Czech Gambling Epidemic One of Worst in World

December 18, 2012 2:45 pm Last Updated: October 1, 2015 11:37 am
A slot machine is seen in the Czech Republic.
A slot machine is seen in the Czech Republic. Under influence of the gambling lobby the government is reluctant to regulate the machines. (Michal Kos/New Tang Dynasty)

There is a tiny town in the south of Czech Republic called Ceske Velenice. At first glance, there is nothing exceptional about it, but within you will find there is one slot machine for every 13.5 citizens—a ratio that even Nevada can’t beat.

As a country of 10 million people, Czech Republic is estimated to have the second highest number of gambling machines per capita in the world—second only to Japan—according to Matej Hollan from Brneni Association, an NGO in pursuit of limiting the rampant gambling market in the small European country.

It all started when a new type of gambling machine entered the market: The Video Lottery Terminal (VLT). The VLT gambling terminals are controlled by one central computer, and were first introduced in 1983 in Bellevue, Neb.,—and banned two years later. But since then, VLTs have spread across the world and made their way into the Czech market in 2005.

Back then the Ministry of Finance decided to treat the VLT as a “new unknown type of machine.” This decision by the ministry went against a law stipulating that existing regulations should be “adequately” applied on unknown types of gambling machines.

From the average user’s perspective, the VLT isn’t much different from a normal slot machine—it would suck in your money, let you play a game, and should give you on average (as stated by law) a minimum of 10 to 20 percent of the inserted money back in winnings. But the ministry’s treatment of the VLT was very unusual.

The bet on mechanical slot machines was limited to 5 crowns (25 cents) per game—on VLT it was set to be as high as 1,000 crowns or 100 euros (between $50 and $125). Slot machines were not allowed around schools or churches, but VLT had no such restriction. Local governments could regulate when and where the slot machines could operate in their area, but the ministry gave them no control over VLTs whatsoever and it didn’t impose any such restrictions on its own machines.

Finally, operating a slot machine required renewing a permit every year. But for VLTs, the ministry gave permits for as long as 10 years, sometimes even longer.

It didn’t take long before people started noticing the tens of thousands of blinking VLTs in the usually small, smoke-filled parlors flooding their streets. “The Ministry ignored all provisions of the law and permitted everything everywhere,” said Hollan.

The ministry responded in 2009 by announcing a new permit system for VLTs: If local regulation restricts operation of classic slot machines, VLT operators must first get consent from the local government to get the permit for their VLT.

Strangely, even after the new permit system came into effect, the Ministry kept on issuing around 1,000 permits per month—the same amount as before.

At the time, some towns had already issued regulations to ban or restrict VLTs, simply counting them as normal slot machines. However, not long after, at the initiative of the Ministry of Finance, the Ministry of Internal Affairs contested several such regulations in the Constitutional Court—the highest judicial organ in Czech Republic. In all cases, the court ruled in favor of the towns, protecting their right to limit gambling to maintain public order and health in the area of their authority.

One after another, the towns did so, and more than 26,000 permits for such machines were revoked.

At this time, around the end of 2011, the Ministry of Finance amended the law so that it states the local governments can restrict or ban not only VLTs but even unknown gambling machines. However, at the same time, it put in a provision restricting the local governments from banning already permitted VLTs until the end of 2014.

The Security Information Service (SIS), the Czech national intelligence agency, in its 2011 annual report stated, “The representatives of gambling lobby influenced the legislative process of modifying and tightening up the gambling entrepreneurship and it has done so through institutions deciding upon the form of the new legislation.”

And thus the situation is still far from ideal. According to the latest numbers, there are still almost 53,000 VLTs in the country, and 3,000 of those received permits this year.

Currently, there are no official studies on the effect the huge gambling industry has had on Czech society. Several NGOs are gathering data about the problem, yet while it seems to be widespread, no overall statistics are available. Karel Nespor, M.D., and Czech specialist on addiction diseases, estimates the number of pathological gamblers in Czech Republic to be half a million, “but that is of course an estimate I can’t fully substantiate it,” Nespor said.

Right now the small town of Ceske Velenice, together with several other towns, is filling a complaint to the Ministry of Finance in the Constitutional Court demanding abolition of the controversial provision forbidding them to ban already permitted VLTs until the end of 2014. They hope the court will protect their right to restrict gambling once again, and this time for good.

“Provided the court will side with us, all towns in Czech Republic will be able to regulate the gambling immediately!” said Radim Petr, the council member who initiated the complaint.

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