New authority for supervising gambling activities, and other changes after the Unibet-case

With its Decree No. 183/2017 (July 5), the Hungarian Government established the Gambling Supervisory Authority (“GSA”), a new authority for supervising gambling activities and services in Hungary.

I. Background of the reorganization

Prior to the establishment of the GSA, the competent department of the Hungarian Tax and Customs Administration (“Administration”) executed the supervisory powers. Now, this department has been separated from the Administration and the GSA undertook the role of supervising gambling activities. The GSA falls under the control of the Minister for National Development and performs its tasks with national competence. The reorganization was underpinned by the facts that the proper surveillance of the industry sector in question and the required increase in staff necessitated the establishment of a separate administrative body.

II. Focuses of the Administration

In 2016, the gambling department of the Administration issued approx. 160 authorizations, performed more than 13,000 inspections and rendered 445 decisions imposing fines amounting to HUF 1,700,000,000 (approx. EUR 5,555,555). The most concerned area was the administrative supervision of the online gambling sector (i.e. provision of online – distance – gambling services without proper license). The gambling operators mainly contested the condemning administrative decisions of the gambling authority and in the previous year, 60 from the 80 court decisions were made in favour of the Tax Administration. It is also highlighted however that 170 litigations concerning the judicial review of administrative decisions regarding online gambling services are still pending. The practice of supervision of the online gambling sector in Hungary was also reviewed by the European Court of Justice (“ECJ”), which confirmed in its judgement dated June 22, 2017 ( delivered in case C-49/16 Unibet International Ltd versus Hungarian Tax and Customs Administration) that the Hungarian regulation on online gambling services infringed Article 56 TFEU (freedom of services). The ECJ declared that even if the regulation itself theoretically provides for the possibility that any service provider is eligible for acquiring authorization for providing online gambling services, in the absence of transparency and specific technical rules for implementation and/or application thereof, the regulation shall still qualify as an unlawful restriction of the freedom of services. As regards pending litigations, the newly established Authority will take over the place of the Administration and now it is up to the competent courts how they interpret the statements of the ECJ as mentioned above with respect to the condemning administrative decisions.

III. New rules concerning operator responsibility and joint player account

Government Decree No. 294/2017 (October 10) further consolidates the protection of minors from the harmful effects of gambling and clarifies the responsibilities of gambling operators regarding player self-restraint measures. Ministerial Decree No. 30/2017 (October 10) introduces new rules regarding the joint player account, which creates the possibility of accounting various types of betting, prizes and other gaming transactions under one account, which concerns several types of games organized by a sole operator. Ministerial Decree No. 34/2017 (October 26) imposes further anti-money laundering obligations on certain gambling operators (e.g. casino, cardroom, online casino operators), such as internal risk assessment, customer identification, due diligence and requirements of audited electronic means of communication.