Hungary’s State Monopoly Releases Grip on (Online) Sports Betting
21 July 2022
Commercial opportunities for gaming companies beckon as the Hungarian government has taken the decision to liberalise its country’s online sports betting market.
In January of 2023, a new law should come into force to regulate companies’ licensing, operation and control of certain games of chance[1]. The prospective legislation does not alter the regulation of online casino games which only holders of land-based casino licenses may offer.
CJEU’s Unibet and Sporting Odds judgments – the Hungarian legislator responds
The draft bill aims to liberalize remote gambling in Hungary in the light of the case law of the Court of Justice of the European Union on gambling, in particular to comply with the judgements of the Court of Justice of the European Union in the Unibet case C-49/16 and the Sporting Odds case C-3/17, which specifically addressed shortcomings in Hungarian online gambling regulation.
Specifically, in Sporting Odds (C-3/17) the Court of Justice ruled that the Hungarian online gambling legislation infringed the freedom to provide services (Article 56 TFEU) because it reserved the licenses for online gambling to offline operators holding a concession for a casino situated in Hungary. Meanwhile, in Unibet (C-49/16) the Court of Justice held that the Hungarian legislation on granting concessions for traditional casinos was contrary to the freedom to provide services.
Place your bets please – all EEA operators welcome, subject to conditions
The significant effect of the bill becoming law is that it means private operators established in the European Economic Area will soon be able to organise remote gambling based on a license issued by the Hungarian Gambling Supervisory Authority (“GSA”)[2], ending the current monopoly of Szerencsejáték Zrt., the public gaming operator.
The amended SZTFH presidential decree details the requirements that prospective operators wishing to enter the newly opened market must adhere to, including the following:
- they must have at least 5 years’ experience of running remote sports betting or online casino games in any EEA state;
- they must meet the minimum share capital requirements of HUF 1 billion (approx. EUR 2.6 million);
- they must provide a minimum collateral amount of HUF 250 million (approx. EUR 650,000); and
- they must pay a “remote gambling organising fee” (e.g., a license fee) to the GSA of HUF 600 million (approx. EUR 1.6 million) for the entire duration of the license, which may be a maximum of 7 years long, as determined by the GSA’s discretion.
As shown above, the bill delegates to the President of the GSA, power and authority to issue regulations determining the maximum duration of the license and the minimum amount of collateral to be provided by the remote gambling operator – considerable power.
Responsible Gambling
A liberalized online betting market means more private companies which, in turn, can mean higher risk of encouraging excessive gambling. Therefore, the draft also aims to emphasise player protection aspects and introduce guarantee regulatory elements which protect the interests of players.
For example, it introduces an action plan for player protection, which must be submitted by prospective operators, and, in an unusual move, the ultimate beneficial owner of the prospective operator must attend the Hungarian regulator’s offices annually in person to report about the operator’s achievements in the field of responsible gambling during the foregoing year.
The devil is in the detail – good to know
The draft bill excludes those operators who have carried out unlicensed gambling in an EEA state in the ten years prior to applying for a license under the bill. Additionally, any operator that provides unlicensed gambling services will lose its license to provide its services in Hungary.
Furthermore, a remote gambling operator may only accept bet deposits by transfer from the player’s payment account held with an authorised payment service provider, by online payment by credit card using the payment card linked to such account or, if the GSA allows it in the approved game plan, at its point of sale or betting office. At the same time, a company established for the purpose of organising gambling activities may only have a payment account if it confirms it has been authorised to organise gambling with a license issued by the GSA.
Contact Michael Bailey at AE Business Advisors mbailey@ae.com.mt or Matthew Francis at Szecskay if you wish to discuss entering the Hungarian market to offer online and/or related services.
This briefing note has been prepared by AE Business Advisors in Malta and Szecskay Attorneys in Budapest.
[1] The President of the Supervisory Authority of Regulatory Affairs (“SZTFH”) Decree No 20/2021 of 29 October 2021 on the implementation of tasks relating to the licensing, operation and control of certain games of chance.
[2] In Hungarian: Szabályozott Tevékenységek Felügyeleti Hatósága (abbreviation: SZTFH) which oversees not only gambling, but mining and tobacco related activities and concessions.
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