Czech Republic Moves Towards Opening Market to Foreign Operators

Published April 17, 2016 by Lee R

Czech Republic Moves Towards Opening Market to Foreign Operators

The Czech government is ready to welcome foreign iGaming providers, though slot operators are not happy with the conditions.

After a January delay, a new motion approved by the Czech legislature has gambling providers preparing to adapt to new tax requirements and a potential onslaught of new competition.   

The Measures

The Czech lower house has approved legislation to raise taxes on gambling firms and open the online market to foreign operators.  After a delay in January,  final approval was issued last Wednesday.  The new measures will take effect next year, pending approval by the Senate, which at this point is considered a mere formality.

Current Environment

A handful of gambling firms currently operate in the Czech Republic´s domestic gambling market, including Prague-listed sports betting specialist Fortuna Entertainment Group.  

Foreign Operators Welcomed

The legislation opens the door to foreign operators with the caveat of the Finance Ministry holding the authority to shut down any betting website it deems illegal.

Economic Impact

Gambling represents a decent percentage of Czech economic output.  Last year, Czechs spent 138 billion crowns ($5.8 billion) on gambling, translating to approximately 3.5 percent of annual economic output. 

More than half of the 2014 totals were spent on mechanical and video slot machines.

According to Finance Ministry estimates, the bill will bring in estimated increase in revenues of 1.5 billion crowns annually.  

Safeguarding Against Addiction

The new legislation is also implementing preventative addiction measures, with a second bill set to impose stricter rules for the use of slot machines and video-lottery terminals.

Slots Hit

Slot machine operators are the main unhappy party with the new levies, having been tabbed for an increase of one fifth by the new legislation--from the current level of 28% all the way to 35%.  The indignance clearly arises from the fact that the tax for other areas such as sport betting and lotteries will remain the same at a lower 23%, keeping in mind that gambling taxes are levied on top of a standard corporate tax rate in the Czech Republic of 19 percent.

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