Hungarian Licensing Requirements Make Industry Unhappy

RGA, the world’s largest trade association representing major online gambling operators and software providers has issued a stark assessment of Hungary’s latest regulations in a recent press release. The Remote Gambling Association believes that a recent decree, supplementing the Hungarian gambling law in force since 1 January 2012, risks shutting down the country’s online gambling market.

Based on the government’s decision the scope of remote gambling has been expanded to include internet betting in Hungary along with the categories already covered. If such activities are handled via communications devices and systems then they are all subject to a 20% gross profits tax (GPT).

While RGA welcomes the concept of GPT being present in the law, since “the industry considers GPT the correct method of taxation”, the association is concerned by “high ‘one off’ licensing fees”, which they deem unrealistically high. The recent decree would require operators paying a HUF 100 mln (EUR 350,000) concession fee for each type of license, which would then be valid for 5 years.

The RGA believes that this amount would dissuade many international and Hungarian internet casino and online betting operators from applying. This may ultimately thwart government plans to generate HUF 30 billion (EUR 35 mln) from online gambling taxes this year.

RGA CEO Clive Hawkswood pointed to international precedents and said that “if the right balance can be achieved then it will result in clear benefits for the Hungarian Government and Hungarian consumers. Measures which effectively prevent the establishment of a competitive domestic market will encounter very serious problems and will lead to consumers continuing to seek out operators in other jurisdictions”

The Hungarian government is expected to welcome the positive assessment of GPT while brushing criticism of the decree’s other aspects off the table. The Hungarian proposal is awaiting the EU green light before being implemented.