EEGReport Magazine: The Hungarian online gambling sector has been subject to debate for quite some time now. What are the recent developments, and are foreign operators likely to be able to apply for licensing in the next few years?
Gabor Helembai: The Hungarian regulatory environment has not been a success story in recent years. Following some unexpected changes of the Act XXXIV of 1991 on the Organisation of Gambling (the “Gambling Act“), we have finally arrived at a relatively still period, which to be honest does not project a bright future for the regulated online gambling market in Hungary at present.
What makes the situation controversial is that the Hungarian licensing procedure remains a two-step system: a private (i.e. non-State owned) operator is awarded a concession right first by the Minister for National Economy, and once the gambling organiser has obtained such concession right, he/she may then apply for a licence for the actual operation from the Gambling Supervisory Department of the National Tax and Customs Authority (the “GSD“). The main concern is that the Minister for National Economy has discretionary power to decide on who should be awarded either a land-based casino, or an online casino concession right.
In practice, however, the Gambling Act does not stipulate that private operators are not allowed to enter the market and set up a business in Hungary, it is a fact that currently only Szerencsejáték Zrt., the 100% State-owned gambling organiser, is the one and only operator with an online gambling license in Hungary. In addition, presumably this is also the reason why only three concessionaires operate 8 (eight) casinos throughout the entire country. Taking into account the current state of affairs, we do not expect that such very exclusive club of concessionaires will expand in the near future.
The number of land-based concessionaires is also important for online business, as under a recently introduced requirement a remote gambling operator should first have a land based casino concession to be entitled to apply for an online casino concession (and an operation license afterwards). As a result of the above legal regulations and facts, there is not much opportunity left for potential online operators considering opening a business here, apart from finding a way to somehow co-operate with the land based casino concessionaires.
The Gambling Act does not regulate how the land-based casino concessionaires should offer online gambling services. Accordingly, in theory it is possible to “outsource” the operation to a third party, which opens up the possibility to online gambling operators to enter the Hungarian market by means of co-operation with the land-based casino concessionaire. Due to the lack of relevant regulation so far, the parties may agree on the terms and conditions relatively freely.
Last year, there were several rumours how land-based casino concessionaires – who are of course in a very privileged position – are planning to exploit the advantages they have, but a formal obstacle prevented all parties from proceeding with this matter: no implementation rules were adopted by the competent Ministry. Thus, the GSD literally could not assess and make a decision on any application. The problem were solved at the very end of 2015 when the Ministry for National Economy adopted and published secondary legislation, which provides detailed personal, financial and technical requirements for online casinos. Accordingly, we expect significant developments on the regulated market this year, and to soon find out what was happening behind the scenes last year.
EEGReport Magazine: Why are you always mentioning online casinos?
Gabor Helembai: Following a recent amendment to the Gambling Act, online betting has been monopolised by Szerencsejáték Zrt., the State gambling organiser company, while other competitors from the private sector are excluded from Hungary in this respect. This means that in practice only casino games may be offered legally to Hungarian customers via the Internet, of course which makes the Hungarian market even less attractive. We will see how much lobbying influence the concessionaires have, and whether the legislator would change this highly restrictive measurement in the near future.
EEGReport Magazine: What about the operators having no concession/license in Hungary?
Gabor Helembai: As discussed above, basically the regulator did not leave open much opportunity to start and pursue online gambling organiser activity in a legal way. This means that operators who are still committed to the Hungarian market have to face the sanctions of the GSD. In the past two years, the GSD has been constantly trying to block the websites of unlicensed operators. Moreover, they have started to impose fines on them as well, stating that they could enforce the resolutions even beyond the Hungarian borders. There is no doubt that serious/lengthy legal disputes could be anticipated in these matters. Allegedly several operators have already challenged resolutions of the GSD.
Another minor chance could be that, according to the latest information available, the European Commission has prepared detailed opinions on the latest draft amendments to the Gambling Act twice during the compulsory notification procedure under Directive (EU) 2015/1535 in 2015. Taking into account that neither the detailed opinion, nor the communication with the Member State is public, we are not aware of what the problem was with the then draft, and now effective regulations. Hopefully, the European Commission may have some influence on the Hungarian government in this respect to achieve a more liberalised regulation, but anyway, we cannot see the results at the moment, if any.
EEGReport Magazine: As we know it’s all political, however there is huge interest coming from the operators. What is the size of the Hungarian market based on niches? Sports betting, casino, poker?
Gabor Helembai: Regarding the figures of the Hungarian online gambling market, we have only very limited information available, due to the fact that currently all of the remote gambling operators are operating illegally in Hungary, and therefore no recorded data is published. What can help us to orientate ourselves, is that it has turned out that Szerencsejáték Zrt. had a revenue of HUF 110 billion (approx. EUR 350 million) from sports betting in 2014, which includes both the online and the land based versions. Furthermore, from this amount online betting alone generated more than HUF 11 billion (approx. EUR 35 million), and this number has most probably been growing. Allegedly, this legal way of sports betting is only the smaller part of the entire market, but there is no available information on the actual figures, unlicensed operators’ data is not registered. Taking into account that Szerencsejáték Zrt. does not deal with online casino games, no indicative figures are available regarding the potential market size.
