The newest amendments on Gambling Act adopted in September 2011 clarifies the present handle of certain online gambling activities.

At present time the organization of online gambling – in the practice of National Tax and Custom Office (NTCO) – can be interpreted as prohibited activity if provided by foreign service provider not licensed in Hungary. Some of the gambling activites are state monopoly and some of them are subject to concession (eg.: ***lóverseny***, casinos betting).
The amendment of Gambling Act clarifies the status of foreign online gambling organizers, From 1st January 2012 some of these activities will be liberalized if provided as distant service, these activities will be subject to licensing procdure. It is a new elements of the legislation that foreign gambling providers are not absolutely prohibited to provide their services towards or in Hungary.

Both domestic and foreign gambling organizers can provid gambling services in Hungary according to the new legislation come into force from 1st January.

To enforce the new rules and motivate the gambling organizers to clarify their legal status in Hungary the new legislation on online gambling provides the possibility for the NTCO to order Hungarian telecommunication service provider to make unreachable the websites of gambling organizers who are not licensed under Hungarian law. The Hungarian telecommunication service providers are obliged to fulfill the order of the NTCO, in case of default the telecommunication service provider can be fined.

Sweepstakes and giving card game (e.g.: online poker) is going to be a liberalized activity if provided as distance gambling. It is necessary to apply for license and to be approved by national tax authority. License shall be acquired if the distance gambling is organized in Hungary, or the recipient takes part in the gambling in the territory of Hungary, or the service bounds to Hungary, especially in those cases, when the service is available in Hungarian, or advertise it in the territory of Hungary.

Advertising, selling and organizing activity is strictly prohibited in Hungary if the gambling service is not licensed in Hungary.

If advertising is performed for gambling activity carried out without the license of NCTO, the government would enhance this with modifying the operative Media Act, and would punish the operative online organizer without permission with 100 million HUF (approx. EUR 330.000), with helping a more efficient and more potent control system.

The license could not be approved, if the applicant or the senior officers or owner bearing at least 25% of votes has criminal record in the owner’s seat, or residence’s state’s law or stands under an effect of criminal squeeze. In further, neither if anybody from the above-mentioned in 5 years before the filing of the application organized gambling without license, and it determined in an administrative, authority or in a court verdict.

The tax authority denies the application for online gambling license if the applicant 5 years before the filing of the application was fined with tax- or default penalty in amount more than 2 million HUF from the competent state, also if 1 year before the date of the filing of the request in the competent state had public or tax debt more than 2 million HUF or longer than 30 days.

In case of distance gambling the tax authority decides about the application for online gambling license in 30 days. The tax authority may suspend the online gambling license for 3 years or until the time of termination of the difficulties, if the gambling organizer despite of the national tax authority’s call, or despite the authority’s action still keeps up the offending condition. Distance organizer economy company needs to be having a seat in the territory EEA-states and needs to be having at least 200 million HUF capitals. The online gambling organizer has to proove that he/she/it has gambling organizer practice, described in the separate act, or in case of in absence of this, he/she/it has to give bond in higher amounwhich is set by the national tax authority according to separate reulation.

If the organizer is not seated in Hungary, he/she/it has to authorize a delegate, who is entitled to represent before the Hungarian authorities and in the same time provides delivery agent service.

The organizer is obligated to use game- and business system tested by accredited controlling body. Servers used for purpose of online gambling services are required to be placed in ECC countries (the United States of America is not appropriate), but it is necessary that the storage has to be done the data needs to be stored in Hungary as well. In special cases the storage of the data related to the online gambling actitvity in other ECC state without storage in Hungary can be accepted depending the jurisdiction of stroing online gambling data, Furthermore the organizer is obligated to provide access to the server and the data (client registration, client’s invoices’ data, balances, data, and game playing data). The organizer is obligated to send a report for the NTCO on monthly basis.

The distance gambling game tax is the 20% of the clear makings of the online gambling organizer. It is important to clarify that the distance gambling is concerning only for the card games and sweepstakes, but the sport bets do not belong here. There are still not ruled questions in the field of gambling, for example the online roulette, or the sport bets’ unformed parts.

The rules concerning the gaming machines are amended too. The taxpaying obligation is establishing from the reception of the license to operat the machine. In case of default of the taxpaying obligation the tax authority has to repeal the gamble organizer’s license immediately. The mérték of game tax depends on the classification of the gaming machines made by the national tax authority. The tax on gaming machines classified as category I or category II machines are changing too, the payable game tax is changing in game places from 100.000 HUF to 500.000 HUF. Tax on gaming machines operated in place classified as electronic casinos payable quaterly is also raised form 120.000 HUF to 700.000 HUF.

Next to the above itemized game tax, from 2011. November 1, the operator of the game machines has to pay in quarter years percent rated game tax. The rate of the tax is the machine’s object-quarter more than 900.000 HUF’s return’s 20%, which needs to be taken into account by game places.

It follows from the ruling, that Hungary’s online poker market from the 1st of January is ruled, the servicers are must get the license from the NAV for the legal operation.

September, 2011.

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