Government unveils opening bid to get to grips with gaming sector

The government has answered local council calls they be given more powers to stamp out gaming machine or so-called herna bars across the country. Proposed legal changes seek to put some order into a chaotic and poorly regulated multi-billion crown sector which many suspect is a front for criminal activity and money laundering.

Czech Prime Minister Petr Nečas announced on Wednesday a government amendment aimed at creating some order on the ground and in the legislative books regarding the booming betting market.

Simply put, the main plank of the amendment will give councils full powers to regulate gaming machines instead of the inadequate partial powers they had before. Previously, councils could only regulate fruit machines or so-called one arm bandits and not their ever more popular successors, video games terminals.

The amendment, which has been welcomed by town and local councils, still has to wind its way through parliament, but the Ministry of Finance is confident it can become law in January next year.

Changes also took aim at other parts of the haphazardly regulated betting industry in the Czech Republic. Those steps have been welcomed by the big betting companies as a move to tackle the illegal betting sector which is eating into their profits. They say, for example, that illegal sports betting now accounts for between a third and half of their legal business totalling 12 billion crowns a year.

Marek Herman is the spokesman for the association representing the big betting companies such as Fortuna, Chance and Tipsport.

“The new government law is a very good signal that the Ministry of Finance considers the situation in our business as very serious and needing a solution. It is a very important signal. What I appreciate is that poker games will be regulated by the law. This is the most important thing.”

Poker sessions, sometimes for big stakes, have taken off in the Czech Republic thanks to a loophole allowing associations to stage them as long as they have been registered at the Interior Ministry. Mr. Herman again.

“In the last two years there has been a dramatic progression in poker games. Our estimate is that 150,000-200,000 people started to play which is an enormous amount of people.”

Under the proposed government amendment, poker will be labelled a game of chance, games will only be allowed in casinos and organisers will have to be properly registered companies.

But the above board and legal part of what in 2008 was a 128 billion crown, 7 billion US dollar, a year betting industry says the steps to combat their illegal competition do not go far enough. In particular, they complain that foreign-based companies offering online betting are not dealt with.

The Czech government says Wednesday’s move was just its opening bid. The Finance Ministry, which has highlighted the danger of organized crime having a slice of the betting market, has been charged with coming up with its full hand in the form of a new law by the start of 2012.