New Hungarian law requires permit for online gambling

Following the long period of inaction, the Hungarian Parliament has recently adopted the amendment bill regarding the Hungarian gambling act in order to reform the regulation of remote gambling. The new rules consist of two main parts: one deals with the enforcement issues and the other with the new provisions regarding remote gambling.

The Hungarian government intends to much better emphasize the importance of blocking unlicensed remote gambling operators in Hungary, therefore a group of new provisions provides the possibility for the competent authorities to order to be temporarily inaccessible the data relating to illegal gambling operations published via an electronic telecommunications network for a period of 90 days. All telecommunications service providers shall be obliged by the decision of the authorities.

The new law widens the scope of games legally available via the Internet, as remote gambling shall include not only online horserace betting and online card games (as the previous version of the law stipulated), but also sports betting and online casino games. The probable gambling operators obviously welcome such favorable change in the law; however, the biggest question is whether the Hungarian government would allow them to take part in this business. Namely, remote gambling shall qualify as a non liberalized gambling activity under Hungarian law, which means that such gambling activities may only be performed in Hungary either by the state gambling organizer company (which has recently launched its brand new website) or by a concession company through concluding a concession agreement with the Hungarian State. This practically means that the Hungarian government will discretionally decide on how many concession will be issued and when. Until now, no information is available in connection with this issue.

As to the details, the concession is valid for a period of maximum five years, with the minimum concession fee applicable for the year 2013 set at HUF 100 million (approximately EUR 341,000) per game type. Licensed operators will be subject to a 20 per cent tax on gross gaming revenues (GGR) payable every two weeks, as well as quarterly supervisory fees calculated at 2.5 per cent of GGR, but at least HUF 100,000 (approximately EUR 340) and no more than HUF 50 million (approximately EUR 170,000).

Hungary has taken the first step to open its market for online gambling operators; however, we still have to wait to see the governments actual approach to the new rules and on the other hand, how these new regulation will work in practice.

Gábor Helembai, Partner, Damjanovic & Partners Law Firm

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