The Slippery Slope of Regulating Gambling and Why the Czech Republic Is Doing It Wrong

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The Czech Republic, or how they call it – Czechia, is a Central European country with authentic and centuries-old architecture and long history. Covering the area of over 78 thousand square kilometers and having a population of more than 10 million, Czechia strives to be a highly-developed country and one of the favorite tourists’ destinations. However, what about those people who come to Czechia in search of big brick-and-mortar casinos? Is gambling allowed in this country? How does the government regulate online casino Czech Republic activities and vendors? And what is happening in the gambling arena of the Czech Republic? Read on this article to find everything out.

Controversial Gambling Regulations is the Czech Republic

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The history of gambling in the Czech Republic dates back to 1956 when Sazka SA was founded. Since that time, laws have been undergoing various changes. In 2012, the government failed to adopt new regulations, as it turned out to be incompatible with the requirements of the European Union. Gambling debates lasted for several years until the Czech Act on Gambling was adopted in 2016. That was a turning point where everything started.

The Senate and lawmakers passed the bill very quickly, and the President signed it right away, even though he had 30 days to do it. All the changes to the law came into force in January 2017. The new Act on Gambling provided new rules for online gaming licensing, as well as a new taxation system, which turned out to be rather strict. Despite the fact that foreign iGaming operators got the opportunity to join the Czech online gambling market leaders presented on this site by obtaining a corresponding license, they still had to face some problems. While the text rates for lotteries and sports betting operations remained at the same level (23%), the new tax rate on the revenue gained from slot machines increased from 28% to 35%. On top of that, each operator should pay corporate tax, which is 19% of the total revenue.

Everything could be alright unless the new Act on Gambling contained several items that allowed the government to block the websites that did not obtain the Czech gaming license. The Czech Republic is not the first European country that comes across the problem of illegal online gambling, but the Czech decided not to stand outside.

Consequences of Implementation of the New Gambling Act

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Since the Finance Ministry headed by a billionaire Andrej Babis got almost an unlimited power to shut down any online website, the anonymous group of hackers decided to do the same in return. They shut down the websites of such giants as Agrofert and Penam, saying that it was time to “move against it”. The websites were unavailable for only five minutes, but that was more than enough to let everybody know how far the hacker group could go.

The hackers demanded the cancellation of the new law that made a lot of troubles for many well-known online operators. Many famous and popular among gamblers online casinos left the Czech gambling arena right after the new law came into force. These include such casino giants as William Hill and Marathon bet. This also created some troubles for those Czechs who had some cash on the balances of these casinos.

Andrej Babis turned out to be pretty decisive in this situation. He met with a representative of the Anonymous hacker group and let him know that the same rules are applied in many other European countries and are aimed against illegal operators that are avoiding paying taxes.

A couple of politicians and Senators also started doubting the constitutionality of the new rules and send it for further consideration by the Constitutional Court of the Czech Republic. The latter said that this was the only way to defeat illegal gambling on the web.

Current Situation on the Czech Gambling Arena

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The new Act on Gambling was implemented after all. While many online casinos stopped offering their services to players from Czechia, some of them decided to stay on the market, Thus, Pokerstars turned out to the first operator to obtain the Czech gambling license.

At the end of 2017, the Finance Ministry published statistics showing that the revenue generated from the online operations increased by 29% compared to the previous year. More than that, the Ministry decided not to stop on the achieved. In April 2019, they announced some changes to the taxation system that included higher tax rates for most forms. While the taxes for slot machines will remain the same (35%), the tax rates for other activities will increase from 23% to 30%. However, many politicians have already criticized the new rules, claiming that they are inappropriate and can lead to the growth of the grey market.