The European Court of Justice has handed down its judgment in Case C-98/14 Berlington Hungary Tanácsadó és Szolgáltató Kft. and Others v Magyar Állam.

The court held that Hungarian legislation which prohibits the operation of slot machines outside casinos may be contrary to the principle of freedom to provide services.

Operators offering slot machines in amusement arcades brought an action before the Hungarian courts, claiming that EU law precludes measures which initially increased their tax burdens and then, at a later stage, prohibited, with almost immediate effect, the operation of the machines concerned. This was to the clear benefit of the casino sector.

The Court confirmed that:

  • national legislation which authorises the operation and playing of certain games of chance only in casinos constitutes a restriction on the freedom to provide services; and
  • a measure that drastically increases the amount of taxes levied on the operation of slot machines in amusement arcades can also be considered restrictive if it is liable to prohibit, impede or render less attractive the exercise of the freedom to provide the services of operating slot machines in amusement arcades.

The judgment comes at an interesting time for Hungary. It also lodged further amendments to its gaming laws with the European Commission. Hungary is clearly trying to protect local interests with a state monopoly over online sportsbetting and with online casino and card games only being organised exclusively by holders of concession rights to operate traditional gaming casinos (i.e land based operators).

We await the Commission’s next move and hope that action is taken against yet another Member State apparently ignoring accepted EU legal principles.