City authorities lose out in battle to prevent licenses for online gambling at bars
City officials in Litvínov, north Bohemia, are dismayed over gambling parlors, or hernas, mushrooming along their streets, and are pointing the finger at the Finance Ministry for issuing licenses despite their objections.
Litvínov officials recently made headlines for striking a “breakthrough deal” with the Finance Ministry to annul licenses for 20 online gambling video terminals, after watching herna bars sprout up for years.
While fees from traditional slot machines trickle into city council coffers, lucrative fees from the newer video terminals go to the Finance Ministry, which also issues licenses for the machines.
“The Finance Ministry used to ask the city whether we had any reservations” about the gambling video terminals, said Deputy Mayor of Litvínov Martin Klika. “But they probably received so many license applications, because they stopped asking us, and, within a year, there were almost twice as many gambling terminals than the number of slot machines we originally had.”
The ministry requested a statement from the city in only five cases, he said.
While the city attempted to slash the number of slot machines, more and more hernas approached the ministry for licenses for gambling terminals. The 130 slot machines the city removed were succeeded by 260 ministry-approved video gambling terminals. Compared with the slot machines, video terminals operate around the clock and can handle larger sums of money, Klika noted.
At present, there are 40,248 of these terminals operating in the country. The number has increased exponentially since their arrival in 2007 from 1,585 that year to 23,4300 in 2008.
Last year, fees from technical games – which also include video terminals – added up to 558.7 million Kč.
The chairman of the Christian Democrats, Cyril Svoboda, has spoken out against the Finance Ministry on numerous occasions – most recently, July 7, via the opinion pages of the daily Právo – saying it issues too many licenses for gambling terminals and disregards city officials.
“The ministry interpreted the law about gambling freely and as it pleased,” Svoboda said, referring to legislation that authorizes the ministry to approve of what the legislature doesn’t cover: gambling video terminals.
“The ministry misused this law and approved a number of terminals. I think that, first of all, there must be a law describing all categories [of gambling machines]. ? Only then can licenses be issued,” he said.
In February 2007, Prague’s municipal police accused former Deputy Finance Minister Tomáš Prouza of being too favorable toward Sazka, a provider of online gambling terminals.
An investigation was suspended in April 2007.
As recently as last month, the Union of Cities and Municipalities sealed an informal agreement with the Finance Ministry and the gambling industry. Now, the ministry is obliged to take into account cities’ objections when issuing licenses for gambling video terminals.
“Until this summer, it never happened that gambling industry representatives, the Finance Ministry and the union could all sit down together at one table,” said Vice Chairman of the Union of Cities and Municipalities Jaromír Jech, adding how surprised he was with the two parties’ receptiveness.
Opening channels of communication is hopefully only a start, Jech said, because “it’s not legislatively anchored that municipalities possess a degree of control over whether a gambling terminal will go up or not.”
He said city officials would prefer the unwanted symptoms of gambling be curbed and not necessarily for the ministry to relinquish its authority over gambling terminals.
“If [gambling video terminals] came under municipalities’ control, I am not sure whether cities would have the strength to take them on. Maybe larger cities like Prague and those with more than 10,000 inhabitants, but the smaller ones don’t have the infrastructure.”
Plus, close ties between city officials and herna bar owners could result in pressure on the city, Jech said. The “couple of crowns” streaming into the municipal treasury from terminal fees, he added, wouldn’t outweigh the burden of herna bars themselves.
In Litvínov, 20 gaming terminals in three bars are in danger of being shut down after the Finance Ministry acquired video footage depicting staff serving underage teens. Klika said the three appeals were sent off, and that now the decision to annul licenses rests with the ministry.
