Government to allow online sports betting

Czechs who want to place a healthy wager on their country’s chances at the soccer World Cup in Germany this June might be able to do so from the comfort of their own homes.

The Finance Ministry plans to set rules that would legalize Internet sports betting for the first time, and those rules „should be worked out by mid-2006 at the latest,“ says Finance Ministry spokesman Jaroslav Růžek.

The country currently does not allow any form of gambling online. This includes online casinos, which feature poker, blackjack and roulette, and online sports books. Czechs wanting to wager have traditionally turned to regular casinos, Herna bars and betting shops.

Analysts say the reason for the apparent rush to allow online sports betting is simple: The government wants to cash in on tax revenue during what is arguably the world’s largest sporting event, the World Cup.

„The World Cup is so big an event that even those who never bet will do so then,“ says František Trantina, marketing director of Fortuna, a Czech sports book company. „There’s going to be a tremendous wave of interest in this tournament, and even if it will fade away a bit after the last match, the gaming companies want to get the most from it.“

But the ministry is only going so far. Its new regulations would still prohibit online casinos and could ban foreign online gaming companies from having Czech customers.

Closing the offshore door

But the ministry is not saying much about how it would do that.

Gambling industry officials say that the new regulations will block foreign companies from operating in the country, but the ministry has only said it will not make online casinos legal.

„Our opinion is that Internet gambling cannot be carried out,“ Růžek says.

The ministry originally banned Czech companies from creating online casinos in an effort to keep minors from using them and because such sites are not transparent.

But in recent years, the country has seen an infusion of foreign companies answering demand for such sites.

At least eight foreign online casino companies have Web pages written in Czech, according to the Finance Ministry. Some of the companies have even advertised inside the Czech Republic.

„The interest of foreign companies in the Czech market is understandable,“ Trantina says. „We have roughly 100,000 players here. It is easy prey for them.“

Czechs spend roughly 12 billion CZK (USD 504 million) on gambling annually, and the Finance Ministry estimates that 1.8 billion CZK of it went to foreign on-line casinos in 2005.

Legitimate gambling companies here are against the presence of foreign e-gambling companies because Web sites located abroad do not have to follow the same rules. To take any bet, companies are required by law to get a Finance Ministry permit, pay taxes and be open to state monitoring — rules with which no foreign Internet gambling company complies.

„Anything offering any difference is better than what the situation looks like today,“ says Zdeněk Zikmund, spokesman for Sazka, the country’s largest gambling company. „We consider the activities of foreign e-gaming companies in the Czech Republic illegal.“

Opening a door?

Some analysts say the Finance Ministry could be on the way to legalizing online gambling in the Czech Republic — eventually.

Internet gambling is booming worldwide. The industry, which made 92 million dollars in 2002, hauled in nearly 10.9 billion dollars last year.

Many countries have already seen the benefit of the growing industry and are loosening up their regulations accordingly, says Judi Kelly, owner and operator of the Sydney-based, and a gambling industry consultant since 1985.

„If anything, jurisdictions are either expanding their services or reviewing their regulations in order to make the jurisdiction more attractive to operators,“ she says.

One exception is the United States, where Congressmen Bob Goodlatte (R-VA) and Rick Boucher (D-VA) reintroduced the Internet Gambling Prohibition Act last month, which would ban any form of online casinos and betting. There is no U.S. law that says specifically that online gambling is illegal.

Czech rules that apply to online casinos still fall under its general gambling law of 1990, which laid out where people are allowed to place bets.

„At the moment the situation seems to be heading towards an environment in which both local and foreign companies will operate on the Internet,“ says Martin Hajek, owner of the gambling advocate

Trantina, of Fortuna, says that the Foreign Affairs Ministry needs to open up the Internet casino market eventually because restrictions have clearly failed.

„Forbidden fruit tastes good, and Czechs are smart enough to find their way through restrictions,“ he says.