The first casino in Hungary opened in 1981 without a gaming law, and it was followed by several others. The Gambling Act came into force in 1991, at a time when nine casinos were operating in Hungary and another three casinos had been granted a license by the Minister of Finance. Until the Gambling Act, casinos could only accept foreign players, but following the implementation of the Act, domestic players were allowed to play in casinos. The Minister of Finance called for tendering for new sites in 1991 and 1993. The result was that eight new licenses were granted, increasing the total number to twenty, and the market soon became saturated.
In 1998 it was decided that casino development should be restricted. As a result Szerencsejáték Felügyelet (the Hungarian Gambling Supervisory Authority ) proposed the amendments to the 1991 Gaming Act, and the enabling legislation was enacted the following year. By early 1999 the number of Hungarian casinos had fallen to 16, with eight of them located in central districts of Budapest, and the remainder located in more populated provincial towns, tourist locations, and border regions. The casinos outside of Budapest generated 33% of the total Hungarian casino GGR and they catered for the lower end of the market.
After 1999, casinos continued to close with the number declining to six in 2004. Two of the remaining casinos are run by the state owned company – Szerencsejáték Zrt.
As part of the changes, the capital requirements for operators were increased, from a minimum of HUF 50m (€203,000) to HUF 300m (€1.22 million) for Budapest and Pest County-based operations and HUF 100m (€406,000) for those outside of this area in order to eliminate any under-capitalized operators from entering the industry. The modifications to the Act mean that all new casinos require a concession tender approved by the Finance Ministry.
Currently concessions run for ten years. Since November 2005, the concession term for category 1 casino increased to a maximum of 20 years, while that of category 2 casinos remained at a maximum of 10 years, which periods can be renewed once by half of the original term by the Minister of Finance without issuing a separate tender notice. Category 1 casino is that one that has at least 100 game and/or card tables as well as at least 1000 money winning machines in operation. All other casinos that do not fulfil these requirements are considered to be category 2 casinos.
Gambling machines are widely accessible outside the casinos and slot revenues have traditionally not been too important for the Hungarian casinos. However, recent years have seen a decline in table game turnover and a shift toward gambling machine play. Typically gambling machines provide approximately 9% of the casino industry’s GGR. Players are becoming increasingly attracted to gambling machines located in casinos by the lure of higher payouts that are not available with gambling machines in arcades.
Since tightening casino regulations, the Ministry of Finance approved a reduction of the gaming tax, from 40% to 30%, effective from January 2000. The net monthly gaming revenues are increased by 50 per cent of the tips received during the month, which was previously 40 per cent. In addition, 2% of GGR is forwarded to Hungary’s Tourist Fund and casinos must also pay an inspection fee of 2.5% of GGR, with a ceiling of HUF 10 and 5 million HUF depending on the category every three months. The most recent modification in gambling legislation made the gambling tax of the casinos (including tables and slots) arranged in regressive range.
The tax structure for casinos is regressive in nature and is as follows:
– The tax is 30% of GGR in the fiscal year for GGRs from zero to 5 billion HUF (€20 million).
– The tax is 1,500 million HUF (€6 million) plus 25% of GGR, if GGRs are over 5 billion HUF (€20 million) and below or equal to 10 billion HUF(€40 million.)
– The tax is 2,750 million HUF (€11 million) plus 20% of GGR, if it exceeds 10 billion HUF (€40 million.)
The number of casino employees has decreased since 2000, due to contraction in the number of casinos.
Machine Gambling Outside Casinos
Gambling (money winning) machines with limited stakes and jackpots are widely available in arcades across Hungary. During 2002 there were about 1,100 organisations licensed to offer gambling machines; among them, they were operating 30,000 devices. The gambling machines must be registered with the Gambling Supervision Board (SZF).
The number of licensed companies organising machine gambling was about 1,200 at the end of 2004. Total number of pay-out machines in Hungary was 34,500 in 2004 and the number of amusement (non-pay out) machines was 6,500 in 2004.
There are two types of gambling arcades in Hungary:
– Category I. (with money-winning Category I and II machines) 1,570 arcades in 2004 versus 1,358 arcades in 2003
– Category II. (bars/pubs with maximum 2 money-winning Category II machines) 20,600 places in 2004 versus 18,405 places in 2003
The gambling machines sector is experiencing consistent growth, although it is predicted that the market is close to saturation.
The current tax since 1 September 2005 is 100,000 HUF or 400 EUR (increased from 75,000 HUF or 300 EUR) per gambling (money-winning) machine per month per location. The game tax on gaming (amusement) machine is 60,000 HUF per machine per year. The game tax has to be payed in addition to the usual taxes of the enterprise. The gambling organiser also has to pay a licence fee to the Gambling Supervisory Authority for each new gambling licence, modification or extension.
Both fixed odds and pari-mutuel betting are permitted in Hungary under the Gaming Act of 1991. However, the Hungarian market consists predominantly of pari-mutuel betting.
The Ministry of Finance (20/1991. (XI. 5.) FM-PM) set out a detailed set of rules for horserace betting with a further decree of the Minister of Finance (25/1991) implementing the Gambling Act. In 1997, an amendment was made to the Gambling Act under which only wholly- or majority-owned state companies could operate betting and only if they had at least five years experience in the gambling industry and had capital of HUF 1 billion (4.0€ million), with the exception of horse-race betting. The maximum period for a licence is ten years.
Stakes are not permitted to exceed HUF 100k (€400), with the prize of a fixed odds bet not to exceed HUF 1m (€4,000).
From 1st November 2005 the Act was amended and at the bookmaker type of betting the maximum concession term is 20 years and the number of concessions issued simultaneously may not exceed 2. At the horse race bettings the concession term has changed to max. 20 years instead of 10 years earlier, and the number of concessions issued simultaneously may not exceed 2.
Bookmakers pay 20% of GGR monthly in gambling taxes, while domestic totalizer-type greyhound and horse racing betting are free from gambling taxes. Other totalizer-type betting pays 17% of turnover monthly.
In Hungary bingo may only be organised by the state gaming operator. Bingo has to pay 7% of monthly turnover in taxes.
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