Place your bets

A recent decision by the Finance Ministry to allow regulated online betting in the Czech Republic met with great support from local betting firms, but has led to unintended consequences as many companies are now dealing with a steep decline in business at their betting shops.

After refusing several previous requests, the Finance Ministry passed legislation allowing Czech gambling companies to offer online betting at the start of 2009. The decision gives Czech companies more leverage in the competition with international online betting firms, which have long had unregulated access to the Czech market. But an increase in online betting has led to a shift in the gambling business, as many customers prefer to gamble in the comfort of their own homes. Many of the country's largest betting companies, such as Tipsport, which owns 1,020 shops in the Czech Republic, are now planning to close dozens of locations. After only three months, online gambling accounts for 30 percent of Tipsport's business, said spokesman Lubomír Ježek, who expects an even greater interest in online gambling in the future.

"We see the Internet as a new opportunity, rather than something to replace brick-and-mortar shops," Ježek said.

Tomáš Bahník, a spokesman for Fortuna, which has about 650 shops in the Czech Republic, reported that Internet betting has skyrocketed since the new legislation, accounting for 25 percent of total business and causing a 5 percent decline in business in their outlets. Like Ježek, Bahník expects that Internet gambling will increase, resulting in the closure of some of Fortuna's less frequented shops.

"We will optimize our branch offices system in the long term," Bahník said. "We will reduce the number of offices to work more effectively."

With the popularity of online betting so high, many gamblers might not notice the closure of their local betting shop. A Tipsport location near Chodov was empty except for two employees on a recent visit. A robotic female voice echoed from electronic roulette machines, imploring nonexistent gamblers to place their bets. It was difficult to imagine that anyone would prefer the seedy sterility of such a casino to the comfort of their living room. Petr, a gambler in Prague who didn't want his full name used, said that he has been gambling for five years, using online gambling exclusively.

"I only gamble online because it's more convenient and uses less time than actually going to the place," he said. "Online, you have a better view of the events, and you can find many statistics on the Web at the same time."

Petr said he most frequently bets with Bet and Win, a gambling company based in Gibraltar. Foreign gambling companies provide stiff competition for Czech companies, which were hobbled by an inability to offer online gambling until the new legislation. Ježek hopes that Czech firms will now lure Czechs away from foreign gambling companies.

"After the first analysis, we see that many clients who used to bet online with foreign companies are coming to Tipsport," he said. "Czechs like to bet with Czech companies, and we think this will continue."

The pervasiveness of foreign online betting firms was the main complaint of Czech gambling firms, which say that such companies had an unfair advantage because they were not subject to Czech law and taxes.

"Foreign companies have always worked here illegally," Bahník said. "Making the market free for all companies was the solution for all interested parties. But Czech companies still have worse conditions than foreign betting companies, which don't have to pay taxes."

Despite the logic of such arguments, the Finance Ministry held out against previous lobbies from Czech firms to allow online betting, citing the inability to monitor users under such circumstances. Radek Ležatka, spokesman for the Finance Ministry, said that the proposal was only accepted when Czech companies found a way to monitor their online users.

"The main reason the proposal was accepted was that it was the first request to solve the issue of gamblers under the age of 18," he said.

Under the new law, those who want to gamble online must first register in a shop, providing verification that they are over 18. If they cannot provide identification, they are not allowed to access the online gambling portal. Ježek explained that such legislation is one key to what he called Tipsport's "synergy" of online gambling and brick-and-mortar business.

"According to the law, we need to have branches to register internet gamblers," he said. "At the same time, we are attracting new customers, like professionals who don't have time to sit in gambling bars, and hopefully women, who don't like the masculine atmosphere of casinos."

The latest figures from the Finance Ministry show that gambling is a significant industry in the Czech Republic, accounting for more than 108 billion Kč in bets in 2007. Ježek explained that most Czechs like to bet on sports results, specifically soccer, which accounts for 60 percent of Tipsport's business. Business in branches may be down, he said, but there is no sign that the gambling industry is losing popularity.

"We have the same odds on the Internet and in our locations, and we see it as a big advantage to be able to offer both types of gambling to our customers," he said.

Stephan Delbos can be reached at
sdelbos@praguepost.com