Czechs Seek More Control, Boost Tax Revenue From Gaming

The Czech government is preparing to tighten control over the gaming industry and boost its contribution to tax revenue as billionaire Finance Minister Andrej Babis seeks to keep the budget deficit in check.

The ministry is drafting a bill that would raise tax receipts by allowing online gaming for all operators in the Czech Republic, Deputy Finance Minister Ondrej Zavodsky said in an interview. The bill, to be valid as of 2016, would also set separate tax rates for different types of gaming, he said.

Babis’s ministry is searching for new sources of budget revenue as it seeks to avoid a corporate tax boost envisioned by Premier Bohuslav Sobotka. The government wants to keep the public finance deficit at a maximum of 2 percent of gross domestic product in the years to come, officials have said.

“We need to create an environment that will allow us to tackle hardcore gaming like slots or table games,” Zavodsky said. “The indirect costs for the state stemming from such gambling are several times higher than the revenue it collects. That should be made even.”

The Czech Republic, which had some 58,841 gaming machines at the end of March, collects about 8 billion koruna ($402 million) in taxes from the gaming industry a year. The Finance Ministry estimates that costs related to gaming industry are at least four times higher than revenue, he said.

The country has the highest number of bars with gambling licenses per capita worldwide, Zavodsky said.

Casinos and slot operators would thus face higher tax rate, while lottery companies would be taxed less, Zavodsky said. In 2012, a special 20 percent lottery tax on gaming companies was imposed. Slot operators also have to pay a daily fee per machine.