The Hungarian Liberal Party (SZDSZ ) wants to privatize the country's national lottery, Szerencsejatek Zrt.
Gábor Kuncze, the chairman of this junior coalition party, is strongly in favor of market-based solutions to public services and cutting taxes. Further, co-liberal Janos Koka, the very active economy and transport minister, is pro privatizing. The SZDSZ, would like the government to go beyond the privatizations outlined in the euro convergence program (the introduction of the euro seems certain to occur between 2011 and 2013) and for the state to sell off several large firms, Koka said last week.
Koka, formerly the president of Euroweb Internet Service Provider and CEO of a Web development and consulting firm, said Szerencsejatek should be included within the list of objects and companies to be privatized because the lottery would be better off in private hands.
Speaking after a meeting of the party's economic council, Koka explained that offloading these companies would produce annual revenues for the state amounting to hundreds of billions of forints (hundreds of millions of US dollars). In turn, this income could be used to reduce the public debt, the minister said.
With a large motorway development finished, ongoing railway projects nearing completion and the surprise announcement of a $153 million budget surplus, the business-entrepreneurial minister has reached a status of heavyweight within the council of ministers.
IGN asked Péter Oravecz, communication director and spokesman of the Hungarian Privatization and State Holding Company, if he could shed some light on a possible privatization on the Hungarian National Lottery.
"The government of the Republic of Hungary hasn't made any decision on the privatization of Szerencsejáték Zrt.," Oravecz said. "The company is listed in the privatization law among the companies to be owned by the state in the long term. Thus, the privatization company doesn't deal with the preparation of the company for privatization."
The following is an excerpt from the Gaming Board of Hungary's 2005 annual report:
Szerencsejáték Zrt., as the only operator of draw games, achieved from the number draw games and from the scratch tickets 543.8 million USD game revenue and 32.7 million USD net game revenue. The increase of the game revenue by 20% compared to 2004 was due mainly to the increase of the price of the single games and in smaller part to the increase of the number of the base games: the price of the single games of the number draw games - except for Keno - was increased from 0.7 USD to 0.8 USD from 14th March 2005.
As a result of law modification, the operators have to use at least 60% of the prize base for prizes in case of scratch tickets licensed after 1st January 2005 (contrary to previous 54%) and no personal income tax has to be paid on prizes. The revenue from scratch tickets was higher by 48% than in 2004.
On the market of betting operation Szerencsejáték Zrt. and Magyar Lóversenyfogadást Szervezo Kft. (Hungarian Horse Race Betting Organiser Ltd.) were the operators in 2005. The total revenue from betting was 69.1 million USD, more by 8.1% than one year before. The prices of betting did not change in 2005.
The total revenue (drop) of the six casinos operating in Hungary was nearly 22.1 million USD in 2005, which is less by 12% than one year before. The net game income was less by 10% than in 2004. The reason for this is the deviation effect of the gaming arcades of category 1, in spite of the fact that the number of slot machines operated in casinos and their share from the net game income kept on increasing.
The net game revenue of the slot machines operated in gaming arcades of category 1 and 2 exceeded 35,8 USD which is an increase of 11% compared to 2004. Due to the rise of the presumptive tax from 345 USD to 460 USD in September the game tax paid increased by 7%, meanwhile the number of licensed slot machines decreased by 7% from the end of 2004 till the end of 2005.
Casinos
In 2005, six casinos were operated in Hungary, three of them in Budapest (Las Vegas Casino Kft., Várkert Kaszinó Kft., Belvárosi Kaszinó Kft.) and three in the countryside (Casino Gyor Kft., Casino Kecskemét Kft., Casino Sopron Kft.). Casino Gyor Kft. and Casino Kecskemét Kft. are owned by the state gambling operator, they pursue their activities not within concession contracts. The payment of game tax of the casinos was 4.3% of the total game tax in 2004.
Development of the Market
The six casinos were visited by 362,507 customers in total, which was a decrease of 1% compared to 2004. The proportion of the foreign customers decreased by 4 percentage point compared to the previous years, to 55%. 62.6% of the net game revenue was paid in HUF, which was higher by 7.3 percentage point than in 2004.
The two casinos in the countryside owned by Szerencsejáték Zrt. (Casino Gyor and Casino Kecskemét) operate by using exclusively HUF. The other four casinos operate by using both HUF and foreign currency, of them Várkert casino uses USD and the others use EUR as foreign currency.
The considerable fluctuation of the exchange rates of HUF and foreign currencies had a significant effect on casinos. (In 2005 the exchange rates were 183-215 HUF/USD and 242- 254 HUF/EUR.)
In 2005 the amount wagered by the customers in casinos was 47.9 million USD, which was less by more than 12% than in 2004. The net game revenue was 4.9 million USD, which is less by 10% than in 2004.
The full report can be viewed online at www.szerencsejatek.hu/uzletijelentes.html.