Czech Republic: Ministry of Finance about to lose €100 million case against a national gambling provider

At a time when new gambling regulations are being drafted, the Ministry of Finance of the Czech Republic (“Ministry”) lost its case against a Czech gambling provider – Casino Kartác Group. The provider challenged the practice of the Ministry according to which online gambling providers were awarded licences while a comprehensive legal regulation of online gambling has been missing completely. As a result, the Ministry issued a couple of licences to domestic online odds betting providers but refused to allow any other type of online gaming (such as casino games). According to Casino Kartác Group, the Ministry has been acting deliberately, failing to substantiate its inconsistent approach to providers of various types of online gambling games, which conclusion has now been confirmed by court. According to the published information, Casino Kartác Group already filed the claim for damages consisting in lost profit against the Czech Republic, stating that an amount equal to approx. €100 million is at play.

This case illustrates that under the current regulation, domestic online providers trying to fulfil all of the strict statutory requirements may be substantially disadvantaged vis-à-vis some of the foreign providers who provide their online services in the Czech Republic without having any licence, counting on a difficult enforceability of the regulatory rules outside of the territory of the Czech Republic. Although prior to commencement of works on the new bill, the Ministry already expressed its opinion that the new regulation needs to explicitly cover the online gambling sector. The abovementioned court decision may be a further impulse for the Ministry to look closer at the problem and create rules which enables the Czech Republic to be a healthy competition environment for online gambling providers