Drama at the Top for Hungary

Is Hungary’s gambling regulator set to be caught up in the new administration’s anti-corruption sweep, as the government orders an investigation into its destruction?

Hungary’s government has begun an investigation into potentially dismantling the regulator and absorbing its functions into government.

This follows allegations that regulator SZTFH awarded a lengthy casino licence without putting it out to public tender, echoing historic allegations of cronyism.

Under review

Earlier this week, in the Hungarian Gazette, the government published a resolution demanding that ministers assess the suitability of SZTFH.

The minister of justice has been tasked with, “taking into account the regulatory solutions that can be used to terminate the SZTFH - and to ensure that the tasks it performs are performed by bodies managed by the Government”.

He is due to file a report on the issue no later than September 30, according to the decision, which was signed by Hungarian Prime Minister, Péter Magyar.

No reason was given in the Gazette for the review, but reports have linked the review to a recent decision by the regulator to award a 35 year casino concession to CAI Hungary Kft.

The company belongs to billionaire István Garancsi, who is a close friend of former Hungarian PM, Viktor Orbán.

Current leader Magyar was elected on a mandate of wiping away decades of alleged corruption across the entire state machine of which Orbán was at the centre.

That included the gambling sector, with Magyar promising during his campaign to review all existing casino licences to assess if they were unfairly awarded as political favours to allies of his predecessor.

The pledge has fueled hopes among the international gambling industry that Hungary will reform its famously isolationist online betting and casino rules, which have consistently been criticised by the EU for blocking free trade.

In the meantime, SZTFH’s decision to hand a former Orbán ally a mutli-decade casino concession without any sort of public tender appears to fly in face of Magyar’s promise to clean house.

Responding to the Gazette decision, the regulator issued a statement defending its record on gambling regulation.

The statement does not address allegations around the casino licence, but these have only appeared in the local and international press and not in any government communication to date.

“Since its establishment, the Authority has fully fulfilled this reporting obligation in accordance with the requirements set out in the law, and the competent parliamentary committee has always accepted its report summarizing the results achieved and tasks performed in the current year with a large majority,” said SZTFH.

The statement goes on to highlight the tax income generated for the state since it was established in 2021 and notes that it employs 400 people.

The regulator also offered a legal warning to government officials who may look to have it dismantled.

“When assessing the legal environment for independent regulatory bodies, such as the SZTFH, the level of European Union legal regulation cannot be ignored: there are many state tasks for which Community law itself requires that the given national task arising from EU legislation be carried out by a state administrative body independent of the central government and endowed with legislative powers.

“Within the framework of the Hungarian constitutional institutional structure, compliance with this requirement is ensured if the independent regulatory body is the custodian of the implementation of the given task.”

Hungary's relationship with EU law, including in the gambling sphere, has historically been patchy, but Magyar has signalled much closer alignment with the bloc than his predecessor, who was frequently the Union’s primary antagonist.

Not alone

Trouble for Hungary’s regulator comes just a week after regulatory drama in neighboring Romania , following the unceremonious exit of vocal regulatory chief Vlad-Cristian Soare from his role at the ONJN.

Soare claimed in a post on LinkedIn that his firing came as a complete surprise and he was given no reason for his dismissal.

During his little more than a year at the head of Romania’s gambling regulator, the outspoken Soare has made a habit of publishing additional commentary on the authority’s activities on his personal LinkedIn page.