According to the figures provided by the General Financial Directorate of the Czech Republic, the country’s last year’s revenue from regulated gambling was hit by a steep decline of 21.3%, bringing in the total of CZK 31.3 billion ($1.4 billion).
Overall, players in the country wagered CZK 249.4 billion ($11 billion) in 2018, which represents an 11.3% rise compared to the previous year, and won CZK 218.2 billion ($9.5 billion).
The decrease is due to reduced contribution from slot machines
“Technical games,” as the Directorate refers to slots, have been the major let down in 2018’s revenue, showing a decline of 39.3% and totalling CZK 14.8 billion ($635 million). The issue was almost entirely with the land-based slots, which registered a plummeting fall of 42.4% to CZK 12.9 billion ($570 million). Online slots were down too but in comparison with the massive blow from their physical counterpart, theirs was a less drastic decline – 4.8%, reducing the income to CZK 1.9 billion ($83 million).
These values are largely affected by the introduction of new regulations and controls, which came into effect in August 2017 and were followed by additional requirements in March 2018. The first wave limited the bonuses that land-based venues could offer their players, while the second imposed new and stricter rules on identity and age verification, stating all punters had to be registered on their entry into a gaming venue.
Another reason may be that the gambling activity can be regulated on municipal level, meaning that each town can regulate gaming operations in their respective jurisdiction as they see fit. This allows them to ban gambling entirely, allow it only at certain specified addresses or ban it only from certain specified addresses. Over the past couple of years an increasing number of municipalities has been choosing to use this power in one way or another. This has led to a decrease in venues that allow gambling.
The results are not all bad
Table games (or “live games” as the Czech Directorate dubs them) has shown an increase of 8.0% to CZK 2.3 billion ($101 million), out of which the vast majority came from land-based casinos. Online dimension brought in CZK 175.1 million ($7.8 million), thus beating its takings from the previous year by a pleasant difference of CZK 55.6 million (2.5 million).
The situation is even brighter when it comes to lottery – the revenue was up 13.8%, raking in CZK 6.7 billion ($296 million) and owing mainly to the retail performance, which accounted for 89.9% of the final sum. Freshly legalized online lottery that has been permitted since January 2017, reported CZK 670.6 million ($30 million) in revenue, registering 78% growth compared with the previous year.
Purely land-based Totalizer had its revenue almost doubled when it brought in CZK 4.7 million ($207,500), while bingo, also available only in the physical form, took the opposite direction and fell to CZK 7.4 million ($327,000).
Lower revenues mean lower tax take and hence lower budgets for municipalities
Together with the steep fall of the slot revenue, the amount the government received in industry taxes has dropped as well, marking a 20.3% decline to CZK 9.7 billion ($428 million). The operators currently pay a 35% gross revenue tax so the reduced revenues in 2018 made a significant difference.
This has also made an impact on the budgets of individual municipalities, some of whose budgets took a painful blow in consequence. For example a certain town on the German border has lost approximately third of its budget due to diminished tax take and due to the reduced gambling custom as the newly imposed stricter rules put off German punters that used to frequent gaming facilities in the town.
The new regulatory framework is still in the works
The results the General Financial Directorate provided are only the second set of full-year figures reported since the introduction of the updated gaming regulations in January 2017. One of the goals of the adjustments was to bring in international operators and encourage them to obtain a license, however, at the same time, some of the new rules steal from the potential attractiveness of such a venture. High taxes and prolonged administrative processes, including the requirement for in-person registration for iGaming sites, are just two examples.
Despite a few unfavourable conditions, it does not mean no big names have shown interest in the market. On the contrary, one of the most renowned providers in the industry, Microgaming, made it known in February that it would be entering the Czech gambling scene in partnership with the Czech online casino and sports betting site Tipsport.cz.
Still, things do not end here. The Czech government has announced that starting from January 2020 it would increase taxes on gambling in order to limit the availability of potentially addictive products and services. As a result, the tax rate on lotteries, bingo and non-slot casino games will rise to 30%, while fixed-odds betting will be required to contribute 25%.