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Hungary is imposing strict restrictions on international operators trying to enter their market despite a ruling from the Court of Justice of the European Union (CJEU) that it cannot sanction or fine international operators, according to a lawyer.

Speaking on a panel at the virtual European Gaming Q4 meetup on November 8, Gábor Helembai, counsel in the corporate practice group at Taylor Wessing, said the Court of Justice of the European Union (CJEU) found Hungary’s new gambling law is not compliant with EU law, meaning the country does not have the power to penalise international operators for grey market operations.

However, Helembai revealed that on January 1, 2023, the Hungarian government plans to “push the button,” as he put it, on cracking down. “The government can, I think, expect to make international operators' lives much more difficult in the forthcoming years.”

The government plans to block IP addresses and issue severe sanctions to financial institutions that provide payment services to international operators. Advertisements will remain forbidden for international operators.

“Now of course the bigger companies can argue that the new law is still not compliant with the EU law, but it will take four years when we get another CJEU decision, which will establish whether or not this new law is compliant with EU law,” said Helembai.

This leaves local EU operators ostensibly in a good position in the market. However, land-based casinos retain exclusive rights under the gambling law to operate online casino games. In order to join the online gambling market, companies would have to disentangle verticals, leaving casino games out of their offerings.

There is a further restriction for them to contend with: authorisation will not be granted to an applicant that organised gambling without a licence in the last five years.

Hungary’s parliament approved legislation to amend gambling in July, with changes that on paper make it seem much easier for operators to enter the previously state-monopolised market.

According to Helembai, a concession is not needed, as if an operator meets the regulator’s requirements a licence will be rewarded to conduct online gambling.

But with all the practical restrictions and implications noted above, it appears that the market will remain relatively closed for the foreseeable future.