Now It's Hungarian Sovereignty Hassles
Published: Friday, December 03, 2004 Online-Casinos.com
NOW ITS HUNGARIAN SOVEREIGNTY HASSLES
Another cross-border sovereignty fight was looming this week as The Budapest Business Journal reported that Hungary's Gambling Supervision Department had launched litigation against the Briitish online gambling group Sportingbet.
Sportingbet launched its Hungarian-language website in June of this year and is operating without the appropriate license, claims the Supervision. And, according to paragraph 267 of Hungary’s criminal code, organizers of illicit gambling can be sentenced to two years in jail. Sportingbet, however, maintains that its activities are perfectly legal and conform to all applicable European Union regulations regarding the cross-border offering of services.
As usual in these 'territorial' disputes the heart of the disagreement lies in the fact that gambling is a state monopoly in Hungary, governed by the 1991 Gambling Act, which prescribes that gambling organizers must be majority owned by the Hungarian State.
The gambling supervision has already levied a fine of Ft 500,000 (around Euro 2 000) on Sportingbet’s Hungarian media buyer, Provimar Kft, and has called on the company to remove Hungarian-language content from the Sportingbet website.
Quoted by the BBJ, Nigel Payne, group CEO of Sportingbet, said he is not worried about the legal proceedings, and insisted that the company has no intention of ceasing to offer and market its services in Hungary.
“Hungary is one of a small number of countries where the government has a tax protectionist monopoly. It’s a treasury-driven tax strategy, as the government, through the state’s gambling chain, takes tax from citizens at source,” he said.
However, Payne noted that Hungary is now part of the EU, and as such is signed up to the EU Constitution. Free-trade policies within the union mean the Hungarian government is in no position to restrict other EU-based companies from offering their services to citizens, he argued.
“This is stated in the EU’s Constitution, and having talked personally with the responsible people within the EU, they will uphold this law if it is challenged,” he said.
László Oravecz, department head at the Gambling Supervision, nevertheless contends that Sportingbet’s internet-based service violates the Hungarian Gambling Act.
According to Oravecz, the act stipulates that publishing offers for gambling services via telecommunication devices and networks – including the internet – requires the approval of the supervision. He added that the licensing obligation also applies to local organization, sales, marketing and advertising activities of foreign gambling services.
“The supervision has not issued a license for the gambling services available on the website,” he said. “So, as far as the available information is concerned, the website operates in a way that violates the law.”
Payne opined that the real issue is one of taxation, claiming that the desire to block his company’s activities in Hungary is driven by the treasury. As the sole licensed lottery and sports betting operator in Hungary, state-owned Szerencsejáték Rt is essentially a tax monopoly, he said, whereas Sportingbet’s activities are tax-exempt.
Szerencsejáték paid some Ft 57 billion in taxes into the budget in 2003.
Meanwhile, reacting to the fine levied against it, Provimar has requested the EU to look closely at Hungary’s gambling laws.
Payne observed that current legal proceedings in EU courts between another U.K. bookmaker, Ladbrokes Plc, and the Dutch state lottery are tilting in favor of Ladbrokes, and that he expects the bookmaker to win. The Netherlands operates a similar system to Hungary, with all gambling activity run by the state.
Payne said he is in no doubt that EU law allows his company to operate in Hungary, explaining that in such cases, EU law supersedes national law.
“I can categorically state that we will not stop our service in Hungary, nor should we, as legally we do not have to,” he said. “A member country cannot pick and choose which parts of the EU Constitution and laws it applies.”
STOP PRESS: News coming in as we went to press was that the authorities in France are taking action against Sportingbet because the U.K.-licensed online bookmaker is targeting French-speaking bettors. Industry observers are asking why, then are the French apparently happy with Eurosport running ads for foreign online gambling services?
