Gambling Industry Overview in Czech Republic
The following approaches will be presented
- Gambling legislation in Czech Republic
- Gambling authorities in Czech Republic
- Online casinos in Czech Republic
- and more
Gambling is legal in the Czech Republic, and since 2012, an abundance of casinos and other gambling establishments can be be found there. Online gambling is also legal and it is governed by the 2016 law on interactive gambling. However, the legal status of various forms of gambling, especially online gambling, in the country can be confusing.
According to the Czech Ministry of Finance's latest annual gambling report (2007 to 20019), a total of 43.3 percent of Czechs aged 15 or older gambled in the past year. That is up from 39.8 percent the year prior but below levels in 2017.
In 2020 the country also remains an international poker hotspot for land-based gamblers.
Despite major changes in gambling laws, including the introduction of bans, changes in taxes, the introduction of consumer protection laws, and a more rigorous licensing process, since 2012, the number of casinos in the country has actually increased.
The Czech Republic is considered to have one of the most liberal approaches to gambling in all of Europe. That being said, some parts of the country are, however, definitely more open to and supportive of gambling than others and there is a considerable difference in land-based and online regulation.
As of mid-2020, there were approximately 36,900 gaming machines in the country, spanning 1,162 venues, while licensed betting shops numbered 2,188.
In addition to traditional casinos, gaming machines can be found in arcades, and while considerably fewer, in pubs and restaurants. In 2019, slot machine use had reportedly declined at land-based locations.
Inadequate measures taken towards gambling regulation in the country over the past two decades have seen the sector face some serious obstacles that have not been easy to overcome as they involve social and political issues.
Overview
As mentioned, while gambling is still an extremely popular activity in the Czech Republic, legislation issues have posed somewhat of a setback to the development of the industry and especially to the online gambling segment as foreign operators have to deal with tough restrictions.
The Czech Ministry of Finance is the primary institution in charge of granting licenses to operators willing to provide betting services but some exceptions apply.
While gambling in the country is legalized and is regulated at a state level, individual municipal regions within the country still maintain the power to impose restrictions or outright bans on certain types of activities, according to their own respective policies.
Operators, available on the gambling market, are supposed to pay solid fees. Strange as it may seem, the Czech Republic gambling regulators pay considerable attention to the licensed operators, while those available on the unregulated markets are basically left to freely provide their services. Some of them even maintain .cz domains and provide their services in the Czech language.
Gambling authorities have been unwilling to pay closer attention to the unlicensed gambling operators issue as they did not regard their activities as something illegal.
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Yet, they decided to limit their presence and started a campaign against the popularization of unlicensed operators, which led to disagreements with broadcasters.
Authorities' inactivity caused disagreements with the licensed operators that claimed their business was seriously harmed as their unlicensed competitors offer a wider variety of gambling services.
They urged gambling authorities to reconsider the existing legislation, amend the laws, and allow local operators to provide their products in online format.
Apart from the betting providers, the European Commission also questioned the adequacy of the gambling laws of the country and demanded them to be promptly reviewed and made to comply with the Directives and laws set by the union.
In early 2017, after existing legislation was thoroughly overhauled, a new legislative framework for gambling in the Czech Republic was introduced and has led to the most profound change to the sector since 1990.
History of Gambling Regulation in the Czech Republic
Back in 1956, Sazka SA was established and it has been the leader on the market for quite some time. In the early 1990s, Tipsport began offering sports betting services. Soon after, the market was further diversified and Fortuna was established, after which Synop Tip was founded.
Including the state-run Sazka, there are currently 5 online gambling operators in the country.
Meanwhile, the casino industry has expanded and the number of casino venues has grown from 180 in 2013 to 299 in 2017, according to the European Casino Association (ECA).
This has led to problem gambling issues and actions have been taken towards reducing the number of casinos available on the territory of the Czech Republic.
The gambling policy also suggested online gambling activities be limited to fixed-odds games and casino games to be prohibited. In addition, the requirements determined sportsbooks registered within the Czech Republic to be allowed to operate.
In 2012, the new gambling regulation approved by the Czech government caused serious disagreements and the amended laws were found incompatible with the requirements of the European Commission. That is why the implementation of the regulation was canceled in order to be further reviewed.
Relevant Legislation and Legal Framework
The dynamic development of the gambling activities over the years led to a rapid popularization of electronic gaming machines. The free access to gambling machines caused serious problems and as a result, some municipalities opted for banning them, which created tension among the regulators and the municipal officials.
