As we in the United States have been focusing our attention on the legislative roller coasters in Pennsylvania and California and those states’ efforts to legalize and regulate online gambling, a new internet gaming law in the Czech Republic has flown a bit under the radar. About a month ago, Czech President Miloš Zeman signed a bill into law that legalized online gaming but hoo boy, does it make it unattractive to anyone who wants to get involved.
The legislation, which will take effect at the turn of the new year, will open up the Czech gaming market to non-Czech providers; there are currently only five licensed providers operating in the country. That’s great news and was possibly done to turn the frowns from the rest of the EU upside down, but it comes at a price. Literally.
Under the new law, licensed online gambling operators will have to pay 35 percent of gross gaming revenues on casino games that use a random number generator (RNG). Now, when we think of “casino games,” we generally think of thing like craps, blackjack, and roulette – non-poker games – but it is though that in this case, poker is also included, since it is a game that uses an RNG. Sports betting and lottery games will be taxed at 23 percent.
And all that is ON TOP of the 19 percent corporate income tax rate. Andrej Babiš, the Czech Finance Minister and the one who originally introduced the online gaming proposals in 2014, had previously wanted casino games to be hit with a 40 percent tax, but he conceded that 5 percent. The funny this is, Babiš didn’t push for legalization because he likes online gambling. He actually hates it. His goal was to tax it so heavily that the money it makes for the government somehow makes up for the social ills it causes.
He even told Business Week, “The indirect costs for the state stemming from such gambling are several times higher than the revenue it collects. That should be made even.”
With taxes so high, it is entirely possible that Babiš could indirectly get his way, as many operators may opt to stay out of the Czech market because it is too expensive. Then again, if operators stay away, players might flee to black market sites. We will have to wait and see.
Even if operators flock to the Czech Republic, players might still decide to find unlicensed sites because the licensed sites will lack enough attractive games. The new law puts player protections in place, which is most certainly a good thing, but in this case, they look way too restrictive. The largest an online poker bet is allowed to be is CZK1,000, which is approximately USD $41. The maximum winnings for a single game or tourney can only be CZK 50,000, about $2,049. That should be fine for micro-stakes players (like me), but anyone who wants to play for any somewhat significant amount of money is going to have a rough go of it.