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September 15, 2017

The debate over gaming regulations continue

The history of the debate over lax or tight regulation is not new in the Czech Republic. Yet, the recent tighter regulations have brought it to the fore again. There have been serious disagreements between the city officials and the Finance Ministry over this issue. In fact, Prague’s municipal police in 2007 went so far as to accuse Tomáš Prouza (Deputy Finance Minister) to be more than favorable towards Sazka (a gambling terminal provider). The city officials were quite disappointed with the Ministry for the mushrooming of Hernias in Litvínov (Bohemia) in 2009.

This new legislation has replaced the previous Gambling Act of the 90s in a very radical way. For the first time, the Czech Republic will now issue licenses to foreign-based operators. Currently, the gambling names of Sazka, Synot Tip, Chance, Fortuna, and Tipsport are the only ones operating with a license provided by the Czech government. This new laxity by the Czech government is significant as it is an unprecedented event in the history of the country.

The restriction by the Czech Republic was despite the fact that foreign operators such as Bet365 had offers like the welcome bonus to lure international customers in, had been hugely popular across the country.

The Ministry of Finance, their gaming regulatory body, will now make it mandatory for operators to hold a license. The maximum time period for these licenses will be six years. In order to obtain these licenses, all the applicants will have to provide a surety either by funds deposit in the Ministry of Finance account or by a bank guarantee. The surety size could be anywhere between €185,000 and €1,850,000 depending on the gaming products offered.

While these parts of the new legislation seem fairly reasonable and in line with the demands of the modern times, yet there are things in the new rules that are not to the liking of the gaming companies. Especially the slot machine operators are the most affected due to this new legislation. Because their taxation rate from the previous 28% has risen steeply to the new 35%. And a parallel increase in other areas like lottery betting, poker, and sports betting has not taken place.

In conjunction with this new legislation, the government will now retain a list of those web portals with un-authorized online games. And the websites in that list, under the directive of the Ministry of Finance, will be blocked by the Internet providers and their payment transactions will not be executed as well by the payment service providers.

While the new legislation seems like a good fit to tackle the challenges of the modern times, yet, it seems to have threatening undertones as well. The heavy taxation could be more than what some companies have the strength to bear. This was one of the reasons why many big gambling companies left Poland. And while the situation in the Czech Republic might not be that grave now, still very heavy taxation might not bode well both for the operators and the Czech economy as well.

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