Hungary Ending Online Monopoly Without Caveats Unlikely, Says Lawyer

February 8, 2022
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Legal changes proposed by the Hungarian government would allow private operators to apply for an online licence, ending the current monopoly, but at least one legal expert does not expect animosity between the government and offshore companies to conclude any time soon.

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Legal changes proposed by the Hungarian government would allow private operators to apply for an online licence, ending the current monopoly, but at least one legal expert does not expect animosity between the government and offshore companies to conclude any time soon.

The legal changes were submitted to the European Commission this month and are scheduled to enter into force on January 1, 2023.

Under the proposed licensing regime, operators will have to pay HUF600m (€1.7m) "for the entire period of the licence".

The changes are intended to improve the protection of players from gambling-related harm online, as well as ensuring the country’s laws are compliant with EU legislation, the draft says.

However, operators deemed to have offered their services illegally within the EEA during the past ten years will not be granted a licence, it says.

Viktor Radics, a dispute and gambling lawyer at DLA Piper, has said ending the monopoly without any caveats would be "very surprising" after a decade of legal battles between Hungarian authorities and international operators.

The formation of the online market will depend on the regulator’s interpretation of the draft provisions, which could go either way and can “definitely be adverse to international operators that have been challenging the Hungarian regime”, Radics told VIXIO GamblingCompliance.

In a blog post in January, Radics highlighted that the Hungarian gambling regulator had suddenly reopened investigations into operators offering their services to Hungarian consumers without a local licence that had remained mothballed for several years.

The lawyer said it remains unclear what the intention of the regulator is regarding these enforcement cases, given that the Court of Justice of the European Union (CJEU) ruled that Hungarian gambling laws that the regulator used to sanction online operators between 2014 and 2018 are incompatible with EU law.

There are also a number of “unusual provisions” in the proposed new sports-betting regime, according to Radics, such as requirements for the operator’s director to be a Hungarian citizen and the need for the owner to report to the regulator's offices in person to discuss responsible gambling achievements.

“These might be of concern from an EU law perspective,” Radics said.

Additionally, “that the new regime keeps online casino services linked to land-based casinos is clearly in violation of the CJEU’s judgment in the Sporting Odds case (C/3-17). So overall I do not expect the draft bill to pass the EC scrutiny without any issues”, he said.

There is no indication of how many licences would be made available in the new proposed licensing regime.

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.

Separately, on October 1, 2021, the Supervisory Authority for Regulated Activities took over as the new gambling regulator.

Just a few weeks later, the new supervisory authority introduced a responsible gambling decree, which entered into force on November 1, 2021, which requires operators to provide information about the damages of excessive gambling and the risks of developing a gambling addiction inherent in their products.

The decree, which is also incorporated into the proposed licensing law, also includes a duty for operators to restrict vulnerable players, provide tools to limit play and offer self-exclusion measures, among a host of other requirements aimed at protecting players.

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