Internet gambling remains inaccessible to outsiders
[HU]
Even as the internet finally matures into an everyday commodity in Hungary, online firms remain unable to tap into the highly lucrative world of online gambling, which remains pretty much off-limits here to all but one company.
“Online gambling is one of the most promising money-making areas on the internet, but in Hungary there are serious legal concerns,” said Balázs Weyer, chief editor of Origo, the internet portal of market-leading ISP T-Online Hungary Rt.
Gambling remains very much a restricted venture, even as T-Online Hungary experiences steady growth in revenue generated through the internet, with the biggest driver being ad sales. On a positive note, however, Weyer observed that the European Court of Justice has vowed to examine the issue.
Despite the restrictions, a couple of foreign firms have made inroads toward extending services to Hungary: the U.K.’s Sportingbet Plc in 2004, followed by Vienna-based BetandWin.com Interactive Entertainment AG in 2005.
George Hudson from Sportingbet’s press office told the BBJ last week that his firm complies with all EU market legislation when deciding to open in a new market within the union.
“Given that Sportingbet is a U.K.-based company governed by U.K. law, it is able to operate in all EU member countries under terms of the EU’s framework directive on the free provision of services,” he said.
Hungary’s regulators, however, take quite a different view.
“In Hungary, only state-owned betting firm Szerencsejáték Zrt is licensed to provide online betting services,” said László Oravecz, department head at the Gambling Supervision.
Would-be market entrants feel that Hungary’s regulator is wary of foreign firms, and that the impact of improved odds for competitors could threaten Szerencsejáték’s cozy monopoly position. The gambling enterprise’s after-tax profit of Ft 1.5 billion (€5.3 million) in the first quarter of 2006 represented a 74.4% increase on the corresponding period of 2005. Szerencsejáték has spent Ft 300 million recently on developing its online gaming system, which includes the launch last Monday of its sports betting game Tippmix. Online sales of the game are expected to bring in an additional Ft 1 billion in revenue, claimed CEO Gábor Székely.
Can’t beat the system
Though advertising of online gambling sites such as BetandWin.com is illegal in Hungary, some companies still do it because the fines imposed are less than the advertising revenue, noted Weyer.
According to Oravecz, Hungary’s 1991 Gambling Act states that publishing offers for gambling services via telecommunication devices and networks – including the internet – requires the approval of the Gambling Supervision. He added that the licensing obligation also applies to local organizing, sales, marketing and advertising activities of foreign gambling services.
“The supervision has not issued a license for any online betting service providers other than Szerencsejáték,” he said. “So, other websites offering such services operate in a way that violates legislative measures, as such activity may be regarded as illegal.”
Oravecz added that people who decide to avail themselves of such gambling services run the risk of not being able to legally claim their prizes within the territory of Hungary.
For its part, the EU has initiated proceedings against certain member states for possible infringement of EU law with regard to internet gambling. Nevertheless, the potential for internal market distortion remains high, and the EU’s regulatory board does not expect any significant progress to be made in improving the overall EU gambling environment in the near term.
“The tax-driven fiscal protectionist policies adopted by several member states present a large political obstacle, and are serving to weaken political will within the EU to tackle the issue with any alacrity,” Sportingbet noted in a report.
Iván Bartal, an associate at Budapest law office Freshfields, observed that the chance of Szerencsejáték losing its online monopoly is quite unlikely in the short term.
“The European Commission recently sent a formal request to Hungary requiring information on whether the provisions of the Hungarian Gambling Act concerned with betting activities are compatible with Article 49 of the EC treaty that guarantees the free movement of services,” he said.
Bartal added that the EC could launch a formal infringement procedure, which could end up before the European Court of Justice.
“The ECJ could penalize Hungary if the country falls foul of a court ruling or, for instance, fails to amend its legislation,” he warned.
However, Bartal added, this could take years, and it is also possible that no such proceedings would ever be launched.
“Besides,” he noted, “these proceedings wouldn’t generally affect Szerencsejáték’s monopoly position, as it’s really up to Hungary’s Parliament to amend the applicable law.”
Even so, EU law could eventually override Hungarian law.
“In future, there may be a specific set of regulating guidelines or principles that member states will be required to follow,” Bartal said.
Again, however, it would be unwise to bet much on anything happening very soon in this regard, given the high level of contention surrounding the issue and the wide variety of views concerning compatibility of gambling laws between member states and the EU.
“The aim of the new services directive is to lay out detailed rules and facilitate the freedom of establishment for service providers and the free movement of services within the EU. As things stand now, however, it doesn’t apply to gambling services,” concluded Bartal.
