Czech Republic Bans Online Betting Bonuses

Betting bonuses and other welcome offers will soon be a thing of the past for gamblers in the Czech Republic. Last week, the Ministry of Finance in the Czech Republic issued a recommendation that government regulators should prohibit online betting bonuses and offers from operators.

The document detailing the recommendation explained the government’s reasoning as being related to concerns of problem gambling. The document explains that while the Czech Republic permits games of chance, the government also understands that there are significant social costs associated with gambling.

The report also noted that casinos appeal to “instant and seemingly easy winnings” in not just major cities, but also in smaller cities across the country. The Ministry of Finance believes these promises post a threat to peaceful coexistence.

Thus, the Ministry of Finance recommended tightening not only the way gambling activities are carried out in the Czech Republic, but also regulating “related activities such as advertising.” Calvin Ayre provides a handy link to the original document here, but it has only been published in Czech.

The recommendations have reportedly been accepted by the government and will be used to further refine new online gambling legislation that took effect earlier this year. Even before this latest change, the new gaming laws in the Czech Republic resulted in many international betting sites abandoning the Czech market rather than stick around and apply for licenses.

Compliance with the new law is difficult for international operators due to high taxes and other regulatory hurdles. For one, the laws require betting sites to verify new customers face-to-face before permitting them to sign up for account. Additionally, tax rates of 23% on sports betting revenue and 35% on casino gaming revenue have further dampened enthusiasm.

Will the lack of bonuses hurt domestic betting sites?

Online betting bonuses are a common marketing tactic for betting sites around the world in their efforts to attract new customers. Losing that key marketing tactic may indeed make it more difficult to convince potential customers who are on the fence. However, such a policy would apply equally to all operators and therefore put them all on an equal playing field.

One of the issues with such promotional offers is that betting bonuses do tend to turn into an escalating arms race. As one betting site comes up with some new offer, others follow suit and attempt to one-up the competition by offering an even more lucrative offer.

The problem with such an arms race is it incentivizes betting sites to become increasingly creative with their offers. That can lead to operators using sneaky terms and conditions to make their bonuses look better than they really are, which ultimately leads to a negative user experience. In that sense, getting rid of bonuses altogether would have its positive side.

On the other hand, eliminating bonuses for all licensed betting sites would make unregulated offshore sites look more attractive by comparison. If a betting site located elsewhere chooses to ignore Czech gaming laws and simply continue business as normal from a distance, it would have a major marketing advantage over the sites that choose to play by the rules.

A Better Compromise

A better solution rather than eliminating bonuses entirely would be a middle-of-the-road approach. Allow betting sites to offer welcome bonuses to customers, but make it clear that certain “truth in advertising” standard will be applied to all operators. If a particular bonus is deemed to be misleading in some way, fine that operator and let them know doing so puts their license at risk.

The UK’s Gambling Commission takes an approach along this vein for operators licensed in the UK. Betting bonuses are not prohibited in the UK, but regulators do monitor the industry closely and crack down on offenders.

In the UK, gambling marketing material and bonus offers are subject to a litany of regulations that include prohibitions on marketing gambling to children, on portraying gambling as a way to improve one’s social status or to solve one’s personal problems and on offering misleading bonuses.

One portion of the UK’s Gambling Advertising Guidance document (PDF here) deals specifically with bonus offers (emphasis mine):

Marketing communications must not mislead the consumer by omitting material information. They must not mislead by hiding material information or presenting it in an unclear, unintelligible, ambiguous or untimely manner.

Material information is information that the consumer needs to make informed decisions in relation to a product. Whether the omission or presentation of material information is likely to mislead the consumer depends on the context, the medium and, if the medium of the marketing communication is constrained by time or space, the measures that the marketer takes to make that information available to the consumer by other means.

The advertising guidelines also explain that marketing communications regarding bonus offers “must state significant limitations and qualifications” and that such “qualifications must be presented clearly.”

Even the use of the word “free” and all of its variations is heavily restricted by the UK’s gambling advertising guidelines.

To be fair, even the UK market continues to have issues with misleading bonus offers. The Commission has repeatedly had to issue large fines on operators who fail to comply with advertising rules.

It’s also possible that monitoring advertising and collecting fines from operators may be something the Czech Republic simply isn’t ready to do yet. The Czech Republic’s regulator is much smaller and less-experienced compared to the UK’s massive Gambling Commission.