EEGReport Magazine: Who are the key operators at the moment?
Gabor Helembai: The one and only legally operating online gambling organiser is Szerencsejáték Zrt. Certainly, other operators are also available. However, the number of them is changing constantly, but steadily decreasing. There are truly committed ones, e.g. Unibet, whose commercial ads can still be seen in the television regularly, as well, presumably subject to continuous confrontation with the Hungarian authorities. Although, it is rather typical that the blocked and/or fined operators leave the market and waiting for better times.
EEGReport Magazine: How important is the presence of affiliates are in the Hungarian market (i.e. what percentage of operators’ acquisitions or of marketing budgets do they command)?
Gabor Helembai: Due to the above detailed situation, there is no information available. Taking into account that there are no licensed online gambling organisers currently operating in Hungary, it is also illegal to pursue any activity aiming at the organization, promotion, soliciting, etc. of the unlicensed gambling in Hungary.
EEGReport Magazine: If regulated, what advice would you give to potential new entrants considering Hungary (operators, affiliates, suppliers etc.)?
Gabor Helembai: As currently there is hardly any opportunity to legally operate in Hungary, no useful or promising advice exists for new entrants. Having seen the recent practice of the GSD, it would be worth noting that operators providing services in the territory of Hungary could expect procedures to be launched by the GSD against them. For those wishing to avoid such a legal procedure, it would be advisable to close the website to Hungarian customers immediately. The GSD continues its strict practice in this matter: the mere fact that the website is available from the territory of Hungary may be grounds for an authority procedure here.
EEGReport Magazine: Looking further afield, where are the major emerging opportunities in Eastern Europe for operators at this moment?
Gabor Helembai: As far as I know, Bulgaria and Romania are the hot spots in the region nowadays providing the most advantageous opportunity for operators looking to operate in a regulated market. These countries have taken a different approach compared to Hungary or other countries in the neighbourhood, i.e. they liberalised their markets. I truly hope that they will become a success story, because this may convince the Hungarian decision makers to change their attitude and realize that letting the competitors in would be better for all players in the game: the State, the operators, and last but not least the customers.
Tom Light -SBTech Interview- (EEGReport – Magazine – Issue2 – February – May 2016)
EEGReport Magazine: Eastern European markets are growing at an incredible rate and I don’t think that anyone can argue about the fact the sports betting is the biggest niche when it comes to online gambling in Eastern Europe. Do you feel that this is accurate?
Tom Light: In most cases yes, we see that in countries such as Bulgaria, Czech, Hungary, Lithuania & Poland, sports betting is accountable for 75%-90% of the Gaming GGR, which includes Sports, Casino, Poker & Bingo. For markets like Latvia, Romania & Slovakia Sports is still a major sector within the gaming industry being accountable for 30%-50% of the GGR.
In play in particular has been a growth denominator in the past years for online sports-betting, allowing the punter roll-over his funds several time during one match.
Beyond the turnover it is important to mention that the margin is much high when it comes to sports betting, as well as the image of sportsbetting, which says that if you are good and knowledgeable you can make money.
We should even see a bigger increase during the Euros coming this June, as many non-punters would start betting on their favorite reprehensive teams.
EEGReport Magazine: Can you maybe give examples of countries where this isn’t happening and casino or other gambling products might surpass the sport betting audience? You can even mention markets that aren’t yet legalized in terms of licensing.
Tom Light: Romania is an example for a country that up to last year had 10% more turnover on casinos then on sportsbetting, I think this is related to regulations and since the new regulations came in to place I’m sure that during 2016 sportsbetting GGR will surpass casino.
To put in perspective, globally, the sportsbetting GGR is bigger than the all the other gaming sectors…Combined!
EEGReport Magazine: There has been a lot of innovation when it comes to sports betting products, and with one of the major European soccer event coming up this June, are you guys busy in the lab trying to bring new technology that will make online sports betting easier or even more attractive?
Tom Light: These days we are simply talking about personalization, which in core is the knowledge the operator has for each of his punters, the more knowledge the more personalized. Data can be gathered via the most common logs of all betting activities, behavior on the website, but even polls and ‘Mark as favorite’ buttons. Mapping this business intelligence is not a simple task, but the operators who are able to do so will have amazing insights on their clients.
Once data is collected and offer must be created via various algorithm and rules, based on many variables such as favorite teams/leagues, past winnings, past losings, trigger-happy cashout, etc… in order to create various offers for example:
“Manchester United did the job for you last time, can they do it again?” (While adding a betting button).
These offers are much more effective and are much more converting then just showing a generic offer to all customers or even to customer segments.
Another way to create offers, is using cross-player data, same as amazon does, with:
“Customer who bought these products, also liked XYZ …”. The likes of Bettorlogic offers this type of service which is taking the betting behavior of punters who made similar bets and are informing the customer which bets he might like. Since this is a more social way of bet recommendation, this might be more appealing to the punter which might not driven from the ‘house’ recommendations, as much as the activities of other partners.
