Czech appellate ruling tightens definition of "targeting" players in the Gambling Act

Czech Republic

The Czech Gambling Act applies to internet games that even partially target individuals residing in the Czech Republic, but does not define what “targeting” means.

Czech authorities interpreted “targeting” rather extensively and concluded that all websites where individuals from the Czech Republic can register and participate in games of chance are thus targeting individuals residing in the Czech Republic and therefore are subject to Czech gambling regulation.

This conclusion was applied even in cases where websites hosting internet games:

  • were in a foreign language;

  • did not allow the use of Czech currency;

  • did not support the receipt of deposits and the sending of winnings to and from Czech banks; or

  • did not explicitly focus on the Czech market.

In addition, the conclusion was applied when website operators did not have a registered office in the Czech Republic and did not provide technical support to individuals from the Czech Republic or communicate with them in the Czech language; and when the games of chance were not advertised in the Czech media or used Czech life and society in advertising.

All of the above points represent examples of targeting foreseen by the explanatory memoranda to the Czech Gambling Act and the Act on Gambling Tax.

As a result of this interpretation, Czech authorities:

  • listed a significant number of foreign websites hosting internet games to the “blacklist” (i.e. a register of unauthorised internet games), which obliges Czech Internet service providers to block such websites in the Czech Republic; and

  • initiated administrative sanction proceedings, imposing pecuniary fines of millions of Czech Koruna, to the operators of such websites.

These consequences remained in place for more than five years because the operators of the foreign websites hosting internet games of chance were foreign entities that mostly did not challenge the decisions of the Czech authorities.

On 24 May 2022, the General Directorate of Customs, as the appellant authority in administrative sanction proceedings, issued an appellate decision, concluding that lower instance authorities had interpreted the Czech Gambling Act incorrectly and that the mere fact individuals from the Czech Republic can register at websites and participate in internet games did not mean that these games were targeting individuals residing in the Czech Republic.

The General Directorate of Customs confirmed that targeting individuals residing in the Czech Republic must be assessed on a case-by-case basis, but confirmed that examples of targeting mentioned in the explanatory memoranda must be considered.

Moreover, the General Directorate of Customs confirmed that geolocation features that pre-fill information based on the territory from which an individual is accessing a website are currently common, and the fact that they pre-fill the territory of the Czech Republic and the Czech international telephone code does not by itself constitute targeting.

To conclude, the mere availability of internet games in the Czech Republic does not mean that these games target individuals residing in the Czech Republic. Therefore, operators of foreign websites hosting internet games that are not targeting individuals residing in the Czech Republic but are listed at the blacklist, can request that their websites be removed from the blacklist.

For more information on internet gaming in the Czech republic, contact your CMS client partner or CMS experts: Jan Ježek and Tomáš Matějovský.