March 1, 2018
Yesterday the CJEU ruled against the Hungarian requirement that online operators must have a land-based presence in order to offer online gambling services to residents of Hungary.
Act XXXIV of 1991 on Gambling Operations and Act C of 2012 on the Criminal Code are the principal laws regulating gambling in Hungary. Currently, the law demands that in order to offer online gambling services, licensees must hold a licence for a land-based casino. Since Hungary’s licensing framework was updated in 2014, international operators have complained that the regime is biased in favour of domestic operators. Based on the 2014 amendments, only local land-based firms could apply for online casino and card-games licenses and online sports betting could only be offered via the ‘ Szerencsejáték Zrt’ state monopoly.
The CJEU has now determined that this is a clear violation of EU Law. The CJEU stated that ‘The requirement that an undertaking create a permanent establishment or branch in the Member State in which the services are provided runs directly counter to the freedom to provide services since it renders impossible the provision of services‘
The ruling was delivered in a case brought by Sporting Odds who were providing online gambling services in Hungary without a local licence but under an EU licence. It has been determined that the Hungarian requirements are discriminatory against international operators as it is not possible to satisfy Hungary’s conditions for online licensing without a physical presence in the country. In its ruling, the CJEU stated that ‘Article 56 TFEU must be interpreted as precluding a penalty, such as that at issue in the main proceedings, imposed for the infringement of national rules introducing a system of concessions and licences for the organisation of games of chance, if such national legislation proves to be contrary to that article’.
In response to the CJEU’s rulings the Hungarian Ministry of Justice was quick to issue a press release stating that Hungarian authorities will continue to penalise those operators who do not hold a local licence.
You can read more about the rulings of the CJEU here.