High licensing fees threaten "fully liberalised" Hungarian market
Remote Gambling Association warns high, one-off licensing fees within Gambling Act could "threaten creation of a fully liberalised online gambling market".
High one-off licensing fees within Hungary’s latest Gambling Act “threatens the creation of a fully liberalised online gambling market”, industry lobby group the Remote Gambling Association (RGA) has warned.
The Hungarian government has submitted an amendment of its 1991 Gambling Act to the European Commission proposing a gross profits tax (GPT) of 20% for licensed operators. Despite the RGA, and the industry as a whole, favouring GPT as the most workable form of taxation and the lobby group stating it is “encouraged by its presence within the legislation” it has expressed concerns over costly licence fees.
The Hungarian government is proposing that operators pay a concession fee of HUF 100m (£300,000) for each type of game they offer in exchange for a five-year licence. State owned operator Szerencsejatek ZRT, however would be granted a license automatically with the government responsible for the remaining licence applications.
“The RGA considers the concession fees to be unrealistically high and likely to deter many operators from entering the market,” in said in statement.
The government hopes to generate revenues of HUF 30bn from taxing online gambling, however a number of experts have predicted that the bill as it stands would, according to the RGA, “frustrate” entry to the market for the majority of operators, “reduce consumer choice” and lead to a “reduction in expected tax revenues”.
Clive Hawkswood, chief executive of the RGA, said: “If the new regime is to be successful then it must offer appropriate regulation and a viable fiscal framework. Unfortunately, the combination of the new gambling tax and an unrealistically high concession fee would frustrate entry to the Hungarian market.
“International experience clearly shows that if the right balance can be achieved then it will result in clear benefits for the Hungarian Government and Hungarian consumers. Unfortunately we also have experience, from jurisdictions such as France that measures which effectively prevent the establishment of a competitive domestic market will encounter very serious problems and will lead to consumers continuing to seek out operators in other jurisdictions”.
In mid-September 2011 the Hungarian finance minister told a parliamentary committee that online gambling could be taxed from early 2012. This was followed in late October last year when the Hungarian government announced broad plans to regulate and tax egaming activities in order to compensate for revenues set to be lost following a nationwide ban on land-based slot machines.