Member Article

Hungarians fancying a flutter on their local football team winning the next game can only (legally) indulge in doing so through a state-owned monopolist. This is about to change, however, as Hungary is set to liberalise its online sports betting market providing opportunity for EU gaming operators.

Forced by EU Court judgments, the Hungarian government has taken the decision to liberalise the Hungarian online sports betting market by introducing a legislative package which would amend certain Acts already in force regarding the organisation of remote gamblingand other related instruments dealing with the licensing, operation and control of certain games of chance.

The legislation is presently scheduled to enter into force on January 1, 2023.

CJEU’s Unibet and Sporting Odds judgments – the Hungarian legislator responds

The draft bill aims to liberalise remote gambling in Hungary in light of the case law of the Court of Justice of the European Union on gambling, in particular to comply with the judgements of the Court of Justice of the European Union in the Unibet case and the Sporting Odds case, which specifically addressed shortcomings in Hungarian online gambling regulation.

Specifically, in Sporting Odds the Court of Justice ruled that the Hungarian online gambling legislation infringed the freedom to provide services because it reserved the licenses for online gambling to offline operators holding a concession for a casino situated in Hungary. Meanwhile, in Unibet the Court of Justice held that the Hungarian legislation on granting concessions for traditional casinos was contrary to the freedom to provide services.

Place your bets please – all EEA operators welcome, subject to conditions

The significant effect of the bill becoming law is that it means private operators established in the European Economic Area will soon be able to organise remote gambling on the basis of a licence issued by the Hungarian Gambling Supervisory Authority (“GSA”), ending the current monopoly of Szerencsejáték Zrt., the public gaming operator.

Prospective operators wishing to enter the newly opened market must adhere to, including the following:

• they must have at least 5 years’ experience of running remote sports betting or online casino games in any EEA state;

• they must meet the minimum share capital requirements of HUF 1 billion (approx. EUR 2.6 million);

• they must provide a minimum collateral amount of HUF 250 million (approx. EUR 650,000); and

• they must pay a “remote gambling organising fee” (e.g., a licence fee) to the GSA of HUF 600 million (approx. EUR 1.6 million) for the entire duration of the licence, which may be a maximum of 7 years’ long, as determined by the GSA’s discretion.

As shown above, the bill delegates to the President of the GSA the authority to issue regulations determining the maximum duration of the licence and the minimum amount of collateral to be provided by the remote gambling operator – considerable power.

Gamble responsiblyA liberalised online betting market means more private companies which, in turn, can mean higher risk of encouraging excessive gambling. This is why the draft also aims to emphasise player protection aspects and introduce guarantee regulatory elements which protect the interests of players.

For example, it introduces an action plan for player protection, which must be submitted by prospective operators and, in an unusual move, the ultimate beneficial owner of the prospective operator must attend the Hungarian regulator’s offices annually in person to report about the operator’s achievements in the field of responsible gambling during the foregoing year.

The devil’s in the detail – good to knowThe draft bill excludes those operators who have carried out unlicensed gambling in an EEA state in the ten years prior to applying for a licence under the bill. Additionally, any operator that provides unlicensed gambling services will lose its licence to provide its services in Hungary.

Furthermore, a remote gambling operator may only accept bet deposits by transfer from the player's payment account held with an authorised payment service provider, by online payment by credit card using the payment card linked to such account or, if the GSA allows it in the approved game plan, at its point of sale or betting office. At the same time, a company established for the purpose of organising gambling activities may only have a payment account if it confirms it has been authorised to organise gambling with a licence issued by the GSA.

Finally, the prospective legislation does not alter the regulation of online casino games – the status quo remains that only holders of land-based casino licences may offer online casino games.