Hungary's largest gambling operator has been engaged for several weeks in one of many battles in the expanding European cross-border gambling war.
Szerencsejáték Rt., a 100 percent state-owned entity and holder of the exclusive rights to sell number draw games, sports bets and prize draw tickets, firmly objects to the advertising practices of London-based Internet sports book Sportingbet Plc and German operator Active Lotto 24.
Sportingbet recently launched a fully Hungarian betting and poker site and is advertising the site in Hungary via its Hungarian partner, Provimar.
Active Lotto 24, meanwhile, has been promoting its German State Lottery games via its agent, Tellcall Hungary.
Szerencsejáték Rt. is looking to the Hungarian Gaming Board for help. One of the board's duties is to take action against those who are involved in illegal gambling. The board can apply sanctions, impose a fine of offense and initiate a procedure of offense or a criminal procedure.
"The European Union currently has no provision or court sentence with an obligatory force in Hungary which would take the regulation of gambling out of the competence of the member state," said László Oravecz, who heads the board's Draw and Betting Licensing and Supervision Department. "Thus, the member states of the E.U., such as Hungary, can regulate within their own competence the requirements for gambling performed in their jurisdictions. Similar to Hungary, other member states of the E.U. also has restrictive provisions, and they apply them in respect of the organization of gambling."
"Otherwise," he added, "the Treaty of Rome makes it possible to restrict the free movement of services by lawful, legal or administrative means, justified by public interest and public security.
Oravecz said the Gaming Board takes public interest and public security in account when examining license applications. Likewise, he said, "The jurisdiction and competence of the Gaming Board covers exclusively the territory of Hungary."
"As a result," he said, "the board can take measures and other legal steps with effect exclusively against companies and persons who perform such illegal activity. Such activities of entities being abroad have to be judged by the law of that country and by the bodies of that jurisdiction. For our part, we can draw the attention of our partner authorities or--if it can be tracked down--of the performers of the activity to the fact that the performance of their activity is illegal in Hungary.
Hungary's legal provisions also prohibit any intermediary, advertising or marketing activity related to the participation in foreign gambling. The board, Oravecz said, can apply sanctions against those who perform such activity in Hungary.
"In case the active participation in the organization of illegal gambling in Hungary can be pointed out," Oravecz said, "a criminal procedure can be initiated by the investigating authorities and, depending on the result, a calling to account by criminal law may occur."
Oravecz said Sportingbet and Active Lotto 24 are the only companies known to be conducting the activity in question. The only similar cases have been those in which bogus or unknown companies (or their agents) present themselves as state gambling operators. But these cases, he said, are classified as Internet fraud.
The Gaming Board hasn't at this point taken any legal action against Sportingbet and Provimar or Active Lotto 24 and Tellcall Hungary.
Szerencsejáték Rt
In addition to having a stake in four Hungarian casinos, Szerencsejáték Rt. operates gambling services via phone, Internet and SMS. Two thirds of the Hungarian adult population (about 5 million players) are regular customers of the company. The group has more than a 50 percent share in the Hungarian gambling market.
Performance- Szerencsejáték Rt. has increased its turnover by 70 percent in the last two years. Its 2003 results were its best ever, with net revenue of US$667 million,
profit before tax of $91 million and profit after tax of $74 million.