The last part is to serve this offer in a proper matter, which can be targeted ads, SMS marketing, push notifications, widgets / pop-up on the site, or even gentle highlights of bet markets across the page.
EEGReport Magazine: Most of the Eastern European countries have qualified for the EURO 2016, this means that you don’t have to a betting fanatic to bet on your country during such events. Everyone will do it for at list the period on which the tournament is being played. What does this mean for online sports betting operators and especially software providers?
Tom Light: Back in the day, it was very clear, if you are an Italian operator, and there is a game ‘Italy VS Portugal’, you are as much gambling as all the punters on your sportsbook – the risk was one sided, and the results were sometimes amazing but other times destructive.
In today’s world, this scenario cannot happen, the punters are betting 85% of the times on in-play live betting where the bet markets are very liquid, such as fast markets – what will happen in the next one minute, corners, 1×2 rest of the match, etc… all these markets spread the risk around various bet selection making the operator the desired margin instead of a roller coaster.
EEGReport Magazine: Looking further into the future. What are in your opinion the top markets that are going to open up for online gambling in Eastern/Central Europe?
Tom Light: I would look at Netherlands, Czech Republic, Portugal, and the evolving of the Romanian market.
Netherlands being a market proven in the .com market with high PV.
Czech Republic which is the Eastern European diamond, which is now dominated by TipSport, iFortuna, Sazka, Synot and StarTyp will open up Jan 2017 for additional licenses by international companies.
Portugal, with mass-market attraction for sportsbetting, various .com case studies such as BWIN and Betsson(Dhoze).
And of course the Romanian market which is proving to be very fruitful by the day.
Tom John Light Biography – (EEGReport – Magazine – Issue2 – February – May 2016)
Tom John Light was born and presently resides in Tel Aviv, Israel. Tom has lived and traveled worldwide and is highly knowledgeable and experienced working in various global regions.
Tom has been working in the gaming industry for many years with a focus on casino operations and sports betting. Currently Tom acts as Vice President of Business Development at SBTech. He is renowned for his role as Vice President of Business Development at FashionTV. Additionally Tom has successfully served as CEO for several online gaming companies such as 7Red Casino and 1King Casino.
Tom is recognized for his high involvement with the creation of the Online How-To Guide ‘eHow’ and has been featured/published in various interviews and articles.
Gal Ackerman Crowdtrading – (EEGReport – Magazine – Issue2 – February – May 2016)
EEGReport Magazine: In the last couple of years we have seen a growth in the launch of financial programs, but none of them seems to attract so many new traders as Trade360. The innovation which came with CrowdTrading seems to have swept the enthusiastic traders off their feet and they now choose your platform for their trading activities. What is the real innovation behind this phenomenon?
Gal Ackerman: In a nutshell, CrowdTrading is about taking the big data that banks and brokers rely on and putting it in the hands of the people. Revealing how new market trends develop in real-time is really the perfect way for new Traders to get a feel for the rhythm of the markets, and as their knowledge grows, their profits should too!
EEGReport Magazine: When it comes to financial trading programs and platform, a huge concern always is raised and it’s a concern the EU is trying to battle daily. It is concerns regarding Money Laundering. How is Trade360 with such problems, has there been any incident, is it tracked and reported?
Gal Ackerman: We have a talented and experienced team dedicated to AML. So far, we’ve managed to identify and prevent the handful of attempts that have been made to cheat the system. We’ve reported each incident to the appropriate authorities and we’re confident that we’ll continue to stay well ahead of the curve and maintain our all-important integrity.
EEGReport Magazine: Since Trade360 is a rather new financial service form, it falls within the newer and stricter operating guidelines issued by CySEC. How are client deposits protected and standards executed in this enhanced regulation?
Gal Ackerman: Our legal team in Cyprus is in constant contact with CySEc to ensure full regulatory compliance. Our clients’ funds are held securely in segregated accounts at top-tier EU banks and our customer support team is always working to ensure the highest standards of service across the board.
EEGReport Magazine: How are the affiliates taking advantage in promoting this innovative way of trading? There certainly has to be a high demand for marketing materials and payouts. We’ve seen that there is a top $650 CPA for affiliates.
Gal Ackerman: The growth in our Affiliates Programme has been exponential, and we’re all very proud to be part of it. We know that to attract the finest Affiliate talent, we need to pay the best CPA, and I’m so pleased that there have been so many substantial payouts in such a short time. Our USPs are proving to be super-appealing to clients, feedback from Affiliates is universally positive, and it’s very gratifying that collateral take-up is so high.
EEGReport Magazine: As we know, you have always been in the Financial industry. In your expert opinion, can there still be room for innovation in these trading platforms? We have witnessed so many these couple of years, that gave access for individuals that did not know anything about trading to start and venture into this great niche.
Gal Ackerman: I think there will be major convergence between people’s social, leisure and economic networks over the next few years, with advances in augmented reality enabling us to multi-task far more effectively. And with the growth of decentralized, crowd-based and peer-to-peer financial services, I think we’re going to see some very interesting developments in terms of synergy, gamification and crowd investing. Watch this space!
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