The inertia of monopoly and its impact on Hungarian gambling regulation

How Political Regimes Shape the Past, Present, and Future of Gaming Policies in Hungary

For over two decades, Hungary’s gambling regulation has been characterized by an entrenched inertia, prioritizing state monopolies and restricted, non-transparent concessions over meaningful market liberalization. Following a landmark political shift in the 2026 general elections, the newly formed government now faces an unprecedented opportunity to overhaul this oligopolistic system. However, dismantling the legacy of the heavily patched 1991 Gambling Act requires balancing the urge for political accountability with the need for a modern, EU-compliant regulatory framework. Discover how Hungary’s history shapes gambling law today and the challenges of reforming a state monopoly system as this article explores the historical roadblocks to gambling liberalization in Hungary and argues that upcoming reforms must be driven by professional industry standards rather than mere political drive for accountability to avoid destabilizing the market.

Factors hindering the dismantling of an oligopolistic market

From a broader perspective, a complex interplay of social, legal and political factors has contributed to the current situation. Here, the inflexibility of a system characterized by oligopolistic features has so far prevented the establishment of a modern, EU-compliant legal framework that serves the interests of both market participants and players.

The persistence of Hungary’s gambling regime is well illustrated by Act XXXIV of 1991 (the ‘Gambling Act’)[1], which, although it has undergone numerous amendments, has been in force for 35 years. Normally, if a law has been in force for such a long time, it is a sign of stability and predictability. However, in such a rapidly changing and fast-paced industry such as gambling, it tends to have the opposite effect. It clearly illustrates that none of the recent political regimes has been willing to address the issue seriously or to rethink the state’s role in the industry through a comprehensive reform. Instead, they have simply patched up the law here and there to suit current political and economic interests. The system’s inability to change cannot be attributed to any single specific cause, but rather to several interrelated and mutually reinforcing factors.

One such factor is the slow recognition and acceptance that, unlike in the past, the state cannot exercise complete control over the online space. Traditionally, the state has a deeply ingrained belief that it can control all market activity. This may well have been true for a long time in the case of traditional, brick-and-mortar operations, but ceased to be true following the emergence of the online industry.

Gambling during the socialist era fell into the category of activities that were tolerated but not supported: it was subject to strict state supervision and was available to the public only to a limited extent. For example, Hungary’s first modern gambling casino under socialist rule opened in Budapest in 1981 and initially admitted only foreign visitors paying in hard currency[2]. This approach was also applied at the time of the transition to a market economy in 1991.

There was no question that the lottery – the ‘cash cow’ of state-organized gambling – came under a state monopoly. Meanwhile, other forms of gambling became subject to concessions, allowing the state to decide at its discretion who would be permitted to organize gambling. This fundamental principle continues to underpin the Hungarian gambling regulatory framework to this day.

In response to the rise of online gambling, initial regulations for the sector were introduced in the late 2000s[3]. However, given the borderless nature of the industry, early enforcement proved largely unsuccessful. Despite significant estimates regarding the size of the gray and black markets, it took a decade of gradual effort to establish a regulatory framework capable of delivering measurable results. Today, this three-level defense system relies on the technical blocking of unlicensed websites, a comprehensive ban on advertising prohibited content, and the blocking of related financial transactions.

Although official statistics on the exact size of the unregulated market remain unavailable, the robust revenue growth among legal operators over the past three years indicates a successful shift of players away from illegal platforms. For instance, the state operator nearly doubled its total revenue between 2021 and 2025[4], a surge driven primarily by its betting division. This growth is consistent with stronger channelization, but certainly does not by itself prove migration from unlicensed operators.

Even as late as 2024, industry estimates[5] suggested that the gray and black markets still retained a significant market share. However, the soaring profits of the state-run operator and the strong financial performance of the few licensed operators seemingly validated the state’s restrictive efforts. Consequently, political decision makers felt little motivation to recognize the inherent limitations of state control in the digital sphere. Instead of adopting a more inclusive regulatory approach – such as fostering regulated cooperation with a broader range of service providers – the government opted to maintain its prohibitive stance.

