Hungary is a European country that is also a member of the European Union. While its population amounts to 10 million people, with 17 million international overnight tourists per year, it is one of the most visited Central European countries. This means that the country has a great potential of boosting its economy by offering different forms of entertainment to tourists.
Many countries choose to legalize gambling as a way to attract even more visitors who can contribute to their economies. In Hungary, however, the gambling climate is a bit more complicated. A simple answer to the question “Is gambling legal in Hungary?” would be – yes, it is. However, gambling is heavily regulated within the territory of the European country.
Even though some forms of gambling have been legalized in Hungary, the majority of them are a monopoly of the state-owned Szerencsejáték Zrt. The lack of opportunity for any other operators to legally operate on the Hungarian market makes the gambling industry within the country rather restricted.
Currently, the two forms of gambling that have been legalized 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.
As a former Soviet country, Hungary had a long history of illegal gambling, which in its turn created a huge underground gambling market that was ruled by different criminal groups. Following the fall of the Soviet Union, Hungary was among the first former Soviet countries to legalize gambling.
In the following years, the gambling industry was fully monopolized by a state-owned enterprise. Even after the country joined the EU, it would not allow foreign operators to offer their services to Hungarian players, continuing to restrict the gambling market within the country. It was not until 2013, that the Hungarian government felt the pressure to loosen up its restrictions and allowed offshore providers to offer their services in Hungary.
Under the current laws, any individual who is over the age of 18 can legally participate in gambling activities licensed in Hungary. The gambling sector within the European country is regulated by Act ⅩⅩⅩⅣ of 1991 on Gambling Operations. The same piece of legislation has provided guidelines for the regulatory bodies responsible for licensing and overseeing sports betting, lottery, and casino gaming on the territory of Hungary. Operations of so-called card rooms are also governed following the sections of Act ⅩⅩⅩⅣ of 1991.
The End of Gambling Monopoly in Hungary
Currently, the main gambling provider in Hungary is Szerencsejáték Zrt, which is a state-owned company. Up until 2012, it was able to have a monopoly on the gambling industry in the country, operating all the lotteries in Hungary, as well as one of the two legal local casinos.
After Hungary joined the EU, many expected that it would give up the monopoly system and would allow foreign operators access to the Hungarian gambling market. However, it was not until 2013 that the government caved to the pressure and introduced amendments to the law that allowed foreign online casino operators to offer their services to Hungarian players.
While many believed that these changes to the law would open the Hungarian gambling market to foreign operators, the transition to a non-monopoly system has not been that smooth. To be able to operate in Hungary, offshore companies are required to pay a fee of $400,000. Huge taxes are some of the tactics of the Hungarian government to continue deteriorating foreign companies from the gambling market in Hungary.
To be able to obtain a license for operating on the gambling market in Hungary, foreign companies must apply for a license by the Gambling Supervision Authority. This is the Hungarian authority that makes sure that license holders are compliant with regulations imposed by Hungarian laws. The same body is also responsible for imposing fines and sanctions on those who are not meeting the license requirements.
There are quite a few strict conditions that a company must meet to be permitted to operate in Hungary. This is often the reason why foreign operators stray away from the Hungarian market and prefer to operate without a license from the local licensing authority.
Online Casinos in Hungary
Thanks to the amendments introduced to the Gambling Act in 2015, all operators who wished to offer online casino services to Hungarians would need to obtain a license from local authorities. While the government decided to keep lottery and sports betting a monopoly, it allowed non-state-owned companies to apply for casino operating licenses.
Even though many believed that this would open new doors to fans of online gambling, the number of online casinos was still fairly limited. The reason for this was that only land-based casinos were allowed to apply for online casino licenses. What is more, the local regulator is allowed to block gambling sites that have not been licensed to operate in Hungary. These restrictions imposed by the Hungarian authorities leave local players with a small number of options for legal online casino gambling.
In 2017, the Hungarian Government went as far as amending its laws to require financial institutions within the territory of the country to block transactions that are processed from or towards unlicensed gambling companies. The steps that the government is taking to limit the expansion of the gambling industry 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. While nowadays there are a few websites that legally offer online casino games to Hungarians, their number is very limited.
