Opinion: Fine tuning Hungarian online gambling regulation
Gábor Helembai, gaming lawyer and partner at law firm Forgó, Damjanovic & Partners discusses the recent progress made in Hungarian online gambling regulation
Following a one-year standstill period, it seems the Hungarian government has in recent weeks started to take seriously the issue of introducing the first remote gambling rules in Hungary and the much discussed operation of international online gambling operators.
On the one hand, the Gambling Supervisory Division of the National Tax and Customs Administration (GSD) has started to prepare a blacklist of unlicensed operators and has been blocking their websites – which obviously ensures advantage to the one and only current licensee, the State Gambling Organiser.
On the other hand, the Parliament has adopted a number of amendments to the previously proposed remote gambling regulations, which eases the path to market entry for remote gambling operators, particular foreign operators. The most important ones are as follows:
Changes to the framework now make it clear that bookmaking via the internet can legally be conducted by non-state owned gambling operators “ otherwise known as concession companies. The mandatory minimum capital for a concession company/concessionaire has now been significantly decreased. Operators were previously being asked to show HUF200m (approx. 670,000), however this has been reduced to HUF50m (approx. 170,000).
Another change has been within the Act on Concession which stipulated that a foreign concessionaire must first establish a Hungarian business association for the purpose of operating in Hungary. However, from now on the regulator will allow the concession company to be a foreign legal entity as well.
In addition to the the financial savings expected from the changes above, remote gambling operators will also benefit from the fact that the tax rate has been reduced from 20% to 15% of net gaming revenue, while the maximum amount of the quarterly supervisory fee to be paid to the GSD is now HUF10m (approx. 33,000) instead of HUF50 million (approx. 170,000).
Associated to this, the yearly concession fee to be transferred to the Hungarian state has been set at HUF102.4m (approx. 340,000) per year per game type – casino, sports betting and card games.
One remarkable achievement of the revised rules is the introduction of a reliable gambling operator category in respect of remote gambling, effectively creating a fast-tracking system. This preferred qualification may be useful for operators, as a reliable gambling operator could avoid a formal concession tender and instead submit their respective offer directly to the Minister for National Economy, who decides on the acceptance thereof without any formal procedure.
A company may qualify as a reliable gambling operator, if (i) it has a transparent ownership structure; (ii) it has no significant public debts (not exceeding approx. EUR 1,700); (iii) no enforcement procedure was initiated against it due to such public debt; (iv) no fine was imposed on it due to the violation of gambling laws in the state of its gambling license; and (v) it has been operating at least for three years as a gambling operator in the state of its gambling license.
On the top of that, the government’s serious attitude is grounded by the fact that the Ministry for National Economy has finally notified the European Commission about the draft implementation (secondary) rules which contains, among others, the detailed provisions of licensing, auditing, technical-informatics requirements, players’ registration, players’ accounts and self-restriction.
Now the Commission and the Member States have the chance to react upon the draft, but if such notification procedure ends, most probably in October, the Ministry will be in the position to adopt the final version, which opens the possibility of launching the first licensing procedures.
However, despite this significant progress, the biggest question remains whether the Hungarian government actually intends to grant concessions to foreign operators. And, if so, how many concessions will be distributed taking into account that the granting of a concession is the exclusive and discretional competence of the Minister for National Economy who may still look to protect the interests of the state-owned operator.