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Czech Officials Propose Stricter Gambling Laws, but Welcome Foreign Operators

Oct 11, 2014 - by Monica Erdei
Czech Ministry of Finance

Czech authorities welcome foreign gambling operators

Czech authorities want to introduce a new ruled for the gambling industry, seeking to tighten regulations and lift tax revenue.

Gamblers living in the Czech Republic spend more than $6 billion every year, making the local market profitable enough to spark the interest of some of the largest online gambling firms out there.

There are currently five companies dominating the Czech betting market, including Prague-listed Fortuna Entertainment, but the industry has grown over the past few years and officials believe the country is ready to open itself to foreign operators.

Under the current regulations, foreign-based online betting firms cannot provide services in the Czech Republic unless they have a physical presence in the country. In other words, they would need to obtain a license and open land-based betting shops before going live.

But now the Finance Ministry said they should be allowed to operate in the country under new gambling laws, and of course taxed accordingly.

Reuters: Czechs look to boost tax revenue with revamped gambling law

Under the current regulations, gamblers who access foreign websites risk steep fines. Betting companies that don’t hold a license in the country are not allowed to advertise their products here. But the Czech Republic has a population of 10.5 million, and the local gambling market has a lot of potential for growth.

For a while now, betting companies have been complaining about all the inconsistencies in regulation and tax policies practiced across different states of the European Union. Many operators prefer to avoid countries where regulations aren’t clearly defined, and the Czech Republic was certainly not a main hub for foreign-based operators.

But the new proposal would change the current laws to allow remote betting groups, provided that they register their operations and pay taxes to the local government. The new tax rates are expected to be finalized by the end of the year.

“Users currently bet abroad, which several foreign companies make easier by introducing sites in Czech. According to our estimates, the state misses out on more than 1 billion crowns a year in this segment,” Deputy Finance Minister Ondrej Zavodsky said.

Before going into effect, the ministry’s proposal would have to go through government consultations. The law would most likely be applicable in 2016.

Prague Post: Ministry wants to ban gambling machines in pubs, gas stations

Authorities intend to ban gambling machines from pubs, bars and gas stations located across the Czech Republic. Deputy Finance Minister Ondřej Závodský told reporters that betting offices, casinos and gambling rooms will still be legal, but a registry of gamblers and a central monitoring system will be established, to track their activity.

According to online gambling news, these gambling machines are the most harmful for problem gamblers and vulnerable players. When the new regulations come into force, the customs administration will be the new authority responsible for giving permission for new machines, instead of the Finance Ministry.

Ultimately, municipalities will have the final say when establishing the locations where operators will be allowed to open new businesses. They will also have the authority to ban this type of gambling in the area. The ministry’s only role will be to supervise the gambling industry in general.

Another measure proposed in the bill requires that the number of gambling rooms and casinos be decided according to the number of inhabitants in each region. For example, municipalities with fewer than 5,000 inhabitants will only be allowed to have one gambling room. Casinos will only be allowed to open in areas with more than 40,000 inhabitants.

The new bill is expected to be presented by the end of the year. It will also include information on new gambling fees and taxes.

Czech.cz: New bill to introduce strict gambling regulation

Finance Minister Andrej Babiš has unveiled details about the new gambling regulations proposed in the Czech Republic. Under the new laws, slot machines would be banned from pubs and bars, and moved to casinos or specialized venues. They would also have betting limits.

There are around 100,000 gambling addicts in the country; the government spends an estimated 15 billion crowns per year in health care and welfare. Several municipalities have already taken steps to ban or restrict gambling on a local level.

“The draft legislation addresses all negative impacts of gambling on the society which have been estimated at 15 billion crowns every year,” Finance Minister Andrej Babiš told reporters. “But there is more – hundreds of suicides, broken-up families, and so on. The draft should enter into force in January 2016 which gives us enough time for a proper debate and I firmly believe the bill will be approved.”

The ministry also intends to set up a central monitoring system to control gambling operations in real time. Additionally, gamblers and punters would have to register in a database, which will then be connected to other registries, such as the databases showing welfare recipients.

“We would also like to introduce principles of responsible gambling, establishing maximum hourly and monthly bet limits. On top of that, we want to prevent certain groups of people from gambling. These include gambling addicts undergoing treatment or those who owe money either to their families or to the state,” Babiš added.

The draft legislation will most likely go into force in January 2016.

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