Hungary slot-machine ban bucks regional trend

October 04, 2012

BUDAPEST, Hungary (AP) — The government says it's trying to cure poor Hungarians of a gambling addiction. The gambling industry says that authorities are trying to seize control of a lucrative pastime.

Whatever the case, Hungary's decision to ban the ubiquitous slot machines seen in pubs, bars and parlors across the country goes against a gambling boom seen elsewhere in Eastern Europe, even as economic times get tougher.

The government announced the ban Monday morning, after an extraordinary Cabinet meeting called by Prime Minister Viktor Orban. It justified the surprise move by saying that tens of thousands of Hungarian families had been ruined by slot machines.

"Our objective is to ensure that our poorest, most disadvantaged and defenseless citizens ... be prevented from having the opportunity of spending their money on gambling activities," said State Secretary Janos Lazar.

The law, which is expected to take effect in a few days, forces slot machine operators to immediately surrender their licenses. Slot machines will have to be removed from pubs and gambling halls and will be allowed only in Hungary's three casinos — two in Budapest, the capital, and one in Sopron, a city on the border with Austria.

The government had already been cracking down on slot machine addiction. Tamas Huszar used to own eight slot machines, including four in a small pub he runs in north Budapest. After the government last year raised the monthly tax on each machine five-fold, from 100,000 forints ($450) to 500,000 forints ($2,250), Huszar decided to keep just one. Now he'll have to give up that one, too.

"Not only is my income going to fall, but I will be forced to lay off employees," Huszar said. The Hungarian move bucks gambling trends elsewhere in the region. Casinos and betting parlors have been proliferating in Bulgaria, Albania, Serbia and the Czech Republic. In Serbia, a boom in football betting has led to wagers even on games in the Finnish lower divisions.

On Tuesday, just over 24 hours after Lazar's announcement, lawmakers in the Hungarian Parliament voted 238-1 in favor of the bill, with eight abstentions. Experts estimate that there are some 100,000 gambling addicts in Hungary, a country of 10 million people, while another 500,000 are at risk of developing a gambling habit.

Istvan Schreiber, president of the Hungarian Gaming Association, said the industry has been blindsided by the government's change of heart, especially because a law passed in 2011 allowed for new, server-based slot machines due to be introduced early next year. Under the new system, slot machines would have been replaced by video terminals connected to a central computer, which would keep track of all gambling activities and could be monitored by state authorities.

But that has been replaced by a blanket ban. "The government has changed the law from one day to the next," said Schreiber, who also feared that the ban could strengthen illegal gambling. "Evidently, there is a business decision behind it. We'll see what is going to happen."

Schreiber said the association was considering filing class suits in European courts against the ban. Another trade group, the E-Casino Association, appealed to President Janos Ader to ask the Constitutional Court to review the law before he signs it.

The Ministry of Economic Affairs rejected the argument that the ban would cost up to 40,000 jobs as claimed by Schreiber's group. "In fact, the sad reality is that one slot machine can ruin the lives of at least 10 families," the ministry said in a statement.

Tamas Boros, a political analyst at Policy Solutions in Budapest, said the changes would likely increase state control over gambling in Hungary, putting it under the auspices of Szerencsejatek, the state-owned gambling company which has a monopoly on lotteries, scratch-off tickets and sports betting.

"The state is trying to centralize gambling activities and make all gambling revenues flow in to Szerencsejatek," Boros said. Lazar said the government was also planning to implement tougher conditions for opening a casino in Hungary. Boros charges that the plan could lead to the establishment of state-owned casinos.

To compensate for the 30 billion forints ($135 million) in lost tax revenues due to the slot machine ban, Lazar said the government was planning to regulate and tax Internet-based gambling activities.

Although it would be difficult to implement, Boros said it was also possible that the government could seek to prohibit access in Hungary to foreign Internet gambling sites and give Szerencsejatek a monopoly on such activities in the country.

Taking a break from feeding the machines at a Budapest gambling hall, Antal Lato said he sometimes got "totally wrapped up" in his gambling and welcomed the ban. "It will be good because at least you won't lose your money," said the 63-yer-old Lato, acknowledging that he sometimes spends up to 20,000 forints ($90) in one session. "The truth is, you have to struggle to win your money back."