A blanket ban on gambling solves nothing, as black casinos in Czechia are multiplying. Smart regulation is the only way forward, claims the Hospodářské noviny news portal.
Revenues from gambling taxes are growing every year in the Czech Republic, exceeding 20 billion crowns (€800 million) for the first time last year. However, many traditional brands, such as Rebuy Stars and others, have closed in the Czech Republic or are experiencing problems.
“The Czech gambling market is undergoing significant reform. Ten years ago, it could be said that the Czech Republic was the casino of Europe. We had almost 100,000 licensed slot machines, almost 9,000 gaming halls and casinos, and per capita we were the second country in the world in terms of the number of gambling games,” Jan Řehola, director of the Institute for the Regulation of Gambling, told Hospodářské noviny.
“However, the situation has changed. The number of gambling halls and casinos has dropped by 95 percent to the current 700, the number of legal slot machines has dropped by more than 80 percent to 20,000. In terms of per capita, we are already far below the European average, behind Germany and other countries,” added Řehola.
Gambling is still growing, just not in brick-and-mortar establishments, as it has been moving to the online environment.
Last year’s government consolidation package increased gambling taxes, making them one of the highest in Europe. The way in which the tax is distributed between the state and municipalities has also changed. Municipalities that have gambling halls and casinos on their territory have seen their income fall.
Municipalities can decide for themselves whether to allow gambling halls and slot machines on their territory or not. They often ban them in an attempt to reduce crime. “According to our research among cities and municipalities, this has not happened, although mayors claim otherwise in the media,” said Jakub Žofčák, an analyst at the Center for Economic and Market Analysis. According to him, gambling and its negative impacts have simply moved online and behind closed doors to illegal gambling halls.
According to Tomáš Pintér, the mayor of Planá, which takes a liberal stance towards gambling and has two casinos operating on its territory, an absolute ban leads to the emergence of illegal gambling dens.
“We allowed casinos because we want to keep gambling under control. The second motive is the financial resources, which are important for the operation of the municipality and its ability to develop. We have set rules of cooperation with the operators of gambling dens, i.e., who will take care of what, including, for example, security. It works and we are satisfied. We have not had a single complaint from citizens,” Pintér explained.
However, after the change in the rules for distributing gambling tax revenues, the municipality lost 80 percent of its budget. “It was challenging, we had investment projects underway, but we have to deal with it somehow,” Pintér stated.
Currently, the four largest Czech cities – Prague, Brno, Ostrava and Pilsen – have introduced a complete ban on gambling. “But if we look at how smart regulation is done, so that the well-being of citizens is as high as possible and the social costs as low as possible, then the best is appropriate regulation. That is, not complete liberalization, when slot machines are on every corner and no rules apply to them, but not complete prohibition either. The ideal situation is when there are strict rules for gambling that are followed. However, such rules cannot be set on the illegal market,” Řehola pointed out.
After big cities banned casinos, they began to be built around them, a typical example being Vestec u Prahy. “I don’t see any reason why there couldn’t be four or five casinos in Prague. Out of 28 European capitals, we only find casinos in five,” Řehola pointed out. According to him, the goal is for a player who wants to gamble to have a legal place to go.
“Today, all players are registered, they have to set self-restrictive measures, the origin of their finances is being investigated, those on benefits cannot play, and so on. There are a number of tools that the state has introduced. But if they ban the whole thing, these measures will not work,” stated Řehola.
Jakub Žofčák’s research team conducted extensive research on the social costs of gambling in 2022. “Government spending is associated with enforcement, putting players in prison if they commit a crime, and the like. It amounts to about 5 to 12 billion crowns per year,” Žofčák said. However, private costs are higher, around 100 billion crowns.
“This includes lost money, which accounts for half of this amount. Then there is also interest on gambling-related debts or lower wages because the player does not go to work. Other factors include light and sound pollution from gambling halls, violent crimes and impacts on the children of players, which amount to 2.5 to 5 billion crowns,” Žofčák added.
Mayor Pintér noted that online gaming is growing rapidly in terms of total deposits. “The total deposits per quarter have increased from 30 billion to 120 billion in the last four years. There has been an enormous shift. So the problem in the future will not be in casinos, but in online gaming,” Pintér is convinced.
A big topic in gambling is also the black market for games, whether online or in brick-and-mortar casinos. The Institute for the Regulation of Gambling has attempted to map the black market through research. “We have come to the conclusion that the black market in the Czech Republic is around 20 to 30 percent of the legal market. For example, the customs administration has discovered more than 1,400 black gambling dens in the country since 2017. I would just like to remind you that we have 700 legal ones,” Řehola underlined.
This is proof that the black market for gambling is also gaining large proportions in the real world. And the social costs resulting from it are even higher than the costs of legally operated games, he says.