Furthermore, the political drive for reform was dampened by the broader economic boom of the 2010s. The combination of sustained economic growth and a steady influx of European Union funds meant that the financial impact of lost tax revenue from illegal gambling was largely unfelt. The last time the Hungarian government showed any inclination to open the gambling market to foreign operators was in the late 2000s, during a starkly different and much less favorable economic climate. Admittedly, the focus then was not on liberalizing online gambling, but rather on major foreign investors developing large, Las Vegas-style casino resorts in Western Hungary[6]. These projects would have brought substantial direct capital investment and significant tax revenue.

None of these projects ultimately came to fruition, for reasons including financing constraints and political controversy, and they have not been revisited since. Today, however, with the national budget once again showing signs of strain, the argument that gambling is not merely a necessary evil, but a highly lucrative source of state revenue, may finally return to the forefront.

Over the last 20 years, there was no strong public demand for comprehensive reform that could have forced a political response. Hungary inherited a gambling market from the socialist era where gambling was not about ‘going to the casino’, which was long considered a bourgeois pastime. Instead, it was about mass-market games played for small stakes.

The proceeds from these games were frequently channeled into state projects, such as sports or housing development funds. With this legacy, and without a broad social base that challenges the traditional ‘tolerated but not prohibited’ mindset, the push for sensible regulation was supported by only a narrow demographic group.

The best example of this was in 2012, when the government banned the operation of slot machines almost overnight. By restricting them to a few casinos, they dismantled an entire industry[7]. Citing national security and player protection concerns, the Christian-conservative government pushed this program through with almost no public opposition.

Later, two unstated arguments helped counter any potential social demand for change. While never officially articulated by the government, they fit perfectly into its broader political narrative. First, there was the idea that Brussels (the EU) should not dictate how Hungary regulates its markets. Second, domestic Hungarian businesses should be favored over large foreign corporations whenever possible.

Aided by the public’s general indifference, the majority of people quietly accepted that gambling rights were granted exclusively to Hungarian and politically well-connected entrepreneurs. Consequently, this situation was not used as a basis of political attack for many years. The topic only gained real traction in the run-up to the 2026 elections. Even then, it did not emerge as a standalone issue, but rather as part of a broader review of various state concessions, such as motorways and tobacco.

Last but not least, a major source of resistance to market reform came from efforts to protect the state-run gambling operator and its associated business circles. Beyond generating profits and tax revenue, the state monopoly has historically played a structural role in the broader ecosystem of the government of the day. The company’s corporate sponsorship subsidiary has drawn intense scrutiny from investigative journalists and transparency advocates[8]. Critics argue that successive administrations have used the state-controlled operator as an off-budget financial reserve, essentially a parallel funding mechanism for political priorities.

From this perspective, state dividends are legally rerouted through ‘corporate sponsorships’ to support entrepreneurs, influencers, and cultural figures aligned with whichever party is in power. Conversely, the official corporate stance highlights the operator as a vital benefactor of Hungarian civil society, sports, and culture. The company maintains that all sponsorship allocations strictly follow legal protocols, benefiting successful entities and ultimately serving the public interest.

Ultimately, the focal point of this dispute is not about illegal bribery or covert kickbacks. Instead, it highlights a formalized, legally permissible framework where the substantial revenues of a state monopoly can be systematically utilized to support the political and ideological ecosystem of the incumbent administration.

Combined, these circumstances have created a system that fiercely guards the status quo. Over the past two decades, legislation and enforcement have largely functioned as a political arena to protect the beneficiaries of this oligopolistic regime.

Legal roadblocks to gambling liberalization

The socialist government in power between 2002 and 2010 placed no particular emphasis on gambling. Consequently, the restrictive system established up to that point remained largely unchanged. Given this stagnation, expectations were high following the election of a conservative government in 2010. The industry waited to see if the new administration would rethink gambling regulations. Change did indeed begin in 2011, but not in the way the market expected.

The restructuring of the Hungarian gambling market began when the government quintupled the monthly tax on slot machines in pubs and amusement arcades. This heavy fiscal burden placed severe strain on operators, triggering a wave of venue closures. At the time, the street-level slot machine market vastly overshadowed the traditional casino sector, generating more than ten times its gaming revenue.

A decisive turning point came in October 2012, when the Hungarian Parliament outlawed slot machines outside land-based casinos. Virtually overnight, machines disappeared from arcades, bars, and hospitality venues, leaving casinos as the sole legal setting for slot gaming. The government framed the crackdown as a response to social welfare concerns and national security risks. Consequently, the previously fragmented, multi-operator market collapsed, consolidating all slot machine gambling strictly within the casino sector. This, however, was only the beginning.

