The Czech Republic is beginning to find out how serious its illegal gambling problem is, with this year’s edition of the Black Book of Illegal Gambling, an independent initiative seeking to appraise, address, and raise awareness about the deeply-rooted problem of unregulated gambling that is putting people at risk and eating into potential state revenue.
The Czech Republic is beginning to comprehend the reach of its illegal gambling market
This year’s analysis is based on independent research by Mgr. Robert Klobucký, Ph.D. (Sociological Institute, Slovak Academy of Sciences), and an economic analysis by the Center for Economic and Market Analysis (CETA) led by Ing. Aleš Rod, Ph.D.
The Black Book of Illegal Gambling estimates that as much as CZK330m is lost in tax revenue every month, and that hundreds of thousands of players gamble with illegal operators already. Czechs may be losing as much as CZK14.5bn on illegal gambling, depriving the state budget of potentially CZK4bn in tax money.
To put things even in perspective, "Playing Unlicensed Gambling Games on the Internet," by Klobucký, suggests that 66.2% of respondents who have been on the national self-exclusion list at some point have also been playing with illegal online casinos either occasionally or regularly. The author adds:
"We estimate that approximately 800,000 Czechs play with illegal operators, of whom about half do not even know if the casino where they play has a Czech license. These people are exposed to an environment without any protection, limits, or control."
Klobucký argues that the register’s efficacy and efficiency depend on ensuring that operators are licensed. The register struggles in an online environment where there is a well-established practice of players exploring websites that are not regulated in the Czech Republic, as they are not beholden to the same player safety standards.
In other words, websites that are deemed illegal in the Czech Republic are not obligated to check if a patron is on the country’s self-exclusion list – the Register of Excluded Persons (RVO).
The matter of lost tax is no small issue. Rod argues that illegal gambling is not merely a social problem – it’s an economic one.
"This uncollected public revenue obviously has its price – it could finance sports, culture, addiction prevention, reduce debt, or remain in the pockets of taxpayers if it stayed in the official economy with legal operators. Instead, it ends up in the hands of anonymous operators based beyond the reach of Czech authorities in tax havens," Rod adds.
This creates a vicious circle where the money collected by illegal gambling operators is then used to market their products locally and reach an even wider audience in the country, and one that often may not suspect that the websites are not regulated in the Czech Republic.
Current measures fall short of reining in the illegal gambling market
The most popular illegal brands in the country are searched up to 110,000 times a month. The country also has 27 regulated operators versus an estimated 1,113 illegal ones who habitually target local players, as per Petr Čelechovský from Bonver Win a.s.
Apart from using aggressive marketing strategies and not paying tax, illegal operators are also resorting to other, more predatory practices. Many are emulating the design of already regulated companies in the hopes of misleading players.
In recent months, we have recorded dozens of fake websites that abuse the Sazka brand. Players think they are on a trustworthy site, but they are sending their money to unknown entities outside the Czech Republic," says Aleš Veselý, CEO of SAZKA a.s.
He is not alone. Fortuna Games and Tipsport, two other prominent local companies, have experienced increased instances of spoofing and other schemes designed to subvert traffic and dupe players into believing they are playing with a licensed operator.
The conclusion of all of this is clear. "Based on the data, we can see that the current repressive measures are not enough. It is necessary to strengthen the technological tools for blocking illegal websites, simplify cooperation with banks and payment service providers, and at the same time systematically raise public awareness of the risks of illegal gambling," says Jan Řehola, director of IPRH.
