December 18, 2014

Czech Republic gambling operators brace for tax hikes

Gambling operators in the Czech Republic could see their tax bills nearly double by 2016 if Finance Minister Andrej Babis (pictured) gets his way. Babis is set to present a new gambling tax proposal on Friday and a Czech newspaper reported that the plan includes rate hikes that would boost the government’s annual tax haul from CZK 8b (US $359m) to CZK 14b ($629m).

The newspaper claimed the current 20% tax on gross gaming revenue would be raised to between 30% and 40%, with fixed-odds sports betting coming in somewhere at the low end of that scale and slot machines at the high end. That’s on top of the 19% corporate tax that licensed gambling companies are required to ante up. The newspaper didn’t cite its sources for the figures and Babis declined to comment when queried by Reuters.

The Czech government is in the process of overhauling its gambling laws to allow online casino and lottery products in addition to sports betting. The legislation, which the government hopes to approve early in the new year, would also open the market up to international operators, although how many would find those tax rates appealing remains to be seen. The Czech Republic was one of several nations whose online gambling regimes were scolded by the European Commission last November as too restrictive.

The legislation is also intended to rein in the number of gaming machines currently entertaining gamblers in pubs, bars and other small-scale venues. There are currently 7.5 gaming machines for every 1,000 Czechs, twice the number in Slovakia and 25x the number in Austria.

On Monday, Czech national anti-drug coordinator Jindrich Voboril revealed that the government had approved a new national strategy that lumps gambling in with alcohol and drugs as targets for further restriction. The Ministry of Health has been tasked with preparing a plan of action by the end of March, which will remain in place until March 2019, after which the results will be evaluated and a new plan formulated.

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