The Czech Republic is reputed as the European country with the highest number of residents that engage in gambling activities.
From the Country’s borders to its major cities and towns, and even in the smallest villages, gaming machines are commonplace. Despite several attempts by the local councils to ban the gambling sites, the sites continue to proliferate across the country. At one point in the recent years, it was estimated that there were six times more gambling machines in the Czech Republic than there were in the rest of the EU combined.
By the end of 2014, the number of such establishments stood at around 5400, plus about 570 casinos. While the number of gambling machines reduced over the year by close to 10%, it still stood at about 67000, down from the highest of 102000 in 2011.
The Country, in 2014, spent 138 billion crowns on gambling. This amounted to a 10% rise despite the attempted crackdowns. The government recently signaled a move to apply more stringent regulations in the gaming industry.
This article explores the situation of Czech’s gaming atmosphere including the newly proposed Two-tiered Gambling Tax rates.
General Overview of Czech Republic’s Gambling Industry Regulation
While the residents of Czech Republic are enthusiastic about engaging in various gaming activities, the regulation issues undermine the growth of the industry and more so to the online gaming sector as foreign operators are met with more stringent restrictions.
The Ministry of Finance is the principal body mandated with the issuance of licenses to agencies willing offer betting services, but certain exceptions apply. Currently, Fortuna, Sazka, Chance, Synot and Tipsport, are the only authorized operators on the Czech’s territory.
While all the operators in the gaming industries a required to pay solid fees, the Czech Republic gambling regulators only pay attention to the licensed operators. The operators on the unregulated markets freely provide their services unabated. Some of the unlicensed operators even run .cz domains, providing gaming services in the Czech language.
The main reason for Gambling authorities not paying keen to the unregulated gambling operators was that their activities were not considered illegal. Nonetheless, the authorities decided to limit the presence of these operators with campaigns against the spread of unlicensed operators. This issue sparked disagreements with broadcasters.
The regulated market operators also clashed with Gambling regulators with the claims that their business was being endangered by their unlicensed competitors offering a wider range of gambling services.
These licensed operators urged the authorities to review the existing legislation, revise the laws and allow local operator to offer their gaming products in an online format.
The European Union also weighed in on the inadequacy of the Czech Republic’s gambling regulations and demanded that the laws promptly reviewed to be in line with the EU’s set requirements.
Some amendments were effected indeed. Licensed operators no longer have to be located in the country. The latest regulation just requires an operator to have an office, a move that has enabled international gaming service providers to venture into the market.
Nevertheless, it will take considerable time before the operators start offering fully fledged services online. This seems to be a hurdle that might the full range of services online, which seems to be an obstacle that might keep away international investors from applying for a license.
The Czech Republic Proposes a Two-tier Gambling Tax Rate
The Czech Republic recently proposed a higher tax on casino products than on sports betting, with its latest plan for revising the gambling tax regime.
For quite some time, the government has been pondering about boosting its flat-rate 20% tax on all gaming revenue. In the past week, a media outlet reported of politicians approving a plan to impose a 23% tax and a 28% tax, on sports betting and casinos, respectively. This would also see land based operators parting with a daily fee of US$ 4.50 per machine, two times the current rate.
The new tax regime would cut across land-based and online gambling. The Czech Republic is yet to welcome the international online operators, but it plans to begin the licensing process once the regime becomes effective in 2016.
.This proposal has to pass a second reading in Parliament. However, this is not expected to take place for a few weeks. There is a high probability that politicians will settle for the implementation of a 25% tax on all forms of gambling as originally suggested by the Ministry of Finance.
According to the media outlet, it will be a reason for celebration to Czech betting operators if the 23% tax rate is chosen. The outlet estimates that Tipsport would likely save close to 40 million crowns come in the year 2016, while Saxka could save 80 million, and 30 million for Fortuna Entertainment Group.
All the proposed changes in Czech Republic Gambling legislations are expected to come into effect in 2016. It is widely believed that the changes will live up to the expectations with regards competitions, technological features, and even players’ security.