Licensing for Casino Operations in Hungary
As mentioned earlier, the operators who wish to be offering casino services on the territory of Hungary must obtain a license from the Gambling Supervision Authority. This applies to both land-based and online gambling, with the same authority also being the one issuing licenses to offshore casino operators.
The permits that private companies can apply for include a casino and an online casino license. The two types of licenses respectively also cover poker and online poker. Currently, the law has permitted a total of 11 land-based casinos to operate on the territory of Hungary.
As for online casinos, the number of allowed licenses is also capped at 11, with only the land-based casinos currently being able to apply for online casino operations. That said, it is possible for local brick-and-mortar casinos to collaborate with foreign operators. This way, the license condition for operators being required to have a registered address in Hungary can be met. Once issued, casino licenses for operation in Hungary are valid for five years. That said, at the end of 2021, the Hungarian Gaming Authority granted five local land-based casinos extended concessions that will be valid for 35 years, with the casinos allowed to operate up until 2056.
To be able to obtain a gambling license, companies should also meet the requirement for statutory capital. Casino operators must have statutory capital of a minimum of HUF 100 million (EUR 279,00) or up to HUF 1 billion (EUR 2,789,500). The required statutory capital depends on the class of the operating casino. Meanwhile, the requirement for a card club operator is a minimum of HUF 25 million (EUR 70,000).
After companies have applied for a casino operating license, it usually takes up to 75 days to obtain the permit from the respective licensing authority. The waiting period may be shorter if the applicant is registering for a permit to operate arcade machines. The great thing about the gambling licensing process in Hungary 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 any taxes on the winnings they have accumulated through gambling. The only exception applies to those playing the lottery, with winnings incurring a tax that may range between 16% and 24%.
While players are not required to pay any taxes, gambling operators are required to pay taxes, with rates ranging depending on the type of gambling services that are offered. So-called drawing games impose a tax of 30% on the net gambling revenue accumulated over the period of one month. Lottery operators are required to pay a tax of 24% of their monthly accumulated prize pool. Gambling products like Joker, totalisator games, and other lottery-based games impose a tax of 17% of the monthly gambling revenue or monthly prize pool.
Bingo is a game that will require gambling operators to pay a tax of 7% of the prize pool accumulated in a single month. Meanwhile, Keno imposes a 24% tax on the monthly-accumulated prize pool. Sports betting with a bookmaker will impose a tax of 20% of the net gambling revenue, with invalid bets being reduced. Horse race betting is free of taxes but online betting is taxed with operators paying 15% of the net gambling revenue.
Lastly, the taxes that apply to land-based and online casino operators depend on the annual net gambling revenue that has been accumulated. If net gambling revenue does not surpass the amount of HUF 10 billion, the operator is obligated to pay a tax of 30% on that revenue. Meanwhile, if the net gambling revenue amounted to a sum surpassing HUF 10 billion, the operator must pay a tax of 10% of the accumulated revenue plus another HUF 3 billion. It is possible that concessions fees may be deducted.
It is impressive that Hungary is one of the first former Soviet countries to legalize gambling. Ever since 1991, the European country has allowed its citizens to legally bet on the lottery, sports, and casino games. In fact Gambling Act ⅩⅩⅩⅣ of 1991 is currently the legislation piece that is regulating the gambling industry in Hungary, applying to both the land-based and online forms of the sector.
Unfortunately, the legal status of gambling in Hungary does not provide many legal options for gambling aficionados. For many years, all forms of gambling were a monopoly of the state-owned Szerencsejáték Zrt. Forced by outside pressure, however, in 2013 the government decided to permit other companies to apply for casino licenses. As for online casinos, only operators licensed to offer land-based casino services were allowed to apply for the operation of online casinos. This leaves Hungarian players with a limited number of website options where they can legally play their favorite casino games.
The Hungarian authorities are continuously striving to limit the online casino market, with local authorities increasing their list of blocked gaming websites. Overall, there is not huge casino traffic in Hungary, with the local government having a tight grip on the industry. That said, with the EU’s disapproval of Hungary’s gambling policies, there is a hope of future changes that may allow more operators to join the Hungarian casino market.