Devil In the Details' Of Hungary’s Online Reforms

July 25, 2022
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​​​​​​​As Hungary progresses with plans to open up its online betting market, it is still unclear how favourable authorities will be to foreign gambling operators, according to a local legal expert.

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As Hungary progresses with plans to open up its online betting market, it is still unclear how favourable authorities will be to foreign gambling operators, according to a local legal expert.

Last week, Hungary’s parliament approved legislation amending its online gambling laws.

To enter into force, it still needs to be approved by the country’s President and, at the time of writing, the final version of the amendments are not publicly available, but will likely be published in the country’s official gazette soon.

Viktor Radics, a dispute and gambling lawyer at DLA Piper, believes that if Hungary’s legal issues over the past ten years are anything to go by, a question remains whether this is “a genuine opening of the market for international operators”.

After years of restricting online gambling licences to monopolies and its established land-based sector, Hungary was ordered via a Court of Justice of the European Union ruling in 2018 to reform its laws.

“The framework of the new regime might indicate [reform], even though there are some legal concerns. Opening the market is usually a good sign. However, the actual implementation, how many licences and on what financial terms remains to be seen. The devil is in the details. It all depends on the implementation of the rules,” Radics told VIXIO GamblingCompliance.

One major change in a later version of the laws is a new payment blocking regime as an enforcement tool, which Radics predicts will be “very significant for all online operators”.

Additionally, the latest proposed changes have reduced the time operators that have previously targeted Hungarian consumers without a local licence have to wait to join the market, from ten to five years.

The original version of the legal changes was submitted to the European Commission in February 2022, with one main impetus of the bill being to ensure the country’s laws are compliant with EU legislation, the draft says.

Hungary’s new gambling legislation will be shaped by two legal acts, the second being submitted by the Supervisory Authority of Regulated Affairs (SARA), which took over as the new gambling regulator on October 1, 2021.

“We don't know if this final version could be changed as well,” Radics said.

When the legal changes enter into force, according to comments made by the head of the SARA, the regulator will relaunch enforcement proceedings against unlicensed operators, including criminal sanctions.

Radics believes there is a political will to step up action against unlicensed operators, remembering that in 2013 there was “an army of sanctioning and IP blocking issued and criminal proceedings, ending with a legal battle with EU”.

That ruling, in 2017, went in favour of Kindred brand Unibet.

Currently, in Hungary, lottery games, betting and horseracing are operated under a state monopoly, including online.

Slot machines outside casinos are banned and the number of casino licences is limited to 11 in total. Online casino games can only be offered by land-based casino concessionaires.

The rules regarding offering online casinos will not be changed under the draft proposals, inviting speculation of further EU legal challenges.

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