Hungarian Government risks closing its market with high licensing fees

The Remote Gambling Association has today expressed concern that the presence of high ‘one off’ licensing fees within the new Hungarian Gambling Act could threaten the creation of a fully liberalised online gambling market.

The Hungarian government has submitted an amendment of their 1991 Gambling Act to the European Commission which proposes a gross profits tax (GPT) of 20 per cent for licensed operators. The industry considers GPT the correct method of taxation and is encouraged by its presence within the legislation.

However, alongside the tax proposals, the government is also proposing that operators pay a concession fee of HUF 100 million (£300,000) for each type of game they offer in order to gain a five year licence. State owned operator Szerencsejatek ZRT would be granted a license automatically with the Hungarian Government deciding on all other applications. The RGA considers the concession fees to be unrealistically high and likely to deter many operators from entering the market.

The Hungarian government has hoped to generate revenues of about HUF 30 billion from taxing online gambling. However, several leading experts have predicted that as the bill would frustrate entry to the market for the majority of operators, it would reduce consumer choice and lead to a reduction in expected tax revenues.

Clive Hawkswood, CEO of the RGA said: “If the new regime is to be successful then it must offer appropriate regulation and a viable fiscal framework. Unfortunately, the combination of the new gambling tax and an unrealistically high concession fee would frustrate entry to the Hungarian market.

He added: “International experience clearly shows that if the right balance can be achieved then it will result in clear benefits for the Hungarian Government and Hungarian consumers. Unfortunately we also have experience, from jurisdictions such as France, that 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”

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