Exclusive Q&A with Jan Řehola of the Institute for Regulation of Gambling (IFGR) on Proposed Gambling Law Changes
Exclusive Q&A with Jan Řehola of IFGR: the Czech Republic's plan to tighten gambling laws and taxation
Gambling.Re had an exclusive opportunity to interview Jan Řehola, the Director of the Institute for Regulation of Gambling (IFGR), on the latest developments in the Czech Republic's gambling industry. In the Q&A, Řehola discussed the Ministry of Finance's proposed changes to the law on gambling, the issue of illegal gambling in the country, and the potential changes to the gambling tax system. Řehola also shared his insights on how these changes will affect the industry and the players in the Czech Republic.
Gambling.Re: What is the Government preparing to do regarding gambling laws in the Czech Republic?
Jan Řehola: The Ministry of Finance is preparing to tighten the law on gambling, which will now apply to all games available in the Czech Republic, not just those targeting individuals with residency in the Czech Republic. The law will now apply to every gambling game accessible to Czech citizens. According to the Ministry, this will facilitate the fight against illegal online gambling and make it easier to block them, which should help to better protect Czech players. In addition to websites, it will be possible to block apps or websites promoting illegal gambling.
A new feature will be the Panic button that players can use in case of distress.
The Institute for Regulation of Gambling (IFGR) has been dealing with the issue of illegal gambling for a long time. In this regard, IFGR was the first to comprehensively map illegal gambling in the Czech Republic in the publication "Black Book of Illegal Gambling." "We are pleased that steps have been taken that, we hope, will simplify, streamline, and, above all, speed up the blocking of illegal gambling operators."
The amendment also foresees adjustments to the deposits that gambling operators must pay. The deposit will now depend on the amount of gambling tax paid and will be in four stages: CZK 30 million, CZK 80 million, CZK 150 million, and CZK 300 million. Previously, the amount of the deposit was based on the number of casinos or gambling halls operated, but it could not exceed CZK 50 million.
The proposed amendment does not include changes to the gambling tax rates. Speculation about changes to the gambling tax arose in connection with a planned government package to consolidate the state budget. It is currently being discussed at the highest political level, and the results should be known no later than the beginning of June this year.
The proposal for gambling tax from last year's autumn worked with several different tax rates, which were dependent not only on the type of gambling but also on how it was operated (online/land-based). The whole system of adjustments was complicated and confusing. According to the IFGR, "the proposal for changing the gambling tax comes at a time when the state is recording record revenues from this tax. In 2021, it was CZK 12.5 billion, and according to our information, it is around CZK 16.44 billion in 2022. In such a situation, any change in tax obligations should only occur based on a thorough analysis of the fiscal impact of the proposed changes, as even a small change in conditions can disrupt this situation and not achieve the declared objectives."
Gambling.Re: Will there be changes to the gambling tax rates in the Czech Republic?
Jan Řehola: Currently, the law on gambling tax contains two tax rates (23% and 35%) and distinguishes six types of gambling games, of which only four are significant from a fiscal perspective (lottery, sport betting, technical games, and live games). The idea of distinguishing between online or land-based services is also ineffective in this regard because the entrepreneur logically prefers the method of offering their services taxed at a lower rate.
According to the IFGR's opinion, the proposal is unnecessarily complex, distinguishing too many types of games and their modes of operation, and is also in contradiction with the trend of simplifying tax systems and maximizing their revenue. For example, the latest tax changes in Sweden brought a single rate for all types of games, which is the opposite of the proposed changes.
The possible new form of gambling tax we should know no later than the beginning of June this year.