Czech Government Beats Casino Kartáč in Court

The District Court for Prague 1 ruled in favor of the Czech Republic government after a long and drawn-out legal battle with Casino Kartáč. The operator runs land-based casinos in the Czech Republic and was subject to legal proceedings following a dispute over online roulette

Prague with the river in the foreground at night.

The District Court for Prague 1 has ruled that the Ministry of Finance was not at fault for any lost revenue of Casino Kartáč after a lengthy legal battle. ©Julius_Silver/Pixabay

The allegations leveled against the government by Casino Kartáč date back to 2006, when the operator lobbied the Ministry of Finance to be able to provide online roulette in the Czech Republic. The Ministry of Finance refused this request. Online gaming regulations were then passed in 2016, and the market opened in 2017, allowing operators to provide such services to the Czech public.

When the Ministry of Finance refused the request of the operator, it prompted them to file a lawsuit against the Ministry. Casino Kartáč demanded that the government repay it the CZK6.9bn (£227.7m/€270.3m/$299.4m) that it estimated had been lost as revenue as a result of the decision by the ministry, plus interest.

The case has already been dismissed by the District Court. In the ruling, it was noted that any lost revenue was completely hypothetical and as such, the Czech government could not be held accountable for it. The case progressed, however, to the country’s Supreme Court, which canceled the decision of the District Court and ruled that the case was to be reconsidered.

The District Court for Prague 1 has ruled in favor of the Ministry once again, however. The argument put forward by the Office for the Representation of the State in Property Affairs (ÚZSVM) – which represented the government – was accepted by the court. The government’s representatives argued that the Ministry had acted in accordance with the laws in place in 2006, and as such had not committed any crime.

“Despite the fact that this was a protracted dispute lasting more than five years, the courts repeatedly support the Ministry of Finance,” Czech Finance Minister Alena Schillerová said of the outcome.

“I am glad that our lawyers effectively defend the state’s interests in these disputes without having to hire expensive external law firms,” ÚZSVM director Kateřina Arajmu added.

The operator has previously been embroiled in legal disputes with the government, over issues such as setting limits for interactive video lottery terminals, as well as over issues with the approval process for advertisements. Despite this, the operator is yet to win a legal challenge against the state as the ÚZSVM has successfully defended the government in each hearing.

A calculator and a pen on a sheet of paper with account information.

The decision of the court has followed recent changes to the taxation of gambling in the Czech Republic. These will help finance better safeguarding for consumers in the country. ©stevepb/Pixabay

Changes to Czech Taxation

The decision comes as the Czech government gets ready to introduce a series of changes to taxation on gambling in the country.

Presently, the tax rate for gambling in the country is set at 23% of gross gaming revenue (GGR), with the exception of gaming machines, which are taxed at 35% of GGR.

As of the first of January 2020, however, the taxation structure for gambling is due to change.

The new framework will split taxes into three levels, and games will be assigned to tax brackets depending on how harmful the government deems them to be. The draft for this taxation structure was published in 2015 and it is now being implemented.

From January, lotteries, live games and bingo operators will be taxed at 30% of GGR, an increase of 7% from the current rate of 23%. The rate for fixed-odds betting is also due to an increase from 23% to 25%.

The Ministry of Finance has announced plans to support problem gambling initiatives using some of the extra funds generated by higher taxation.

The changes were announced in response to a long-running campaign spearheaded by the Czech Ministry of Health and National Drug Policy Coordinator, who has been calling to address the increase in availability of addictive substances and services in the country.

The Ministry of Finance is also proposing changes to the taxation of both alcohol and tobacco as part of this. These include a 40% increase in excise duty on 0.5 liters of spirits, as well as a hike in the excise duty of cigarettes from 27% to 30%.

“Our country has made considerable progress in the field of combating addiction in recent years… but expert figures show that we must remain active,” Finance Minister, Alena Schillerová, said. “The increase in excise duties lowers the availability of addictive substances and also enables them to raise funds to support prevention projects.”

Czech Health Minister, Adam Vojtěch, added: “Higher taxes can not only increase revenue but also motivate consumers to reduce consumption, thereby reducing related health problems.”

The government plans to funnel revenue from these tax changes into safeguards for players, including initiatives such as an exclusion register, which is expected to launch in mid-2020. This will be put in place to allow players to voluntarily block themselves from accessing online and land-based gambling. Those on welfare, those who are bankrupt and people who have received treatment for gambling addition will automatically be added to the register.

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