Czech Gambling Regulatory Framework: an Overview
By Jakub Kolomicenko, Senior Compliance Officer at Kaizen Gaming
The Czech Republic is one of the EU countries that has a regulated online gambling market. The regulatory framework for online gambling in the country is established and overseen by the Czech Ministry of Finance, and it has been in place since 2017. It has gone through some changes and amendments to ensure that it meets the evolving needs of the market and protects the interests of all the players.
The Czech Republic has a long history of gambling, with some of the most famous brands of providers or operators located in the country. The introduction of online gambling in the country has opened new opportunities for players and operators alike: online gambling was allowed and is currently regulated by the Gambling Act. The act was introduced in 2016 and came into force on January 1, 2017. The aim of the act is to ensure that all forms of gambling are conducted in a fair, transparent, and responsible manner, and to protect players from the negative effects of gambling.
The Czech regulatory framework for online gambling is designed to ensure that the industry is fair, transparent, and safe for players. It sets out a number of requirements for operators who want to offer their services in the country. These requirements include obtaining a license from the Czech Ministry of Finance, paying taxes on their revenues, and complying with various regulations related to player protection.
To obtain a license to offer online gambling services in the Czech Republic, operators must meet a number of criteria. They must have a registered office in the European Union or the European Economic Area, and they must have a proven track record of operating in a responsible and compliant manner. They must also demonstrate that their games are fair and that they have adequate systems and processes in place to prevent money laundering and other forms of financial crime. Once an operator has obtained a license to operate in the Czech Republic, they must comply with a range of regulations related to player protection. These regulations include measures to prevent underage gambling, such as age verification checks, and requirements for operators to provide information about responsible gambling and to offer self-exclusion options for players who feel that they may have a problem with gambling.
Operators in the Czech Republic are also required to pay taxes on their revenues. The tax rate for online gambling operators is set at 23% of gross gaming revenue for sports betting and 35% for technical games (i.e. slot games). This tax is used to fund various public initiatives, including social and cultural programs, education, and public health initiatives. One of the challenges of the Czech regulatory framework for online gambling is that it has been criticized for being too restrictive. Some operators have argued that the high tax rate and other regulatory requirements make it difficult for them to operate profitably in the market. However, others have pointed out that the regulations are necessary to protect players and to ensure that the industry is fair and transparent.
Another challenge, probably the biggest one, of Czech gambling regulation is the very detailed or even bureaucratic approach from the regulator. The licensing process is very formal and can take a very long time. Unfortunately, the same approach is used for adding new games into the slot sections. The approval for technical games is not updated but re-issued, it means that all operators must submit documents for both, existing and new games and those documents are being reviewed by the regulator which results in further delays in the process. Overall, the window of opportunity to add new games into operator’s platform is twice or best-case scenario three times per year, which is not competitive comparing to the abroad regulations.
There are of course many more challenges, such as taxation of bonuses, limitation of players, RG limits, complicated reporting etc., but the biggest issue is that the regulator tends to be increasingly restrictive towards licensed operators but makes insufficient efforts to protect the market from unlicensed operators. Despite the regulatory framework, there is still a significant black market for online gambling in the Czech Republic. This competition makes it more difficult for licensed operators to attract and retain customers, and it can also undermine the integrity of the regulated market, while bringing no profit for the state budget.
Overall, and despite the issues and challenges mentioned above, the regulatory framework for online gambling in the Czech Republic is a well-established and comprehensive system designed to protect players and ensure that the industry operates in a responsible and transparent manner. The framework has gone through a number of changes and amendments since it was first introduced in 2017, and it is likely to continue to evolve over time as the needs of the market change. While some operators may find the regulatory requirements to be restrictive, the overall goal of the framework is to ensure that the industry is sustainable and benefits both players and the wider society.
About the author
Jakub Kolomicenko started his practice as a corporate lawyer and member of the Czech Bar Association but then he changed his focus and as an in-house counsel specialises in IP law and all aspects of gaming law, namely the gambling regulation around the world. He is currently Senior Compliance Officer at Kaizen Gaming after being the Head of the legal department at major game provider for 7 years.