Ivan Kurochkin: “Czech Republic has amended the gambling regulation”

Ivan Kurochkin: “Czech Republic has amended the gambling regulation”

Ivan Kurochkin: “Czech Republic has amended the gambling regulation”
At the beginning of 2024, the regulation of gambling has changed in the Czech Republic. The focus of these changes is new conditions for operators, taxation, and regulation of responsible gambling. New amendments were made to the Gambling Act and the Income Tax Act. The new amendments expanded the concept of gambling. Now not only Czechs but also foreigners can take part in gambling in the Czech Republic. This indicates that the government has plans to generate more revenue from the gambling industry. The capital requirements for operators have also changed – it should be at least 50,000,000 CZK (≈2,200,000 USD). Previously in the Czech Republic, operators needed to obtain a basic license for each type of gambling. The licensing process has undergone simplification, now comprising two distinct procedures: an “initial license” and a “basic license for a specific game type”. The initial license is the decision that establishes the right to issue the basic license. To obtain an initial license, it is necessary to fulfil the financial and tax requirements (no debts, good standing, etc.). However, this type of license does not make it possible to operate. The basic license for a specific game type is a decision to issue a permit for a specific type of gambling. The Ministry issues a basic license: a) if the operator has an initial license; b) if the operator does not violate public order; c) if the correct operation of the gambling is guaranteed and the appropriate technical equipment is provided; d) if the operator has the material, human and organizational capacities, etc. Unlike previously, operators are no longer required to repeatedly demonstrate and document various general conditions and requirements when seeking a license for a new game type. According to the transitional provisions of the law, operators with a valid basic license under the old must receive an initial license under the amendment. The taxation field has also changed. The Czech Republic has introduced a tax on winnings for players. To understand whether this tax applies to the player, it is necessary to know the formula: if the difference between the amount of winnings and the amount of deposits for the tax period exceeds 50,000 CZK (≈2,100 USD), the player must pay the winnings tax. The Income Tax Act outlines the tax rates and calculation methods for personal income tax. Specifically, it sets a tax rate of 15 % for income up to 36 times the average wage, and 23 % for income exceeding that threshold (in the end of 2023 the average wage in the Czech Republic ≈40,000 CZK (≈1,700 USD)). In addition, the new regulation increased the rate tax of betting – to 30% of the gross gaming revenues (GGR). Recently, changes in the regulation of bonuses in The Netherlands, Belgium, and Sweden happened. So, it can be concluded that the issue of bonus regulation may be a common trend in European countries. The new changes in the Czech Republic once again underline the importance of this issue. Based on the new regulation, operators in the Czech Republic will be prohibited from offering risk bonuses to players. In addition, operators will not be allowed to offer any bonuses in the form of food, tobacco, drinks, etc. From our point of view, such a step by the regulator will not favour the presence of various advantages for players to participate in gambling. As a result, it will help to decrease the level of players’ involvement in the gambling industry. Continuing the analysis of the problem of Czech involvement in the gambling industry, the new legislation has significantly changed the regulatory approach to responsible gambling. The operator must now provide all measures to prevent players from participating in gambling: a) information obligations (informing the player about the quantity of time spent, amounts won and lost, exclusion measures, etc.); b) real mechanisms for the temporary exclusion of players (if a player uses such a mechanism during a game, the operator will not be able to accept bets from him for 48 hours). The new regulation has increased the conditions on the player’s account. A gambling player is obliged to indicate the number or other unique identifier of the registered payment account or registered payment instrument when he registers. The owner of the registered payment account or the owner of the registered payment instrument can be identified based on this number. Funds can be deposited to the user account up to a total amount of 10,000 CZK (≈425 USD) in 24 hours. From the user account, funds can be paid out in a total amount of up to 10,000 CZK (≈425 USD) per day. Perhaps these changes were necessary to harmonize the national legislation with the legislation of other countries. As we mentioned above, the concept of gambling covers not only gambling in the Czech Republic but also outside the Czech Republic. Thus, the new regulation of responsible gambling was necessary to enable the participation of foreigners. Of course, there are also other reasons – the high level of gambling among Czechs. Based on the Report on Gambling of the National Monitoring Centre for Drugs and Addiction in the Czech Republic, in 2022, 44-56% of individuals aged 15 and above engaged in gambling activities, including lotteries, within the past year. Among adults, 16-25% participated in non-lottery gambling, with 17-18% opting for online gambling. Additionally, the report highlights a trend among Czechs of experiencing financial losses apart from the aspect of player involvement. The total gambling losses in the Czech Republic for 2022 amounted to 53,800,000,000 CZK (≈2,300,000,000 USD), marking a 14,400,000,000 CZK (≈622,400,000 USD) (36.5%) increase from 2021. Overall, 759,300,000,000 CZK (≈32,900,000,000 USD) was wagered in gambling activities, up from 393,100,000,000 CZK (≈16,900,000,000 USD) in 2020 and 526,400,000,000 CZK (≈22,800,000,000 USD) in 2021, while 705,500,000,000 CZK (≈30,500,000,000 USD) was paid out in winnings, compared to 360,400,000,000 CZK (≈15,600,000,000 USD) in 2020 and 486,100,000,000 CZK (≈21,000,000,000 USD) in 2021. In conclusion, the Czech Republic became another European country that has changed its regulations for gambling. For the first time gambling is not limited to the territory of the Czech Republic. Also, the new legislation focuses on responsible gambling. Such changes may make the market more attractive to operators. Image credit: Casino Guru News

10 APR 2024

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