PartyPoker Becomes Second Online Poker Site to Obtain Czech License

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On Nov. 10, 2018, PartyPoker became the second online poker site to receive a license to operate legally in the Czech Republic. It joins longtime rival PokerStars as the only two internet poker entities to have successfully navigated the licensing process and obtained the approval of the authorities.

Details

PartyPoker, a part of the GVC Holdings portfolio, has reportedly partnered with Leo Tsoukernik, the owner of King’s Casino in Rozvadov: a well-known local brick-and-mortar gaming establishment.

The company has already launched a website with a Czech .cz domain, but at present, it merely redirects to the main partypoker.com site with an error message. Curiously, there’s also a page at cz.partypoker.com that appears to have been last updated in 2011 and features Party’s old logo and branding. This is undoubtedly an oversight on the part of management, and this page will probably be deleted shortly.

It’s likely that content exclusive to the country will be developed and hosted on the .cz domain in the coming months. Some expect the PartyPoker Czech poker room to open for business as soon as January 2019.

License Conditions

The Czech Republic has made a name for itself by having one of the toughest licensing regimes for online gambling services in the world. Not only do license holders have to pay a 19% corporate tax, but they’re also charged 23% on online sportsbook revenue and 35% on internet casino revenue. Because online poker uses random number generators, it’s considered to fall into the casino category and is therefore subject to the 35% tax rate.

Fees for a basic, six-year license are minuscule, but each organization looking to transact in the Czech Republic must first post a surety to cover the possibility that it will fail to honor its financial obligations in the future. The size of this surety can range from 5 million koruny ($220,000) to 50 million koruny ($2.2 million) depending on the type of gaming offered.

Not only do corporations that wish to be licensed have to obey these financial mandates, but the government has also established certain strict rules governing the provision of real money gaming. Internet gambling sites are prohibited from granting bonuses, free spins and other promotional gifts to customers unless there’s no play-through or wagering requirement attached to them. Daily deposits and cash-outs are limited to 5,000 koruny ($220) per 24-hour period. Casino games are restricted to a maximum bet of 1,000 koruny ($44) per round and a top prize of 500,000 koruny ($21,800).

An issue that has plagued competitor PokerStars is that the Czech regulators have viewed tournament overlays as a type of lottery, which the poker room does not have a license to run. Therefore, Czechs were prohibited from entering guaranteed MTTs because of the compliance nightmare that this would create should the player-contributed prize pools fall short. However, PokerStars was able to reach an understanding with government officials in September 2017 whereby Czech players could join these tourneys once 50% of the guarantee was met.

Despite these hassles, Czech players are not segregated at PokerStars and are able to compete against individuals in the site’s global .com player pool. It’s unclear whether PartyPoker will follow this model or will opt to create a dedicated poker room just for Czech residents.

Background

The Czech gambling industry was shaken up by the adoption on Jan. 1, 2017 of a new gambling law that superseded the dated statutes which had been in place in the country until then. It became illegal to offer unlicensed internet gambling. International operators, including PokerStars, PartyPoker, William Hill and 888, exited the market although many of them vowed to return with new licenses in hand. The difficulty of complying with the Czech gaming rules and the overall small size of the market, however, caused many of them to reconsider.

PartyPoker itself at first proceeded with its license application shortly thereafter, but the firm soon abandoned it. PokerStars was the only online poker company to diligently pursue a Czech license, which it was awarded near the end of January 2017. From then till now, it has had a virtual monopoly on online card games for real money in the Czech Republic.

There are several dozen other enterprises licensed to provide gambling services in this central European nation, but most of them are content to operate in the terrestrial sphere, steering clear of internet gaming. Of the remaining few that do accept action online, most are niche businesses that are focused on lottery products. PokerStars and now PartyPoker are the only legally allowed destinations for online poker open to Czech citizens.

Czech Gambling Market Failing?

From a players’ perspective, there’s certainly a dearth of legal online wagering options in the Czech Republic. There are more than 50 international poker operators in existence, but only a couple of them are legally permitted in the country. It is true, however, that unlicensed, grey market sites are only too willing to transact with the Czech population, and there’s little that officials can really do to halt this trade entirely.

Still, government leaders have declared that their attempts to exercise oversight of the gambling sector have been successful. The Ministry of Finance points to the fact that 90% of illegal operators have left the country while noting that the legal gambling industry has seen its profits increase by 56% in the past year.

It may indeed be the case that legitimate Czech gambling license holders are in a lucrative position. Nevertheless, this is mostly an artificial result of the challenging operating climate brought about by the severe regulations on the books, which discourage many gambling companies from bothering with the country. Total profits, along with tax receipts, might well increase if these restrictions were eased somewhat and more competitors allowed to enter the market.

PartyPoker just became the second prominent international gambling company granted a Czech license, almost two years after the first. Perhaps we will have to wait another two years to see a third.