Czech Republic Poker and Gambling Firms Experiencing Reverse Discrimination

Current laws in the Czech Republic prevent local gambling companies from operating online, whilst offshore gambling companies freely market online to Czech residents, citing several recent European Court of Justice (ECJ) cases that ruled if a license is obtained in any EU member state it permits business being done in the rest of the EU.

This is a surprising reversal of the recent protectionist policies of USA, France and Turkey against non-stated owned online poker and online gambling companies.

In November 2003, the ECJ ruled in the Gambelli case that any restrictions on the activities of companies operating in betting businesses constitute obstacles to the freedom of establishment and that a prohibition on participating in betting games constitutes a restriction on the freedom to provide services.

In other words, an EU member state cannot restrict its citizens' access to gambling services if at the same time it encourages them to participate in state-owned gambling services offered by national operators or a monopoly.

In a more recent March 6 ruling in the Placanica case, the ECJ further boosted betting companies' appeals to equal treatment on all EU markets. The ECJ ruled that 'EC law precludes national legislation which excludes from the betting and gaming sector operators in the form of companies whose shares are quoted on the regulated markets.'

In other words, an EU member state cannot restrict its citizens' access to gambling services offered by national operators or a monopoly, nor impose penalties on foreign gambling service operators (click here to read PokerPages article).

"This proves that we can do business here even without having [Czech] license," said Jindrich Rajchl, country manager for international online betting chain Bwin.com.

The Office for Protection of Economic Competiton (UOHS) has received many complaints from betting service companies located in the Czech Republic, claiming that they are being unfairly discriminated against, particularly in the area of sports-betting.

The Czech Business Weekly (CBW) reported this week that the UOHS may instigate an investigation of the Ministry of Finance (MF) who regulates Czech gambling services.

The Czech government is blocking local gambling companies from operating online, but in spite of claiming that any online bets are illegal, it has not taken any steps to block foreign operators' access to Czech residents.

For example, the current Czech lottery law doesn't permit local betting companies to operate online betting because they cannot check whether bettors are over 18 years of age, said MF spokesman Jaroslav Ruzek.

"It's a clear discrimination against Czech betting firms," said Lubomir Jezek, spokesman for betting company Tipsport. "It's essential that online betting is either authorized here or effectively banned from the market."

Since local gamblers are forced to turn to foreign companies that are less transparent and don't fall under the supervision of Czech market watchdogs, they are being discriminated against, Martin Todt, general director of betting firm Fortuna told CBW.

Last year, revenues by foreign online betting providers in the Czech Republic were estimated at about Kc 4 billion (US $188.8 million, or GBP 96.4 million, or Euros 141.9 million). Meanwhile, Czech-based sports-betting firms Tipsport, Fortuna, Chance and Synot Tip reached sales in the Czech Republic of about Kc 12 billion in 2006. In other words, foreign operators took a hefty 25% portion of the Czech market.

"The current situation- when domestic and foreign companies can't enjoy the same conditions on the [odds-betting] market- is certainly not good," UOHS chairman Martin Pecina told CBW. "I can imagine that we could challenge the government to change the situation."

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