Two pieces of draft legislation have been submitted to the Hungarian Parliament with the goal of liberalising the country’s gambling market, effectively ending the monopoly of the state-operated Szerencsejáték Zrt.
The legislation, titled no. 2022/66/HU and no. 2022/67/HU respectively, seek to establish a licensing regime for private operators based on two previous European Court of Justice (CJEU) decisions in favour of Kindred Group and Sporting Odds. The legislators in support of the bills hope for the new laws to come into force on January 1, 2023.
Szerencsejáték Zrt, which operates three, four and five ball lottery products as well as Scandinavian Lotto, has dominated the market thanks to the current regulatory framework for gambling which enforces a rule that only firms with a ‘bricks-and-mortar’ presence would be allowed to conduct business in the country, posing a major hurdle for online-oriented businesses.
In 2017, Kindred, which was seeking to launch in the Hungarian market via its Unibet brand, appealed to the CJEU arguing that the gambling regime overseen by Hungary’s Gambling Supervisory Unit posed unfair conditions for non-national operators.
Ruling in favour of Kindred, the CJEU asserted that Hungary’s gambling legislation posed an “incompatible regulatory framework and imposed subsequent enforcement measures which clearly contradict the fundamental principles of EU law”.
The following year, Sporting Odds referenced the Unibet ruling in its own appeal to the continental court, asserting that Hungary’s gaming legislation was in ‘clear violation’ of European Union (EU) freedom to provide laws.
Citing these rulings, the new draft legislation aims to introduce a new regulatory framework for both sports wagering and games of chance, lotteries included, although the bills still require further approval from the Hungarian parliament.
“In a liberalised online hosting market, several private companies are competing with each other, so it is responsible instead of maximising the principle of gambling, there is a risk of encouraging excessive gambling,” the legislation states.
“Therefore, they liberalise remote gambling by emphasising player protection considerations for players. The draft is intended to be implemented by introducing guarantee regulatory elements that protect the interests of players.”
Key caveats of the legislation include that although theoretically an unlimited number of operators from European Economic Area (EEA) states outside of Hungary, including the UK, are permitted entry, these firms must prove that they have not offered unlicensed gambling in any other European country for at least ten years.
Proposed tax rates have not been detailed, but the minimum number term of licences is set at seven years – in order to secure such licences, operators must prove they have organised legal sports betting for at least five years, have a share capital of a minimum of HUF 1bn (€2.8m) and pay a fee of HUF 600m (€1.7m).
Lastly, the legislators intend to implement stringent player protection and responsible gambling policies as part of the new plans for oversight, with the President of the supervisory Authority of Regulatory Affairs holding regulatory responsibility for such matters.
“A high level of protection for players justifies being dangerous or harmful to the player or his environment, preventing and reducing the occurrence of gambling practises,” the legislation continued.
“New obligations under the draft require service providers to submit an annual player protection action plan to the gambling supervisory authority and that they must report annually.”