At this time Zeman also sanctioned one of Europe’s toughest regulatory and operating codes for the gambling sector and via the 187/2016 law introduced a 23 per cent GGR betting tax and 35 per cent GGR slots tax which saw a number of companies leave the market at that point.
Ten last year the tax base for lotteries was increased again from 23 per cent to 35 per cent of GGR.
Tis was part of a Ministry of Finance plan to introduce a three tier plan to increase taxes across all ‘vice sectors’ which also saw increases for tobacco and alcohol products.
Apparently the Ministry of Finance said the average wage growth in Czech between 2009 and 2018 was 45 per cent whilst consumer tax on alcohol was last increased in 2010. With the increases, the government hopes to raise an additional CzK10bn in revenue this year.
Tis decision caused some arguments with many claiming the lotteries are the least risky in terms of gambling issues whereas online gambling was not addressed. Sazka lodged a complaint with the European Commission at the time over the lottery increases and also stopped advertising with the Mafra publishing house and reduced advertising in other media as a protest. Until then it was one of the top 10 largest advertisers in the country. Mafra belongs to Agrofert Holding, which was previously owned by PM Andrej Babis. Sazka is owned by Karel Komárek, the third richest Czech.
“Te decrease in GGR is primarily caused by the impact of Covid-19 with revenues in different geographies and segments affected to varying degrees. Te reduction of sales of certain products through physical retail networks was partly offset by strong performance in digital-only games and online sales.” Robert Chvátal, CEO Sazka
Meanwhile Sazka has recently indicated that if taxes are increased to 55 per cent this could mean the end of certain products such as the less profitable scratchcards, whilst distribution and sales network would be reduced and tax levies to the state would drop instead of increase with company losses of up to CzK60m. It is possible the company could shut up shop completely in Czech.
Te main goal of the Czech government is to protect its citizens against addictions which officials see as not only detrimental to health of Czech citizens but represents a high economic burden for public budgets and consumers.
Studies have placed the societal costs of alcohol consumption up to CzK60bn a year and smoking CzK100bn. Te cost of drug policy is also rising from around CzK1bn back in 2014 to Kzk1.6bn this year, whilst CzK15bn is spent on gambling addiction issues.
NEWSWIRE / INTERACTIVE / MARKET DATA P103
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