The Czech Republic aims to levy hefty taxes on gambling activities.
The Czech Ministry of Finance is considering a major hike in gambling taxes. This will dramatically impact bingo, live games, sports betting, and lotteries. The proposed new rate would increase from the current 23 percent to 30 percent. The motivation behind these reform plans is not entirely clear.
A Tax System Targeted At Individual Gambles
The announcement of the tax increase came from the Ministry of Finance towards the end of last week. Since then, Czech gambling operators have been bracing for a substantial rise in taxes for bingo, live games, sports betting, and lotteries to 30 percent. However, there's an exception - gaming machines are already taxed at 35 percent of gross gaming revenue.
There's a 2 percent increase planned for sports betting with fixed odds and totalizators. Known as pari-mutuel betting, these allow players to place bets into a betting pool, instead of betting against the usual bookmaker.
The Czech government hasn't explicitly approved the tax hike, but it's likely to be implemented. The Ministry of Finance has mentioned a shift from a generic tax system to one that's product-specific, which is rumored to start in January 2020. The government is also increasing alcohol and tobacco tax. It's aiming to:
"Increase the public budget."
Classifying Gambling Kinds
As part of the budget measures, the Czech government is planning to categorize different types of gambling based on social impacts. Conventional gaming machines, which they deem to have the most significant social impact, will be taxed the most. But sports betting, with the least negative effect, will be at the bottom. The proposal states,
"The proposed amendment to the Gambling Tax Act divides the amount of gambling tax into three levels, dependant on how problematic individual gambling is, just like in the 2015 draft gambling tax law."
Opposition To The Tax Hike
Not everyone's happy with the Ministry of Finance's plans. Some politicians in the Czech Republic's Chamber of Deputies are opposing them, with opposition led by Miroslav Kalousek. He was previously the country's finance minister and ex-chairman of the KDU-CSL and TOP 09 parties. Kalousek sees no need for the reform and even considers it a little extreme. He says,
"We can classify gambling into two groups: socially acceptable activities and problem gambling. There's a significant difference between traditional slot machines and filling out a betting slip at work. As far as lotteries are concerned, I'd keep the tax rate the same. I believe a 30% increase is out of proportion and unnecessary."
Kalousek has the backing of Jan Volny, who's the deputy of the ANO 2011 party and holds 78 seats in the lower house of parliament. Although he agrees with a slight adjustment, he thinks a 30 percent increase is too extreme. According to Volny,
"The increase could be detrimental to market developments. Personally, I'm worried this isn't an overstatement, as the current tax rates for live games and lotteries are sufficient."
Could This Promote Illicit Gambling Markets?
The Czech Republic has only had a regulated iGaming market since January 2017. To capitalize on the market's potential earnings, they've introduced a process for licensing European online gaming providers. Prior to this, foreign operators had been operating in a legal limbo in the Czech Republic.
The new regulations invited foreign providers to offer their services legally. However, the high taxes led to several operators leaving the Czech market. Now, only PokerStars and Partypoker are registered in the Czech Republic.
With the proposed tax hike, lawmaker Jan Bartošek, a representative in the Chamber of Deputies for the Christian and Democratic Union party, is worried about a possible "rebound in the black market." The Ministry of Finance hasn't made any statements about this. Meanwhile, the government shows no signs of letting up its anti-gaming machine campaign. According to recent reports, they're still operational in more than 1,800 establishments. There's still much ambiguity regarding the future course of events.
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Source: www.onlinecasinosdeutschland.com
