Just like any other country, the Czech Republic is being forced to address advances in technology. New and emerging technologies bring both social and economic changes, forcing nations to respond from a policy perspective. The online gaming industry is the perfect example of this, as it has grown quickly in a short period of time, forcing the Czech Republic and other countries to consider the appropriate response.

Unlike many of its European neighbors, the Czech Republic has long embraced gambling, dating back to the 1990s. However, older laws didn’t necessarily account for the recent shift to online platforms. As a result, the Gambling Act of 2016 was passed to address both online gambling and traditional brick-and-mortar locations. With additional regulatory changes coming in 2024, it’s a good time to explore the impact of those regulations and the challenges that still need to be addressed.

Tax Revenue

All over the world, governments are finding out that tax revenue is a huge benefit of legalizing and regulating gambling. Casinos within the Czech Republic pay a 23% tax on their gross revenue, with that number increasing to 35% for lotteries and other more technical games. In 2024, that tax revenue from gambling generated CZK 20.6 billion.

That figure was 12.5% higher than the tax revenue generated from gambling the previous year, showing that the revenue from gambling is still on the way up. There is also reason to believe that the amount of revenue generated from gambling will continue to rise. This year marks the first time online casinos in the Czech Republic have surpassed land-based casinos. With the popularity of online platforms still on the rise inside the Czech Republic, there is plenty of room for tax revenue from gambling to grow.

Putting the Money to Use

What exactly is the Czech Republic doing with all of the extra tax revenue? While a significant amount of the tax funds that come from gambling is used by the national government, over CZK 6 billion of the 2024 revenue was distributed to local governments. This means that money from gambling taxes is being used to fund projects throughout the country. In local municipalities, that extra tax money is often used to fund cultural and educational initiatives that may not exist without the regulation and taxation of gambling.

Black Market Competition

On the surface, all of the tax revenue coming from gambling platforms is a good thing. However, given some of the high rates, there has been significant growth in black-market gambling platforms operating within the Czech Republic. In fact, there has been such a backlash to the tax rates that some operators are halting operations in the Czech Republic, allowing unregulated, black-market sites a chance to poach those customers.

There are potentially hundreds of websites running unauthorized online gaming. Of course, this is taking away tax revenue that could be going to the government and used for helpful projects. This is also taking Czech citizens using gambling sites away from registered platforms that are monitoring for gambling addiction and other adverse effects. At unregulated sites, those issues are likely to go unchecked.

Responsible Gambling

On the bright side, some of the recent regulations in the Czech Republic have addressed the need for responsible gambling initiatives. Czech laws now stipulate that new customers to online casinos and other gambling sites are told about the safe gambling tools available to them. There are also parameters in place that can temporarily prevent a player from placing bets for a 48-hour period if they display unhealthy betting habits.

Gambling sites are also prohibited from marketing to anyone under 18 or those who are considered high-risk for addiction or irresponsible behavior. All of this shows that regulatory conditions in the Czech Republic are promoting a safe environment and not trying to take advantage of people, even if doing so remains a challenge moving forward, given the massive growth of online gaming.

Crypto is Coming

Cryptocurrencies have become another great challenge for the Czech gaming industry. Regulations in the Czech Republic don’t recognize cryptocurrencies as a legitimate form of currency. This is becoming problematic because some gaming sites are accepting Bitcoin and other cryptocurrencies from users to fund their accounts.

In general, online casinos and other betting platforms are gravitating to the blockchain because it provides increased security and faster transfer speeds, both of which are helpful for online gambling. With more online gamblers wanting to use blockchain and cryptocurrencies, the Czech Republic will inevitably have to recognize cryptocurrencies as currency and figure out how they fit in from a regulatory perspective.