The aim of the bill compiled in 2014 was to clarify the requirements under which gambling activities could be performed in the country.
There are eight kinds of activities that are explicitly defined as gambling within Czech law. They include lotteries with a cash prize, odds betting on sports or public events, bingo, slot machines, table games, raffles, and card game tournaments.
The introduction of the Gambling Act in 2017 helped to codify a lot of these activities, while also creating a licensing scheme making it possible for operators of both land-based and online casinos to operate legally in the Czech Republic. The regulator shift was seen as a means of doing away with the black market for gambling, as well as helping generate tax revenues from the industry, while also maintaining close regulation and ensuing player protections where necessary.
Since 2019, establishments with slot machines and video poker machines are also required to have a gambling license, and as a result, slot machines from various pubs, grocery stores, and cafés have all but disappeared. However, so-called “kvizomats”, quiz or trivia machines, have shown up in place of banned slot machines.
Considered a “gambling-friendly” city, in Prague, currently, slot machines can be found in four places including casinos, amusement arcades, 'pivnice' and 'herna' bars.
Almost four years after it was initially promised, as of mid-2020, the Finance Ministry plans to launch a gambling information monitoring system in order to address gambling addiction matters. Included in the system is a register of excluded players, gamblers with a court ban or prescription for protective treatment for addiction, bankruptcy debtors, gamblers in material need, along with the voluntary inclusion of pathological gamblers.
The new regulation is compatible with the requirements of the European Commission and apart from that, international operators are free to apply for a license from the government and provide their services to Czech Republic-based customers.
On January 1, 2020, a new gambling tax system came into effect in the Czech Republic, whereby taxes are split into three tiers, based on how harmful the government deems the activity to be. Gambling tax is currently set at 23 percent of gross gaming revenue (GGR,) the exception being gaming machines or “technical games,” which are taxed at 35 percent of GGR.
Lotteries, live games, and bingo operators, meanwhile, will be taxed at 30 percent of GGR, while the rate for betting, totalisator, raffles, and small card tournaments, rose from 23 percent to 25 percent.
Online Gambling
Online gambling sites may offer their services to people in the Czech Republic, so long as they secure a license from the government. Unlicensed operators could be hit with various restrictions, including but not limited to, blocked payments and inaccessibility to Czech players.
A law on digital gambling was introduced in 2012 and new one, the law on interactive gambling in 2016.
Soon after the new gambling laws were adopted, PokerStars became the first licensed online casino and poker operator, claiming the first international operator license on January 28, 2017.
While it was hoped that opening the local market for licensed iGaming operations would result in international operators flocking to the country and additional tax revenue being generated, by the end of 2017, due to what many viewed as unnecessary bureaucracy and heavy taxes, PokerStars was the only international operator to have obtained a license from the country’s Ministry of Finance.
Online gambling operators are taxed the same 35 percent on casino games revenue as land-based casinos under the Czech Republic’s new gambling laws.
While the Czech Republic remains an international poker hotspot for land-based gamblers, the same cannot be said for online gambling. Citizens of the Republic may only gamble through officially licensed bodies, and considering that only one international company holds the license, users are not left with much choice. Many other international online gambling operators have decided that the country's online poker market isn't worth the high taxes and restrictions.
To say that the country’s new laws have inconvenienced players and operators is an understatement. Even the “online” aspect of the system has been altered unfavorably, with local online players now expected to sign up to play at designated physical locations.
One major reason for the underwhelming performance of the online segment is the face-to-face verification requirement by the state. The Czech Republic is the only country where you're not able to verify your identity online.
Online gambling operators must obtain a basic license for each gambling category. The Ministry of Finance grants the licenses, which are effective within the whole territory of the Czech Republic. Certain restrictions apply such as Internet games must be translated into Czech, and players must be provided with information about the operator and the game plan, among others.
In accordance with the current law, a physical presence and 100 percent Czech ownership are required for online gambling operators. However, as the country is a member of the European Union, and the restriction was found to be contrary to its [EU]
policies, the government currently does not block access to gambling websites licensed in other EU countries, even if they don’t possess a local gambling license.
Foreign online gambling sites can be legally blocked by ISPs at the government’s request, but those instances have reportedly been few and far between. Czech players are not prosecuted for playing on international gambling sites.
New restrictions for online gambling bonuses and free bet offers have been introduced by the Czech Republic. Online operators, any gambling website licensed in the European country, are no longer able to offer bonuses, promotions, free bets, or free spins.
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