The Fidesz (Hungarian Civic Union) political party has proposed an addendum to the Hungarian gambling laws, which is likely to destroy the country’s slot machine industry. If approved by parliament, the bill would increase slot machine taxes to a reported $100,000 US per machine each month.
Other European Union countries have considerably lower taxes on slot machines. German businesses pay a 1,289.68-euro monthly tax per slot machine and Italians pay 1,590.90-euro tax.
Leading members of the Fidesz party consider slot machines a social ill that corrupts residents of disadvantages areas, takes away money from the pockets of the poor and contributes to criminality and drug addiction. In addition, the political party believes that the 500-fold tax increase will generate billions of much needed tax revenue.
According to Stephen Schreiber, the president of the Hungarian Gambling Association (Magyar Szerencsejáték Szövetség), such a prohibitive tax will have exactly the opposite effect of what is intended – “The slot market is completely overloaded. There is no hope for more money and you can say goodbye to the current tax revenues.”
“The slot market segment simply can no longer sustain a tax increase of this magnitude. On average, 240 people play each slot machine monthly, and spend much less than the proposed new tax,” Mr. Schreiber added.
There are currently 13,700 slot machine operating in Hungary, out of which 12,000 machines are located outside casino-arcades, in restaurants, pubs and other establishments not classified as casinos. Due to the recession, nearly 8000 machines have already been removed because of a lack of players to pay the current taxes.
Nearly half of the revenues of non-casino establishments is generated by the slot machines. The proposed tax increase would cause the vast majority of businesses to remove the machine – unable to pay the new tax.
Industry analysts estimate that approximately 60,000 Hungarians will lose their jobs as a direct result of the slot machine tax increase.
The Hungarian internet casino market is in the process of opening up to foreign competition in order to keep the much needed tax revenues within the country.