Gambling in Hungary: myth or reality

Gambling in HungaryThe lack of fresh news about the work of gambling operators is somewhat disorienting, but as it turned out, there are objective reasons for this. But before dealing with the current state of Affairs, let’s turn to the history of the emergence and development of the gambling market in the country.

Hungary’s gambling market: a historical sketch

gambling historyIn light of all the above, it is striking that gambling in Hungary not only exists, but also has a fairly ancient history.

For the first time, the monopoly right to provide gambling services was introduced in Hungary in 1752 by Maria Teresa Habsburg. In fact, the publication of the law means that the regulation of the industry began in the 18th century. At that time, it was only about providing lottery services. After several decades, both card games and betting on horse races became more and more popular.

The country’s first casino, the National Casino, was opened in 1827 by count Istvan secheny. Currently, one of the most popular gambling establishments in Hungary is Casino Sopron, which was officially opened in 1989. The casino is owned by Szerencsejáték Zrt and Casinos Austria AG.

General characteristics of the market

The country’s gambling regulator is the Hungarian Gambling Authority. Casino games – slots, card games (including blackjack) and roulette, as well as poker, bingo, lotteries, sports betting and horse racing-are recognized as legal on the territory of the state.

A feature of the market

In 2014, a completely new licensing system was developed in the country. The conditions were so unnecessarily harsh that many operators rushed to national courts, as well as the Court of justice of the European Union. The latter came to the conclusion that many Hungarian rules, especially regarding licensing of online gambling operators, are not just unreasonable, but also contradict EU legislation, so they should not be applied in practice. Since the new legislation was never developed, Hungary found itself in a non-standard situation – national legislation exists, but cannot be implemented due to non-compliance with EU laws.

Legislation

In Hungary, slot machine halls are prohibited, and slots can only be kept in full-fledged gambling establishments.

Legislation created in 1991 applies to both land-based and virtual gambling. The general provisions of the law contain the definition of gambling, the criteria according to which operators can be licensed, as well as the rules of state control over the industry. Advertising of gambling products, as well as taxation of the sphere are regulated by separate legal acts.

The decree of the Ministry of Finance of 2005 contains technical regulations for regulating the industry. Mechanisms for implementing the principles of responsible gambling are set out in a special government decree issued in 2015.

According to the law on national assets, economic activities related to the organization and conduct of gambling belong to the exclusive sphere of public administration.

The gambling market is also subject to the law on money laundering and terrorist financing.

Licensing conditions

Licensing conditionsIn Hungary, there is a state monopoly on the provision of lottery and betting services – Szerencsejáték. Another state operator has a monopoly on providing services related to betting on horse races.

In total, the land-based gambling segment in Hungary can be represented by the work of 11 gambling companies. Since the number of licenses is limited, the concession system is used when selecting candidates.

Another feature of Hungary is that the right to obtain a license for online gambling operations is granted exclusively to land-based gambling licensees.

When granting a license to operators of land-based gambling establishments, territorial restrictions apply. Permission can be obtained through open bidding or through a concession agreement with the Ministry of Finance. All existing licenses were obtained in this way, no bidding was conducted.

In Hungary, the term “reliable operator”is used. These are companies that have been on the market for more than 10 years and have not been detected in offenses. In particular, the lack of public bidding for the right to obtain a license and the lack of mechanisms for conducting this process has become one of the stumbling blocks for the Court of justice of the European Union.

Licenses for the land-based gambling segment are of two types and are granted for 20 and 10 years.

The operators have the right to advertise their services and products, marketing restrictions not provided by law.

Taxation

taxationLottery operations are taxed at a rate of 24% of the monthly prize pool, and operations related to the game of bingo are taxed at a rate of 7%.

The tax rate for betting operations is 17% of the monthly prize Fund, and for betting services-20% of the net profit. Horse racing bets are not taxable.

Online betting operations cost the monopoly 15% of its net income.

Online and offline casinos pay a tax rate of 30% if the company’s net annual revenue does not exceed 10 billion forints (€29.4 million). If an operator generates more than 10 billion forints of net revenue per year, the tax rate is 3 billion forints plus 10% of revenue exceeding the specified threshold.

Market representatives

The center of gambling in Hungary is considered to be Budapest, which is where most of the country’s casinos are located, namely five. Las Vegas Casino Corvin, which is also located in the capital, is recognized as the largest gambling institution in the country.

The country’s land-based gambling business is represented by the work of nine casinos-Grand Casino Debrecen, Las Vegas Casino Corvin, Onyx Casino, Las Vegas Casino Atlantis, Casino Win Gyor, Tropicana Casino Budapest, Las Vegas Casino Atrium EuroCenter, Las Vegas Casino Sofitel Budapest, and Casino Sopron.

According to the World Casino Directory online platform, the most popular online casinos in the state are Red Stag Casino, Surfcasino and Casino Room.

Conclusion and prospects

Due to the difficult legal situation, the Hungarian gambling market is not developed or attractive for international operators. Unjustified licensing requirements that did not satisfy either the business or the court of justice of the EU, most likely, would not contribute to the realization of the state’s potential. Another stumbling block, in our opinion, is the desire of the state to preserve the monopoly right to provide services to the lottery and betting segment. Most developed countries in Europe have long abandoned this idea and are forming open markets based on healthy competition, which not only promotes business development, but also allows you to increase the level of services provided to users.

Leave a Reply

Your email address will not be published. Required fields are marked *