Foreign investors who are interested in setting up a company in the field of gambling should be familiar with the local legislation provided by the Hungarian authorities if they plan to develop gambling activities in Hungary, regardless of their type.
The industry is regulated by the Supervisory Authority for Regulatory Affairs (SARA), which issues licenses for businesses in this field. It is compulsory to receive a license from SARA in order to carry out gambling activities in Hungary in a legal manner.
If you are interested in opening a company operating gambling activities in Hungary, our Hungarian company formation specialists can provide you with further information on the main advantages of the industry.
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Legal entities suitable for gambling businesses in Hungary
In order to carry out gambling activities in Hungary, investors, both locals and foreigners, need to open a Hungarian company. According to the law, they may start their businesses under one of the legal entities mentioned below (the obligation applies to those developing liberalized gambling activities, as those who carry out a non-liberalized activity must start a concession company):
- limited liability company;
- private limited company;
- public limited company;
- subsidiary.
Authorization for gambling activities in Hungary
SARA will issue the authorization to perform activities in this field as long as the operator can provide the minimum requirements specified by the Gambling Act. As such, SARA will verify the following:
- if the operator provides correct information to the players;
- if the operator explains the risks incurred in the gaming industry;
- if the company provides protection for the players.
Please know that EEA operators that want to open a company in Hungary that provides online betting activities (which are now liberalized for this category of businessowners) are required to apply for a license before engaging in these operations.
The gambling market in Hungary
According to the local legislation, the Gambling Act 1991 distinguishes between liberalized and non-liberalized gambling activities. Liberalized activities refer to gambling places in which the operator provides only slot machines, while the non-liberalized ones are fully owned by the State or by a company which is owned by the Hungarian state.
The gambling legislation stipulates that a company can conduct non-liberalized activities only if the state issues a concession agreement, which will allow the company the right to carry out these gambling activities in Hungary for a specific period of time.
As such, foreign investors who want to set up their businesses in the non-liberalized gambling domain should receive the authorization of the Hungarian state, which will provide a five-year concession agreement. Non-liberalized activities can also refer to online horse racing bets; our Hungarian company formation agents can provide you with further details on this subject.
The online betting sector used to part of the non-liberalized gambling activities in Hungary, but the law has been changed in 2022. However, this rule applies solely to entities incorporated in the European Economic Area (EEA).
Online gambling operators will be issued with a license that is valid for a period of maximum 7 years. However, the license validity can also vary on a case-to-case basis, following the SARA ruling. Our consultants in company registration in Hungary can further advise on this subject (for instance, land-based casino operators can obtain concessions for a period of up to 35 years).
Laws regulating the gambling industry in Hungary
Foreign businessmen who want to start the process of company formation in Hungary must observe the rules of law that regulate the gambling industry. There are many obligations deriving from these laws and our consultants can offer the necessary legal support on the direct implications on the following:
- the amendments of the Act XXXIV of 1991 on Gambling Operations (Gambling Act) applicable starting with 1st of January 2023 (on the liberalization of online betting activities);
- the Act XLVIII of 2008 on the Basic Requirements and Certain Restrictions of Commercial Advertising Activities (rules for promoting gambling activities in Hungary);
- the Act LIII of 2017 on the Prevention and Combating of Money Laundering and Terrorist Financing;
- the Act XVI of 1991 on Concessions (on concessions made with the Hungarian state for non-liberalized activities);
- the SARA Decree No. 5/2021 (Responsible Gambling Decree) and SARA Decree No. 4/2021 (rules for the implementation of anti-money laundering laws).
Gambling operators are taxpayers in Hungary and therefore, the company must prepare specific documents to submit the necessary tax reports. Our accountants in Hungary can assist gambling businesses in this process, calculate the taxes due, report any changes from the data initially registered with the tax authorities, etc.
If you need further information on the gambling industry in Hungary, please contact our Hungarian company formation consultants, who can offer you assistance for the incorporation of a gambling business.