Czech Finance Ministry Struggles to Collect Fines from Erring Gambling Operators

Finance Ministry says it lacks the tools to collect the fines it has slapped on illegal gambling operators

The Czech Ministry of Finance managed to collect only a fraction of the fines it has imposed on illegal online gambling operations since the beginning of 2017, local news outlet E15 reports. The Czech Republic’s new gambling law took effect on January 1, 2017, allowing international companies to operate in a regulated environment.

E15 reported earlier today that the Finance Ministry collected just CZK240,000 (€9,444)from the CZK455 million (€17.6 million) worth of fines it has imposed since the local market’s re-regulation. The fines were slapped on international companies targeting Czech gambling customers without being authorized to do so, that is without holding a license from the Czech Ministry of Finance.

The Finance Ministry imposed a total of CZK252.1 million in fines last year, and CZK203.2 million so far this year. The amounts slapped as fines represent a record for the country. However, as mentioned earlier, only a fraction of the fines have been collected and it is yet unclear when they will be collected if ever.

It turns out that the Ministry of Finance, which is tasked with regulating the local gambling industry and issuing licenses to international companies interested to operate in the Czech Republic, does not have the tools to make illegally operating companies pay their penalties.

However, the Ministry has explained that while it is extremely difficult to collect the fines it has slapped on erring companies, it can penalize those same companies in another way. If such operators decide to apply for a license to operate in the country, they will have to pay the fine in order to be able to obtain that license.

Growth of the Czech Market

As mentioned earlier, the Czech Republic liberalized its gambling market in a manner that allowed international gambling companies to provide betting and gaming services in a regulated environment early in 2017.

Data from the Finance Ministry showed that the Czech market was worth CZK39.8 billion (€1.5 billion) last year, up just 1.1% from 2016. Turnover amounted to CZK224 billion (€8.7 billion) and reflected a 14.1% increase from the prior year. Revenue from regulated online gambling services totaled CZK8.3 billion (€321.3 million) last year.

Despite the new regulations that created a regulated environment, many major gambling companies decided to leave the market ahead of its re-organization. The new tax rates (23% for sports betting and 35% for casino games) made the local market unattractive and a number of big industry players decided to just depart instead of paying the stiff taxes.

There have also been companies that have kept on targeting Czech players without applying for the necessary license. Many of these have been detected by authorities and added to a growing blacklist of erring operators. According to recent data from the Finance Ministry, the list currently includes 116 unauthorized websites.

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