Hungary Hoping to Hit the Jackpot with Gambling Regulations

With its 2013 budget already under pressure, the Hungarian government intends to supplement treasury revenues by milking the cash cow that is online gambling.

According to the latest news from Budapest, the government expects to rake in HUF 10 billion (EUR 35 million) this year by levying a 20% tax on online gambling. Never shy to announce last minute – and sometimes even retrospective – actions, the cabinet is set on introducing further regulations as well. Before they can come into effect, the new Hungarian gambling law must first pass European Commission scrutiny.

If it does, the changes will see separate five-year licenses being given out to online gambling operators allowing them to offer casino games, poker or sports betting – but a separate license would be required for each, at a cost of HUF 100 million (EUR 350,000) per license. So, for instance, a single license would not cover both online poker and internet betting in Hungary.

On top of the 20% tax from their net annual revenues, online gambling operators would also have to pay a “regulatory supervision fee”, equivalent to 2.5% of their net quarterly revenues, but capped at HUF 50 million (EUR 175,000).

To ensure a minimum level of financial stability in the industry, applicants must possess registered capital in the value of at least HUF 200 million (EUR 700,000).

Very strict and close supervision would be guaranteed not only by the requirement to file tax returns every two weeks, but also by the continuous remote access to the operator’s servers, which the tax authority demands.

In order to make sure that players can’t spend their gambling money through unlicensed operators, ISPs will be obliged to block such sites under the planned legislation. Failure to comply could see them pay the cost of 1 to 5 gambling licenses.

To encourage visible and taxable gambling revenue growth through licensed sites, the actual players will be exempt from income tax on their winnings. So, those who want to get rich by playing at an online casino in Hungary will be able to do it tax free. At least until another gap manifests itself in the country’s budget.