Online gambling law Czech Republic

Online gambling finds itself in a tricky position at present in the Czech Republic. Only a small portion of the Czech gambling market is regulated, yet poorly defined laws and a general reluctance to tackle unlicensed operators means many continue to offer their products to Czech consumers regardless.

Czech Republic czech-flag
Population 10,512,208
Language Czech
Online gambling regulation Ministry of Finance
Currency Koruna
Legislative authority Chamber of Deputies
Percentage of population online 72.97%

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Harsh conditions

Sazka logoGambling is a popular form of entertainment in the Czech Republic. However, current legislation is widely considered to be insufficient to regulate the online market, and too restrictive for licensed operators.

At present, licenses can only be issued by the Ministry of Finance for operators offering fixed-odds gambling, although some exceptions can be made now under the terms of the 2012 Lottery Act. The corresponding licenses are issued by the State Supervision of Gambling and Lotteries Department of the Ministry of Finance, and there are five licensees: Sazka, Synot Tip, Chance, Fortuna and Tipsport.

Current levels of taxation impose a 20 per cent tax on operators for gross wins, on top of a corporate tax rate of 19 per cent. Both are considered prohibitively high when compared to other European Union member states.

A lack of action

While these restrictive laws apply to current license holders, little is done to stop unlicensed operators from offering their services to Czech customers. This includes offering Czech versions of their sites, some of which use .cz domain extensions.

A big part of this comes from the reluctance of Czech authorities to clamp down on unlicensed online gambling operators, especially those from abroad. Frequently, the reason given is that they see nothing criminal in such activities, leaving them unwilling to intervene.

That said, a few token efforts have been made to at least limit their presence. Recently, the Czech Council for Radio and Television Broadcasting has started proceedings against TV broadcasters who have broadcast adverts for unlicensed poker operators.

However, no fines or other punitive measures have been forthcoming as yet. For their part, the affected broadcasters have argued that as poker is a game of skill, the laws behind these measures do not apply.

Sharp criticism

Casino Euro Czech versionThis inactivity, coupled with the harsh tax regime and restrictive licenses, has drawn criticism from licensed operators. According to them, this leaves them wholly unable to compete with unlicensed operators who can offer Czech consumers a full range of gambling products.

Four of the five gambling operators have openly called for new legislation that would enable them to offer online casino games, poker and similar products. While the remaining one, Sazka, has already been the subject of a takeover after going bankrupt.

The time is right for change

Nor are the Czech Republic’s beleaguered operators the only ones seeking change. As with many EU member states (such as Germany and Sweden), the European Commission has been looking into the legality of the Czech Republic’s gambling laws. And some Czech politicians and lawmakers have already questioned whether its legislation is in accordance with European competition laws.

Some concessions have been made, however. The new Lottery Act removed the need for licensed operators to be entirely based in the Czech Republic (requiring only that an office be present). I theory, this opens the door for foreign operators to formally set up in the Czech Republic.

However, until they’re allowed to offer their full range of products at a sensible tax rate, it seems unlikely that many will want to apply for licenses. As a result, the Czech market still has a long way to go.

Timeline

  • 2012: Sazka taken over by KKCG investment group.
  • 2012: Lottery Act opens up market slightly to allow foreign companies to enter Czech market.
  • 2012: Council for Radio and Television Broadcasting starts proceedings against broadcasters who run ads for unlicensed operators.
  • 2012: Two Czech gambling firms accused of using false charities to embezzle money.
  • 2011: Czech operator Sazka declared bankrupt.
  • 2010: Law banning adverts from unlicensed gambling operators considered.
  • 2010: President Vaclav Klaus vetoes amendment to gambling law that would see municipalities become responsible for gambling regulation.
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