The government soon introduced the concept of a ‘reliable gambling operator’ into the Gambling Act. This designation allowed the state to bypass open concession tenders and enter directly into contracts with operators meeting these criteria. Ultimately, the majority of these scarce concessions were awarded to business groups frequently cited by domestic media as having government affiliations. This created an oligopolistic system of just two to four operators. While the specific owners have changed over time, the highly concentrated market structure remains in place today.[9]

The introduction of this system also deeply impacted the online market. Legislation passed in 2015 stipulated that online casinos could only be operated by companies holding a land-based casino concession. Although acquiring such a concession was theoretically possible, it was practically unreachable for new entrants, effectively excluding all independent operators from the digital space. This framework remains largely in force today. Consequently, at the time of writing, only three licensed online casinos operate in Hungary, all managed by the same concessionaire.

The path to this restrictive framework, however, was prolonged and erratic. The initial draft bills to regulate the online market emerged as early as 2008 under the then ruling socialist government. The 2010 government transition inevitably slowed this legislative process, delaying the first online gambling amendment to the Gambling Act until 2011. Following this, the statutory definition and regulation of ‘remote gambling’ underwent numerous, often contradictory, revisions. These iterations swung between highly restrictive measures and more liberalized models before settling on the 2015 legislation.

While the exact reasons for these rapid shifts remain unclear, they likely reflected intense behind-the-scenes lobbying by competing economic interests. Plagued by constant legislative changes, delayed implementing decrees, and widespread regulatory uncertainty, nearly a decade passed between the first calls for regulation and the launch of Hungary’s first licensed online casino. In a fast-paced digital industry, this represented a significant loss of developmental momentum. Meanwhile, online sports betting met a similar fate. It was ultimately restricted to either the state-run operator or specific concession holders, though, unlike online casinos, a land-based presence was not a prerequisite.

However, the most significant legal battles were only just beginning. Several international operators challenged these restrictive provisions, triggering legal reviews that eventually reached the Court of Justice of the European Union (CJEU). Market participants secured major victories against the Hungarian State in two landmark cases[10].

The CJEU ruled that Article 56 of the Treaty on the Functioning of the European Union (TFEU)[11] precludes national legislation that establishes a concession and licensing system for the organization of online gambling if it acts as an unjustified barrier. Specifically, the Court held that such frameworks violate EU law if they contain discriminatory rules against operators from other Member States.

Furthermore, even if the rules are technically non-discriminatory, they remain unlawful if applied in a non-transparent manner, or if implemented in a way that prevents or hinders applications from foreign operators.

Hungary did not immediately undertake reforms. This created a paradoxical situation: only the designated ‘reliable gambling operators’ could obtain a concession, but Hungarian authorities were largely unable to enforce deterrent sanctions against unlicensed operators active in the market.

The market operated under these conditions until 2023. At that point, the government shifted its strategy and liberalized the sports betting sector, while leaving the online casino rules untouched.[12] A concession was no longer a prerequisite to running a sports betting website; in theory, anyone could now apply for a sports betting license who meets the requirements set forth by the law.

To demonstrate that the new system was not monopolistic, the regulatory authority issued a license in addition to the state-owned operator to one private market participant – predictably, an incumbent operator already running both land-based and online casinos. However, this regulatory ‘encouragement’ failed to convince independent international players.

As of 24 August 2026, the public register lists only two licensed remote-betting operators. Independent operators were presumably deterred by broadly defined technical requirements, which could easily pave the way for an unreasonably protracted licensing process. Consequently, the Hungarian online sports betting sector remains a two-player market. In summary, another decade has passed – this time focused on enforcement rather than legislation – yet the oligopolistic nature of the gambling regime remains the same.

Conclusion: a new government – new opportunity or old mistakes?

The 2026 election results present the Hungarian legislature with a fresh opportunity to rethink gambling regulation. Driven by campaign pledges, the new government’s willingness to enact change is encouraging, even if the primary motivation remains political. Reviewing the privileges of incumbent casino concession holders – who enjoyed heavily protected oligopolies under the previous administration – is a legitimate social demand. Accordingly, an early summer 2026 government decree[13] mandated a review of both current concession agreements and the broader regulatory framework.