Source: BBJ.hu
Even as the internet finally matures into an everyday commodity in Hungary, online firms remain unable to tap into the highly lucrative world of online gambling, which remains pretty much off-limits here to all but one company.
“Online gambling is one of the most promising money-making areas on the internet, but in Hungary there are serious legal concerns,” said Balázs Weyer, chief editor of Origo, the internet portal of market-leading ISP T-Online Hungary Rt.
Gambling remains very much a restricted venture, even as T-Online Hungary experiences steady growth in revenue generated through the internet, with the biggest driver being ad sales. On a positive note, however, Weyer observed that the European Court of Justice has vowed to examine the issue.
Despite the restrictions, a couple of foreign firms have made inroads toward extending services to Hungary: the U.K.’s Sportingbet Plc in 2004, followed by Vienna-based BetandWin.com Interactive Entertainment AG in 2005.
George Hudson from Sportingbet’s press office told the BBJ last week that his firm complies with all EU market legislation when deciding to open in a new market within the union.
“Given that Sportingbet is a U.K.-based company governed by U.K. law, it is able to operate in all EU member countries under terms of the EU’s framework directive on the free provision of services,” he said.
Hungary’s regulators, however, take quite a different view.
“In Hungary, only state-owned betting firm Szerencsejáték Zrt is licensed to provide online betting services,” said László Oravecz, department head at the Gambling Supervision.
Would-be market entrants feel that Hungary’s regulator is wary of foreign firms, and that the impact of improved odds for competitors could threaten Szerencsejáték’s cozy monopoly position. The gambling enterprise’s after-tax profit of Ft 1.5 billion (€5.3 million) in the first quarter of 2006 represented a 74.4% increase on the corresponding period of 2005. Szerencsejáték has spent Ft 300 million recently on developing its online gaming system, which includes the launch last Monday of its sports betting game Tippmix. Online sales of the game are expected to bring in an additional Ft 1 billion in revenue, claimed CEO Gábor Székely.
Can’t beat the system
Though advertising of online gambling sites such as BetandWin.com is illegal in Hungary, some companies still do it because the fines imposed are less than the advertising revenue, noted Weyer.
According to Oravecz, Hungary’s 1991 Gambling Act states that publishing offers for gambling services via telecommunication devices and networks – including the internet – requires the approval of the Gambling Supervision. He added that the licensing obligation also applies to local organizing, sales, marketing and advertising activities of foreign gambling services.
“The supervision has not issued a license for any online betting service providers other than Szerencsejáték,” he said. “So, other websites offering such services operate in a way that violates legislative measures, as such activity may be regarded as illegal.”
Oravecz added that people who decide to avail themselves of such gambling services run the risk of not being able to legally claim their prizes within the territory of Hungary.
For its part, the EU has initiated proceedings against certain member states for possible infringement of EU law with regard to internet gambling. Nevertheless, the potential for internal market distortion remains high, and the EU’s regulatory board does not expect any significant progress to be made in improving the overall EU gambling environment in the near term.
“The tax-driven fiscal protectionist policies adopted by several member states present a large political obstacle, and are serving to weaken political will within the EU to tackle the issue with any alacrity,” Sportingbet noted in a report.
Iván Bartal, an associate at Budapest law office Freshfields, observed that the chance of Szerencsejáték losing its online monopoly is quite unlikely in the short term.
“The European Commission recently sent a formal request to Hungary requiring information on whether the provisions of the Hungarian Gambling Act concerned with betting activities are compatible with Article 49 of the EC treaty that guarantees the free movement of services,” he said.
Bartal added that the EC could launch a formal infringement procedure, which could end up before the European Court of Justice.
“The ECJ could penalize Hungary if the country falls foul of a court ruling or, for instance, fails to amend its legislation,” he warned.
However, Bartal added, this could take years, and it is also possible that no such proceedings would ever be launched.
“Besides,” he noted, “these proceedings wouldn’t generally affect Szerencsejáték’s monopoly position, as it’s really up to Hungary’s Parliament to amend the applicable law.”
Even so, EU law could eventually override Hungarian law.
“In future, there may be a specific set of regulating guidelines or principles that member states will be required to follow,” Bartal said.
Again, however, it would be unwise to bet much on anything happening very soon in this regard, given the high level of contention surrounding the issue and the wide variety of views concerning compatibility of gambling laws between member states and the EU.
“The aim of the new services directive is to lay out detailed rules and facilitate the freedom of establishment for service providers and the free movement of services within the EU. As things stand now, however, it doesn’t apply to gambling services,” concluded Bartal.
Source: BBJ.hu
mystro - 11. Jul, 11:01