Operator News

Hungary – Eleven Hungarian cities apply for casinos

By Lewis - 4 December 2013

Having effectively closed slot halls across the country, the Hungarian government announced in the summer that it planned to offer licences for nine new casinos, a figure that has jumped to 11 as a new amendment, which enables operators to deduct the concession fee from gaming tax, has reinvigorated the process.

Eleven cities have now applied for these licences. In 2012 the Hungarian government banned slot machine gaming outside of the country’s three existing casinos (two in Budapest and one in Sopron). The ban is believed to have brought the number of slots operating in Hungary down from approximately 24,000 to only a few hundred. 

According to the amendment, the Hungarian Finance Minister, Mihály Varga, has the power to concede casino opening rights to competitors without a tender, given that they are ‘reliable gambling organisers,’ or in other words, they have been in the business for more than 10 years, they have clear, straightforward ownership and have paid all their taxes.

Those applying without tendering would have to pay twice the concession fee and should offer a minimum of 100 million HUF for the next year. As one company can maintain a maximum of five casinos and the budget is aimed at nine locations in total (now revised to 11), potentially only a couple of concessions might be awarded. One popular measure enables operators seeking to avoid the tender and pay the higher fee, to deduct the concession fee from their gaming taxes. This inclusion is thought to have spurred plans for more casinos. The 11 cities that have submitted casino plans to date include: Győr, Debrecen, Szombathely, Pécs, Szeged, Miskolc, Nyíregyháza, Szentendre, Hévíz, Gyula and Balatonfüred.

The new amendment hasn’t been universally welcomed, however, with Socialist MP Csaba Tóth recalling that the cabinet terminated the slot machine market in 2012, claiming the sector posed a risk to national security: “Now you are re-opening it. For yourself,” claims Mr. Tóth.

At the same time as Hungary seeks to expand its land-based gaming market, the government also plans to issue 10 new online gaming licenses under new regulations. Incentivising online operators with a wider range of permissible games, the carrot is quickly followed by the stick in the form of a new 20 per cent gross gaming tax.

According to the government, the new concessions will be valid for up to five years and will require a minimum fee applicable for 2013 of approximately US$450,000 per game type. Operators will be assessed upon a 20 per cent tax on gross gaming revenues payable every two weeks and quarterly supervisory fees calculated at 2.5 per cent of GGR. However, the new regulations will expand the range of offerings to include casino-style games and sports betting. Unlicensed sites will be blocked, and authorities will be able to order any data relating to illegal gambling operations to be accessible for up to 90 days.