms, but the huge financial barriers to market could prevent a healthy online gaming environment in the country.
To promote online gaming in Hungary, gamblers will be able to play tax-free and barriers will be put in place to limit illegal operations cutting into licensed businesses. The government intends to publish a list of unauthorised operators and ISPs would be authorised to block any unlicensed websites, facing fines if they don’t comply.
Whilst the EC needs to sign-off on the optimistic draft legislation that the government is hoping will raise HUF10bn (US $ 46m) in 2013, it could still take more than a year before any operator is licensed. Meanwhile, state-owned operator Szerencsejáték Zrt would be granted a license automatically and work on having its Lottomatica-powered Margin Maker product online in the coming months.
This appears to be a protectionist bill disguised as an open market bill, establishing guidelines and extortionate fees, but giving the government final decision on licensing rights. The EC is encouraging member-states to promote fair trade and analysts therefore suggest the bill will not be approved. However if it becomes law, the proposed licensing structure will enable the market to remain as a monopoly.
Budapest-based gambling lawyer Gábor Helembai said that as the government will decide the number of licenses and what products licensees will be allowed to offer, “presumably not many competitors (if any) will be allowed to operate in Hungary.”
“If the new regime is to be successful then it must offer appropriate regulation and a viable fiscal framework,” added Clive Hawkswood, Remote Gambling Association CEO, “The combination of the new gambling tax and an unrealistically high concession fee would frustrate entry to the Hungarian market.”
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