Licensing of online sports betting rights to football in Hungary

This post (i) gives an overview of the legal background on licensing of online sports betting rights in Hungary; (ii) describes the current situation relating to this right; and (iii) provides suggestions to be considered and implemented in the future.

Licensing of online betting rights under the Sports Act

As of 1 January 2012 the Hungarian Sports Act recognizes the so called event right. This includes the rights relating to (i) the announcement, organization and conducting of football championships, and (ii) the matches of the Hungarian national team. Licensing of online betting rights is expressly named by the Sports Act as part of the event right. The owner of these rights are the sports associations, i.e. the Hungarian Football Federation (in Hungarian: “Magyar Labdarúgó Szövetség”, hereinafter: “MLSZ“). [1]

Related provisions of the Gambling Act

Under the recently amended Hungarian Gambling Act online, real time betting platform may be operated by Szerencsejáték Zrt, the stated-owned gambling operator, and by any operators in Hungary, if they conclude concession agreements and satisfy the statutory criteria. However, Szerencsejáték Zrt is the only operator which is duly licensed to organize remote betting in Hungary at the moment, its online platform went live on 21 May 2013. Nonetheless many foreign operators operate platforms in the Hungarian language and there are also domestic football matches in their offers.

Current situation

MLSZ, despite previous efforts of clubs, does not receive any compensation for its matches which are included in the betting offers of online operators. For the time being this situation could be satisfying for the clubs as the pure fact of being included in the online betting offers is in itself beneficial for clubs since this leads to additional commercial appearance.

Future outlook and suggestions

With the potential appearance of licensed competitors to Szerencsejáték Zrt on the market MLSZ could be in the position to enter into licensing agreements with domestic operators. [2]

  • MLSZ, when concluding related agreements, should also be aware of complying with competition law. Because MLSZ is the holder of online betting rights, the licensing of these rights would likely not be regarded joint exploitation. However exclusive agreements with operators may infringe competition law and, in contrast to the collective exploitation of broadcasting rights, justification of such agreements can prove difficult. Additionally, MLSZ is the only market player which holds the online betting rights to professional football in the territory of Hungary and thus, at least in theory, MLSZ could abuse its dominant market position towards online betting operators.
  • Such agreements could also give MLSZ the capacity to control the conditions under which online betting is operated and thereby avoid or reduce the risk of fraud. This could also raise more focused awareness concerning integrity issues. [3]
  • Online streaming through MLSZ’s YouTube channel could also be linked up with operators betting offers for domestic matches to provide quality online, real time betting possibilities. This could also increase MLSZ’s revenue.

_________________________

[1] Recognition of the event right is similar to the provisions of the French Sports Code on the right of organizers to exploit sporting events (Art L333-1-1 and L333-1-2).

[2] This would mean an additional direct revenue stream for MLSZ to the already existing indirect statutory contributions from betting. Namely, the Sports Act sets out that (i) 12 % of gaming tax of draw gambling games and 50 % of gaming tax of fixed odds betting must be spent for supporting of sport across all disciplines; (ii) whereas the gaming tax of pari-mutuel sports betting ‘TOTÓ’ must exclusively be spent for football. The main advantage of licensing agreements with online operators would be that the income generated through such agreements could exclusively be spent for professional football since the statutory contributions may constitute state aid if those revenues are provided to professional clubs.

[3] At the moment there is a major match fixing inquiry carried out by the Hungarian authorities against Tan Seet Eng (“Dan Tan”) and 44 Hungarian citizens because of alleged manipulation of 32 domestic and international matches, including eleven Hungarian first division encounters.

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