However, merely terminating the 35-year concessions granted to politically affiliated companies will not create a modern regulatory framework. To move beyond political accountability, the government must adopt a conceptual, industry-focused approach to this rare opportunity.

Interestingly, political objectives could inadvertently benefit the wider market in these circumstances. If terminating these long-term concession contracts proves legally challenging, the government might avoid open confrontation by introducing competition instead. Stripping incumbents of their protected status would finally open doors for international players who have been effectively barred from the market.

Conversely, to bypass legal disputes, lawmakers might opt to sharply increase gambling taxes or administrative compliance requirements, even while liberalizing the market. While this would successfully dismantle the current license holders’ privileged positions, it would severely damage the legitimate industry and risk driving some players toward the black market.

Recent history offers cautionary tales: the market turmoil following Romania’s 2023-2025 regulatory overhaul, and Poland’s similar challenges in 2017, highlight the risks of poorly calibrated reforms. Both attracted substantial criticism from operators and market specialists, although their outcomes are not identical and Romania’s longer-term effects remain too recent to assess conclusively.

Together, they illustrate how reforms may fail to produce a competitive and commercially viable legal market if accompanied by disproportionate taxation, excessive compliance burdens, or abrupt implementation. Such conditions can weaken licensed operators and deter credible entrants, while making the legal market less attractive to consumers. This, in turn, risks shifting activity toward unlicensed providers, weakening consumer protection and tax collection while increasing enforcement costs. Effective reform therefore requires predictable transition periods, proportionate taxation, and licensing rules that allow a diverse regulated market to remain commercially viable.

The delicate situation in Hungary would also materially affect the state-run gambling operator, a major beneficiary of the market’s artificially maintained lack of competition. Policy makers must intervene with surgical precision to ensure the state operator does not become unintended collateral damage in the reform process.

Given the high stakes, lawmakers must step out of the shadow of the past 20 years. They must overcome systemic resistance, learn from regional mistakes, and rewrite the rules based on professional, industry-standard arguments. This may require re-examining fundamental issues previously considered taboo, such as the nature and extent of the state gambling monopoly.

As of this writing, the ruling party has not issued a definitive gambling policy statement, and the concession review remains ongoing. We can only hope that, this time, the inertia of the monopoly will not prevail.

Dr. Gabor Helembai is an Attorney-at-law and founder of Dr. Helembai Gábor Law Office

[1] No official translation is available of the Gambling Act. The original Hungarian version is available here: https://njt.jog.gov.hu/jogszabaly/1991-34-00-00.

[2] https://www.nytimes.com/1981/05/17/world/new-budapest-casino-pulls-in-western-currency.html

[3] chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://fdlaw.hu/publications/gaming_betting/Inefficient%20enforcement%20and%20strict%20rules.pdf

[4] Please see the annual financial reports of Szerencsejáték Zrt. in the Hungarian language here: https://rolunk.szerencsejatek.hu/hu/eves-beszamolok

[5] https://archive.g3newswire.com/hungary-for-a-piece-of-the-pie-yield-sec/

[6] https://bbj.hu/business/industry/deals/packer-deals-himself-in-at-hungary-s-eurovegas40544/

[7] https://2010-2014.kormany.hu/en/prime-minister-s-office/news/plans-to-ban-slot-machines-in-hungary

[8] A comprehensive article on the subject in Hungarian: https://444.hu/2026/07/20/felbehagyott-puskas-sorozatot-utolag-lepapirozott-tamogatasokat-es-egy-nap-alatt-kiszort-62-milliardot-talaltunk-a-szerencsejatektol-kikert-dokumentumok-kozott

[9] Please see the currently effective list of gambling licensees in Hungary here: https://sztfh.hu/nyilvantartasok/engedelyek-kozhiteles/

[10] Case C-49/16 – Unibet International and Case C-3/17 – Sporting Odds

[11] Treaty on the Functioning of the European Union, Art. 56: Within the framework of the provisions set out below, restrictions on freedom to provide services within the Union shall be prohibited in respect of nationals of Member States who are established in a Member State other than that of the person for whom the services are intended. The European Parliament and the Council, acting in accordance with the ordinary legislative procedure, may extend the provisions of the Chapter to service providers who are nationals of a third State and who are established within the Union.

[12] https://igamingbusiness.com/legal-compliance/hungary-regulator-gambling-act/

[13] Government Decree 1203/2026. (VI. 18.) on the revision of the casino concession

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