Informally known as Czechia, the Czech Republic is a landlocked European country that covers the historical regions of Moravia, Bohemia, and Czech Silesia. The country was part of the Republics of the Soviet Union (USSR) until 1989 when it returned to a liberal democratic regime. Today, the Czech Republic boasts membership in the EU and a thriving economy whose healthy performance is mostly driven by the manufacturing, services, and agriculture sectors.
The country had several forms of legal gambling during its communist period, including government-controlled horse and sports wagering, lotteries, and scratchcards. Legal slot machines and casino gambling arrived in the Czech Republic at the end of the USSR era. Remote lotteries and online sports wagering became legal in 2012, but it was not until 2016 that the country legalized other forms of online gaming.
Gambling is a common recreational activity among Czech residents, which is unsurprising considering the country had 299 brick-and-mortar casinos as of 2017. Estimates also suggest Czechia ranks second on a global scale in terms of slot machine number per capita. This is hardly shocking since the country is one of the largest slot machine manufacturers in Europe.
The local gambling industry has witnessed consistent growth over the past decade, with casino gaming revenue increasing from €136 million in 2010 to €240 million in 2017. Czech players can legally enjoy various forms of casino gambling, including slots, roulette, baccarat, and blackjack. Poker is also huge on Czech soil, so much so that the capital Prague was chosen as a stop for the PokerStars EPT tournament series.
Czech gambling regulators have introduced various changes over the last few years, including a registry of excluded persons and higher tax rates. Stick with us as we explore the Czech gambling legislation in further detail.
Laws That Govern the Czech Gambling Industry
The only legal forms of gambling during Czechia’s communist period were state-owned lotteries, scratchcards, and the totalizator. The landscape changed with the passage of Act № 202/1990 Coll. on Lotteries and Other Similar Games, which legalized brick-and-mortar casino gambling in the country. Over two decades later, in 2012, local lawmakers amended the legislation to allow for remote sports wagering and online lotteries.
Tax Rates for Czech-Licensed Gambling Operators
1The Tax Model
All licensed gambling operators must pay taxes in line with the provisions of Act № 187/2016 Coll., otherwise known as the Czech Gambling Tax Act. As you can see in Article 4 of the legislation, the tax rates depend on the type of gambling activity offered. The Czech Republic has adopted the widespread tax model based on the operators’ gross gambling revenue (GGR).
It represents the difference between the overall amount wagered (i.e. the total turnover) and the amount returned to patrons in the form of winning bets. Technical game operators are subject to tax rates of 35%. As of January 2020, the tote, raffles, fixed-odds betting, and smaller tournaments are taxed at a 25% rate (previously 23%), while lotteries, live and bingo games incur 30% taxes. For clarification, the term “technical games” refers to slot and video poker machines.
Article 5 of Act № 187/2016 states that landbased slot operators must pay a minimum quarterly tax of Kč9,200 for each slot machine they offer on their premises. The minimum applies even if the 35% GGR tax is lower. On top of that, a 19% corporate income tax is in place for licensed gambling firms.
3Players Must Also Pay Taxes
Another peculiarity of Czech gambling law is that players themselves must also pay taxes on their winnings. In many European jurisdictions, including the UK, players are not taxed since gambling is not considered a professional occupation and therefore, is not seen as a source of income.
Unfortunately for Czech gamblers Act № 586/1992 Coll. (Act of the Czech National Council on Income Taxes) requires them to pay 15% taxes on raffle and lottery profits exceeding Kč1 million. Winnings generated via the other types of legal gambling activities are subject to a 15% annual tax rate. However, this applies only in cases when the difference between the overall profits from the gambling activity and the wagers the player has made within the relevant year is over Kč1 million.
Social Responsibility Policies in the Czech Republic
The Czech gambling watchdog is very strict when it comes to compliance with its social responsibility requirements. Under local regulations, gambling operators can offer their products only to customers aged 18 years old or above, as this is the age of majority in the country.
In the context of online gambling, all players must register accounts and provide the licensees with identification documents that confirm they are legally old enough to gamble. Part IV, Title I, Article 77 of Act № 186/2016 stipulates that all online players must set self-restrictive measures when they register.
Gambling Advertising Requirements in the Czech Republic
The marketing of gambling activities falls under the scope of Act № 40/1995 on the Regulation of Advertising. Its provisions prohibit the advertising of unauthorized gambling products that lack operating permits granted from the Ministry of Finance. Licensed operators can market their services, but with some restrictions. Ads must not leave people with the impression they can use betting as a source of income, for example.
Respectively, marketing materials should not target or appeal to underage individuals and must caution the audience that minors cannot partake in such activities. Each ad must contain a warning stating that frequent and irresponsible betting may lead to gambling addiction. Similar restrictions are in place for landbased gambling operators.
The Advertising Act disallows promotional messages and materials on the exterior of brick-and-mortar gaming venues. Meanwhile, the interior of the betting premises should not be visible to passersby from the outside. All casinos, card rooms, and betting shops should be clearly designated as such.
Sanctions for Violating Act № 186/2016
Some offshore operators service Czech players without basic licenses issued by the Ministry of Finance. The regulatory watchdog strives to impede such businesses by maintaining a blacklist of unauthorized gambling sites. Czech internet service providers (ISPs) have received instructions to restrict the access to unlicensed operators.
ISPs who fail to comply also risk being sanctioned by the local authorities. The same applies to local payment service providers who must block the financial transactions to and from the blacklisted gambling sites. Local companies that contravene the provisions of Act № 186/2016 risk various penalties, including license suspension/revocation, gambling equipment confiscation, and administrative fines reaching Kč50 million.
The heaviest sanction violators face is imprisonment for a maximum of ten years, depending on the severity of their contravention. Such criminal sanctions are enforced under the provisions of the Czech Criminal Code (Article 252) and Act № 418/2011 on the Criminal Liability of Legal Entities and the Proceedings Against Them. Last but not least, we should warn players that gambling debts are enforceable under Czech law, but only on condition the debtors owe money to authorized gambling businesses.
As you can see, the Czech Republic is very strict when it comes to gambling regulation enforcement. The harsher regulatory climate in the country and the relatively high taxes on certain betting activities have caused large gambling operators like William Hill to exit the Czech market.
Despite the tough regulations, gambling remains a widespread form of entertainment in the country. Due to the limited number of locally licensed online operators, many Czechs take their action to offshore betting sites and are generally not prosecuted for doing so.