The law that regulates gambling in the Czech Republic is slowly beginning to stabilize after the major changes of 2017. But it seems that we can expect some amendments in the near future, which could open the Czech market a bit more to foreign operators.At the end of June, a bill was proposed that would change some of the provisions of the Act on Certain Measures Against Legalization of Proceeds from Criminal Activities (“AML Law”) and the Gambling Act. Among other changes concerning gambling reporting, the Bill would fundamentally change how operators obtain the first identification of the client.At the moment, first identification of the client must be done “face to face”, either by the gambling operators themselves, or at a notary, or at so-called CzechPOINT branches available at Czech post offices. This is a significant disadvantage for foreign operators who don’t have cooperative agreements with establishments in the Czech Republic. For this reason, among others, there is currently only one foreign entity operating online gambling games in the Czech Republic.The proposed bill makes it is possible to also do client identification using electronic identification means that have a high level of assurance. For example, it will be possible to use electronic identity cards, which have been issued to Czech citizens since last year. The common validity of the identity card is 10 years in the Czech Republic, so there will be more and more of its holders every year.The most significant amendment of the new bill may be the provision on “identification takeover”, currently used only by banks. Gambling operator will not be required to perform initial client identification if identification has already been verified via one of the following situations:
- the client sends a copy of their electronic identity card and at least one supporting personal document (for example, a driver’s license, an employee’s card, or a student card), which has the capability to determine identification and other data required by the AML Law for identification to the obliged party;
- a contract in textual form has been executed with the client;
- the client demonstrates the existence of a payment account kept with a credit institution (for example, through an electronic statement of an account provided with an element securing its integrity); and the client’s first payment to the obligated party is executed using this account
It is clear that the last option brings a bigger risk that the person who is establishing the user account is not the person in the name of which the user account is established. Still, the misuse of the electronic identity cards is likely in practice to be very low.The bill comes from the Ministry of Finances, and so is expected it to have its significant support in the legislative process. If the bill is approved by the legislature, one of the major obstacles for gambling operators in the Czech Republic could be removed. That, along with the rising popularity of online gambling games may increase the attractiveness of the Czech gambling market. The question is whether that outweighs the complexity of the process for obtaining of a gambling license or the planned gambling tax increase.Anna Všetečková is a graduate of Faculty of Law of Charles University in Prague. She has been working with Becker & Poliakoff, law office in Prague since 2016, since 2018 on the position of associate. In her practice she focuses on gambling law and AML law, as well as data protection law. She has assisted on licensing and regulatory issues to leading gambling companies in the Czech Republic as well as on adaptation to the new gambling regulation in the Czech Republic and implementation of the relevant processes into their day-to-day business. Anna is currently attending postgraduate (JUDr.) programme at Charles University with thesis on the topic of operation of online gambling games in the Czech Republic.
