Hungary is a European country and a member of the European Union. Although its population is about 10 million, it welcomes 17 million international overnight tourists per year, making it one of the most visited countries in Central Europe. This gives the country great potential to boost its economy by offering different forms of entertainment to visitors.
Many countries choose to legalize gambling to attract more visitors who can contribute to their economies. In Hungary, however, the gambling climate is a bit more complicated. The simple answer to the question “Is gambling legal in Hungary?” is yes, but gambling is heavily regulated within the country.
Even though some forms of gambling are legal in Hungary, most of them are the monopoly of the state-owned Szerencsejáték Zrt. Because no other operators can legally enter the market, the gambling industry remains quite restricted.
Currently, the two legal forms of gambling in Hungary are land-based and online casinos. These options give Hungarian players a few ways to legally bet on their favorite casino games and enjoy their time gambling.
Gambling Regulations
As a former Soviet country, Hungary had a long history of illegal gambling, which in turn created a large underground gambling market controlled by various criminal groups. After the Soviet Union fell, Hungary was among the first former Soviet states to legalize gambling.
In the years that followed, the gambling industry was fully monopolized by a state-owned enterprise. Even after the country joined the EU, foreign operators were not allowed to offer their services to Hungarian players, and the gambling market remained restricted. It was not until 2013 that the Hungarian government, under pressure, relaxed its restrictions and allowed offshore providers to operate in Hungary.
Under current law, any individual over the age of 18 can legally participate in gambling activities licensed in Hungary. The sector is regulated by Act ⅩⅩⅩⅣ of 1991 on Gambling Operations. The same legislation sets guidelines for the regulatory bodies responsible for licensing and overseeing sports betting, lotteries, and casino gaming within Hungary. The operation of so-called card rooms is also governed by sections of Act ⅩⅩⅩⅣ of 1991.
Legalization of Gambling
Other Pieces of Legislation Relevant to Gambling Regulations in HungaryThe End of Gambling Monopoly in Hungary
Currently, the main gambling provider in Hungary is Szerencsejáték Zrt, a state-owned company. Up until 2012, it maintained a monopoly over the gambling industry, operating all lotteries in Hungary as well as one of the two legal local casinos.
After Hungary joined the EU, many expected it would give up its monopoly system and allow foreign operators access to the Hungarian market. However, it was not until 2013 that the government bowed to pressure and amended the law so foreign online casino operators could offer their services to Hungarian players.
While many believed these changes would open the market, the transition to a non-monopoly system has not been smooth. To operate in Hungary, offshore companies are required to pay a fee of $400,000. High taxes are one of the tactics the Hungarian government uses to deter foreign companies from entering the market.
To obtain a license, foreign companies must apply to the Gambling Supervision Authority, which ensures license holders comply with Hungarian regulations. The same body imposes fines and sanctions on those who fail to meet the requirements.
There are many strict conditions a company must meet to operate in Hungary. This is often why foreign operators stay away from the Hungarian market and prefer to operate without a local license.
Online Casinos in Hungary
Thanks to amendments to the Gambling Act in 2015, all operators wishing to offer online casino services to Hungarians need a license from local authorities. While the government kept lottery and sports betting as monopolies, it allowed non-state-owned companies to apply for casino operating licenses.
Even though many believed this would open doors to fans of online gambling, the number of online casinos is still fairly limited. Only land-based casinos are allowed to apply for online licenses. Moreover, the regulator can block gambling sites that are not licensed to operate in Hungary. These restrictions leave local players with few legal online casino options.
In 2017, the Hungarian government amended its laws to require financial institutions in the country to block transactions to or from unlicensed gambling companies. These steps were considered too harsh. In 2018, the Court of European Justice accused Hungary of implementing a gambling policy that is not compliant with EU law. Today, only a few websites legally offer online casino games to Hungarians.
Licensing for Casino Operations in Hungary
As mentioned, operators that wish to offer casino services in Hungary must obtain a license from the Gambling Supervision Authority. This applies to both land-based and online gambling, and the same authority issues licenses to offshore operators.
Private companies can apply for casino and online casino licenses, which also cover poker and online poker. Currently, the law permits a total of 11 land-based casinos in Hungary.
As for online casinos, the number of licenses is also capped at 11, and only land-based casinos can apply. Local brick-and-mortar casinos may collaborate with foreign operators, satisfying the requirement for a registered address in Hungary. Once issued, a casino license is valid for five years. At the end of 2021, however, the Hungarian Gaming Authority granted five land-based casinos concessions valid for 35 years, allowing them to operate until 2056.
To obtain a gambling license, companies must also meet statutory capital requirements. Casino operators need statutory capital of at least HUF 100 million (EUR 279,000) and up to HUF 1 billion (EUR 2,789,500), depending on the casino’s class. A card club operator must hold at least HUF 25 million (EUR 70,000).
After a company applies for a license, it usually takes up to 75 days to receive the permit. The waiting period may be shorter for arcade machine permits. A major advantage of the Hungarian system is that there is no limit on the number of licenses that can be issued to eligible applicants.
Taxes Applicable to Gambling in Hungary
Currently, players in Hungary are not required to pay taxes on winnings from gambling. The only exception is the lottery, where winnings incur a tax that may range between 16% and 24%.
While players are exempt, gambling operators pay taxes that vary by the type of service offered. Drawing games are taxed at 30% of net gambling revenue per month. Lottery operators pay 24% of their monthly prize pool. Products like Joker, totalisator games, and other lottery-based games are taxed at 17% of monthly gambling revenue or the monthly prize pool.
Bingo requires operators to pay 7% of the prize pool accumulated in a month. Keno imposes a 24% tax on the monthly prize pool. Sports betting with a bookmaker is taxed at 20% of net gambling revenue after deducting invalid bets. Horse-race betting is tax-free, but online betting is taxed, with operators paying 15% of net gambling revenue.
Taxes for land-based and online casino operators depend on annual net gambling revenue. If revenue does not exceed HUF 10 billion, the operator pays 30% tax. If revenue exceeds HUF 10 billion, the operator pays 10% of the revenue plus HUF 3 billion. Concession fees may be deducted.
Closing Thoughts
It is impressive that Hungary is one of the first former Soviet countries to legalize gambling. Since 1991, citizens have been able to bet legally on the lottery, sports, and casino games. In fact, Gambling Act ⅩⅩⅩⅣ of 1991 is the piece of legislation that regulates the gambling industry in Hungary, covering both land-based and online sectors.
Unfortunately, the current legal framework does not offer many options for gambling enthusiasts. For many years, all forms of gambling were monopolized by the state-owned Szerencsejáték Zrt. Forced by outside pressure, however, in 2013 the government permitted other companies to apply for casino licenses. For online casinos, only operators licensed for land-based services may apply for online licenses, leaving players with few legal websites to choose from.
Hungarian authorities continue to limit the online casino market, regularly adding sites to their blocked list. Overall, casino traffic in Hungary is modest, and the government maintains a tight grip on the industry. Even so, the EU’s disapproval of Hungary’s policies offers hope that future changes may allow more operators to join the Hungarian market.