Hungary’s long and complex relationship with gambling

There’s no question about it. Gambling is huge business worldwide. By 2023 it’s projected that the money generated by gambling will hit the incredible figure of over $525 billion a year.

But the figures only tell part of the story. The industry contributes to the economy in so many ways. Firstly, there are the thousands of people employed, working as everything from computer experts, to analysts, web development teams and digital marketing professionals (SEO, SEM, Media buy, campaign managers), plus there are administrative staff and dealers, too. There are also all the entertainment resorts that make a large proportion of their profits from visitors who have been primarily attracted by the chance to visit their casinos. Finally, there are the millions of dollars of tax revenues that are raised which help to bolster participating countries’ economies.

For example, in the UK where there are multiple online gambling sites and 152 physical casino premises to date, the gambling industry provides 106,670 jobs and contributed £1.5 billion to good causes from the National Lottery.

So, for a country like Hungary which relies heavily on tourism (with around 10 million visitors each year), having a reasonably relaxed approach to gambling would seem attractive.

Hungary’s gambling history

Compared with its European neighbours, it would be fair to say that Hungary is on a par with many but with one major difference. The state maintains a stronger grip than some other countries and this virtually amounts to a monopoly. While this is undoubtedly good in terms of the revenue that it can raise, it does have certain disadvantages – the main one of which is a lack of choice for gamblers themselves.

In 1752 the country’s first lottery was established under a monopoly set up by Queen Maria Theresa Habsburg, by the 19^th century both card games and horse racing had both become very popular pastimes.

This continued to be the case right up until the middle of the 20^th century when gambling of all kinds was banned outright by the government.

This state of affairs continued right up until 1991 when the newly democratic country was in a position to relax many of the laws that had been in place while the country was under communist rule. Gambling was legalized and put under the control of two separate bodies. Szerencsejáték Zrt became responsible for lotteries and sports betting, while the National Tax and Customs Administration of Hungary was established to take care of all other forms of betting.

Gambling in the 90s

At the start of the 1990s, online casinos were in their very earliest days and were not covered in the legislation until 2013, when new laws were introduced. Online gambling was placed under the control of Szerencsejáték Zrt and some very strict rules were put in place to limit the possibility for foreign casino operators becoming part of the Hungarian scene. The most restrictive of these was the ruling that in order for an operator to open an online casino they would also have to have a “bricks and mortar casino” operating on Hungarian soil at the same time.

In addition, the cost of the licence needed for online operators is high– as much as HUF 200 million (€600,000) – a figure that has effectively prevented many of the biggest names in online gambling from attempting to enter the Hungarian market.

This seems quite shocking when you compare it to the amount of leading sites who operate in the UK market which is stringently regulated but charges far less. The enormous success of online gambling in the UK shows just how profitable it can be for both operators and the economy, with many sites providing premium gaming experiences. Head online for some thrilling slots and huge Jackpots. You’ll find a variety of roulette tables with real live dealers as well as an exciting online blackjack experience.

Online gambling today

It’s estimated that there are around 250 online casinos that operate in Hungary, although not all of them do it 100% legally.

That said, there have never been any prosecutions for players as the authorities are more interested in focusing on the casino operators themselves. However, some of these have started to fight back.

For example, in February 2018 a case was brought before the European Union’s Court of Justice in which one operator was protesting about receiving a fine of HUF 3.5 million (€10,500) for offering its services to Hungarian players without first acquiring a license.

While EU rules do state that countries are allowed to restrict the access of foreign operators to a particular market there are limits to when this is permissible. It is generally allowed if it’s to prevent excessive access to methods of gambling. But it’s not allowed if the objective is to charge high amounts to obtain licenses. The court also found that the requirement to have a land-based casino qualified as unfair discrimination.

In its judgement the court ruled that the Hungarian authorities position on allowing online operators to trade, “does not constitute a condition indispensable to the achievement of the desired objectives, and that there are less restrictive measures which are capable of attaining them.”

The court also referred to another case heard previously in which an online casino operator was blocked by the Hungarian authorities as they did not have 10 years’ trustworthy activity behind them. This was also judged to be too restrictive and against EU law.

Where to next?

As to where the Hungarian position will be headed on online casinos, it’s hard to say. It could be that it’s time to relax the rules and become a little more like the UK, especially as so many Hungarians currently gamble online anyway. On the other hand, there have been moves to pass a law forcing financial institutions to block payments to unlicensed gambling sites.

With the monopoly held by Szerencsejáték Zrt seemingly growing stronger and stronger, it might be overly optimistic to expect the situation to change anytime soon but rest assured that online operators everywhere will be watching with great interest.