Hungary State Monopoly for Online Sports Betting to End in 2023

Legal online sports betting and casino gaming are becoming commonplace globally. Recently, countries like the Netherlands, Germany, and Ukraine have relooked into their gambling laws to make them more robust and accommodating. Hungary intends to follow the same direction after notifying the European Commission in February 2022 of its plans to expand its gaming sector. 

Under the latest proposals adopted by the Hungarian legislature in July 2022, online gambling operators under the EEA (European Economic Area) will get licenses from SARA (Supervisory Authority of Regulatory Affairs). The regulation proposes the market launch on January 1, 2023. However, state-run land-based casinos will get priority in offering online casino games. Also, the law doesn’t specify the number of licenses issued by the Hungarian regulator. 

Remember that in 2014, the government extended the brick-and-mortar casino laws to cover the online gambling sector. In return, the regulated gambling industry operated directly under the government. The 100% state-owned Szerencsejáték Zrt currently offers all online sports betting services, with land-based casinos allowed to apply for online poker and casino licenses. 

The License Won’t Come Cheap

As expected, Hungary will play hard-to-get with their iGaming license. After all, about 77% of the Hungarian population gamble online. Before applying for the permit, the EEA operator will appoint and register a representative before SARA. The regulation stipulates that the representative must be a Hungarian native with a Master’s Degree in Economics or Law. Also, the representative must have a clean criminal record. 

Meanwhile, the operators have a maximum of 75 days to register as a representative, and they’ll wait for 120 days to get the license. Another 15-day deadline is added for registration with the tax authorities if the operator isn’t registered. Other licensing conditions include:

• The applicant must be operational in another EEA country for at least five years. 
• The operator must set up a Hungarian branch with a share capital of HUF 1 billion (€2.5 million).
• HUF 250 million (€650,000) will be paid to SARA as security. The body is at liberty to set an amount higher than HUF 250 million. 
• The applicant will pay HUF 600 million (€1.5 million) as the license fee. 
• The EEA applicant can only offer remote gambling through another company if registered in Hungary. 
• Operators must prepare reports on their player protection action plan annually and inform SARA.
• The operator’s managing director and the beneficial owner must be present during consultation meetings with SARA. 
• An operator cannot run multiple gaming websites under the same license.

If the remote gambling operator meets these conditions, the license will be valid for seven years. However, SARA can determine the period as long as it’s within the provided limit. 

Strict Remote Gambling Payment Terms

The draft law also touches on online gambling payments once it becomes law. According to the law, the remote gambling service provider will only process payments through the bettor’s bank account or financial service provider approved by the Hungarian National Bank. The operator can also process payments via a credit/debit card linked to an authorized financial institution in Hungary. And yes, bettors can make cash deposits at the operator’s offices. 

The draft regulation also sets down multiple responsibilities for payment service providers to enforce the above requirements. For example, they will suspend payment accounts linked to illegal gambling activities on the advice of SARA. The payment service provider must also monitor the registration of restricted accounts on the approved website and take the appropriate action without prior notice. 

Will the New Laws Calm the Waters?

Hungary is no stranger to controversies regarding its gambling rules. In 2021, Victor Orban, the Hungarian Prime Minister, extended the licenses for betting allies to 2056, when they were to expire in 2024. To defend the "unorthodox" move, the government said that the 35-year extension was in the country’s best economic interest. Critics claimed this was an "unfair" measure to secure political support from his betting allies. 

Earlier in 2014, major European online gambling players, Sports Odds and Unibet, sued Hungary at the CJUE (Court of Justice of the European Union). They claimed that the new gambling laws disregarded Article 56 of the TFEU (Treaty and Functioning of the European Union). The operators claimed that the regulations were maliciously intended to prevent member states from offering cross-border services. 

Thankfully for them, the CJUE ruled against Hungary, claiming their new licensing regime unlawfully left out EEA-licensed operators. The bench reiterated that the country must adopt gambling regulations that meet transparent, objective, proportionate, and non-discriminatory criteria. This ruling is one of the reasons why Hungary fast-tracked its submissions to the European Commission in February 2022. So, it’s safe to conclude that the draft law will appease most quarters. 

A Lot Still Needs to be Done!

The European gambling regulations continue to change to meet the modern realities of the game. Although operators can start preparing to apply for the SARA license, most already accept Hungarian bettors. 

Consider this; the new Hungarian gambling laws don’t touch anywhere on e-wallet payments. Note that e-wallets are the most attractive online casino banking option today. That means online casino players will continue to flock to offshore websites, which are more flexible regarding payments. 

Another area that the law failed to address is whether winnings will be taxable. Currently, all winnings at legal operators are exempted from taxation, with the treasury taxing casino operators instead. So, it will be interesting how the "gray areas" of the bill are sealed going forward.