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• Governing law

  Name	Law or Code?
  Act 34 of 1991 on Gambling Operations ('Gambling Act')	Law
  Government Decree No. 183/2017. (VII. 5.) on the Gambling Supervisory Authority	Law

  Note: Providing gambling services without a Hungarian gambling license is illegal and may lead to administrative and even criminal offense proceedings. Prize promotions in general do not constitute gambling under Hungarian gambling regulations. However, caution is needed if the characteristics of gambling come into play (especially if payment is required to participate in the prize promotion and if winning the prize depends on chance).

  Last modified 21 Mar 2019

• Extra-territoriality

  Yes, but only if the services are considered as gambling services under the Gambling Act. The Gambling Supervisory Authority ('GSA') exercises its regulatory powers if (i) the gambling services covered by the Gambling Act are operated from the territory of Hungary, or (ii) the customer participates in such games in the territory of Hungary, or (iii) the service is aimed at customers living in the territory of Hungary, particularly when the service is made available in Hungarian, or if advertised in the territory of Hungary.  

  Accordingly, any enforcement risk against foreign operators seems rather low in the case of prize promotions, even if the prize promotion is regulated by the Hungarian Gambling Act (see regulations on prize draw below). At the same time prize promotions which are considered as gambling (contest of chance) (e.g. poker games, casino games, etc), are heavily regulated and enforced by the Hungarian GSA, including through actions against operators established abroad.

  The Hungarian Competition Authority and the Consumer Protection Authority may also enforce consumer protection rules against entities operating abroad if the breach in connection with the prize promotion affects consumers in Hungary.

  Last modified 21 Mar 2019

• Skills competitions

  Yes, prize promotions based on skill are allowed; however, if the following conditions are fulfilled it will still be considered as gambling and regulated by the Gambling Act:

  • the player agreed to pay cash or any other form of consideration to participate in order to receive a cash prize or something of value in the event of a certain outcome or a future contingent event;
  • winning or losing depends exclusively or to a material degree upon an element of chance.

  Accordingly, if the skill element and the element of chance cannot be separated, it is most likely that such activity will be considered as gambling activity under the Gambling Act.

  Last modified 21 Mar 2019

• Prize draws

  Yes. However, if the conditions of gambling mentioned above are met, it might be considered as a gambling activity, which is unlawful. Under the Gambling Act, 'prize draws' shall be reported to the GSA in advance (but no license is required). Pursuant to the Gambling Act, a prize promotion will qualify as a 'prize draw' only if the following requirements are met:

  • it is related to the purchase of goods or services;
    
    
  • free of charge (there is no payment in addition to the usual market price of the product or service);
    
    
  • the determination of the winner is conducted through the 'public drawing' of a ticket.

  If these requirements are not met (e.g. participation is skill-based and not based on purchase of goods), the organizer has no obligation to notify the GSA and the provisions of the Gambling Act will not apply, unless the activity is considered as gambling activity, e.g. because participation is not free of charge. Cash prize is not possible in the case of prize draws.

  Last modified 21 Mar 2019

• Selection of winners

  There are no specific requirements for prize promotions in general. However, in the case of prize draws, the same degree of publicity shall be awarded to the drawing process, the winning tickets and the prizes as that provided when advertising the 'prize draw'. The GSA may conduct inspections. A notary public must be present at each drawing, unless the GSA prescribed otherwise in the authorization. The organizer shall arrange for the presence of the notary public and shall bear the costs of the notary public.

  In the case of prize promotions organized for consumers, it is also strongly recommended to set out the requirements of selecting the winners and awarding the prizes and the possible restrictions in a set of terms and conditions. The terms and conditions have to be transparent for participants before they enter the prize promotion.

  Last modified 21 Mar 2019

• Judges

  No, there are no particular requirements in relation to judges (other than the presence of a notary public in the case of prize draws) or judging for skills competitions.

  Last modified 21 Mar 2019

• Prizes

  As mentioned, a cash prize cannot be awarded in the case of prize draws. Other than that, there are no particular restrictions on prizes awarded; however, in general prizes must be lawful to distribute (e.g. products which cannot be advertised cannot be awarded either, e.g. weapons, tobacco products etc.).

  Last modified 21 Mar 2019

• Registration requirements and fees

  Registration Requirements

  Prize promotions do not require any registration or permit in general. However, prize draws must be reported to the GSA for registration at least 10 days before publishing the prize draw.

  Fees / Taxes Payable

  There is a minor administrative fee for the registration of prize draws (approx. EUR 10 (approx. US$11). The organizer of the prize draw must also pay a so-called supervision fee, which is 0,001% of the value of the prize, but minimum of approx. EUR 15 (approx. US$17), maximum of approx. EUR 1,500 (approx. US$1,700).

  The organizer of the prize promotion must pay personal income tax on the prize (if won by a private individual). If the prize is not taken up by the winner, the organizer must pay the value thereof as game tax.

  Last modified 21 Mar 2019

• Other local requirements

  The key requirements for prize promotions addressed to the Hungarian market can be summarized as follows:

  Prize promotions should:

  • not fall under the Hungarian gambling regulations;
    
    
  • not be organized/advertised if advertising is prohibited or restricted (e.g. tobacco products, alcohol, firearms/weapons/ammunitions);
    
    
  • be clearly identifiable as such;
    
    
  • not create the false impression that the prize is already won, which would constitute as an unfair commercial practice;
    
    
  • respect the winner's privacy, for instance by publishing their names only in case of explicit consent;
    
    
  • limit the use of participant's data only for this particular purpose (except where the participants have explicitly consented to the data being used for further purposes, e.g. email newsletters);
    
    
  • provide easily accessible terms and conditions, which, themselves, shall ensure clear and unambiguous consumer information concerning inter alia:
    
    
    • the name and address of the organizer;
      
      
    • any qualifying requirements, including the category of persons entitled to take part or excluded;
      
      
    • how to participate, including possible costs of participating;
      
      
    • details of each prize and its value; possible follow-up costs (e.g. costs for picking up a car);
      
      
    • period of the promotion, especially the closing date;
      
      
    • how winners will be selected; and
      
      
    • where and when the names of the winners will be published.

  Last modified 21 Mar 2019

• Timing

  Prize draws must be reported to the GSA in advance.

  Last modified 21 Mar 2019

• Translations

  Supporting terms and conditions should appear in Hungarian in order to be clear and unambiguous for participants in Hungary.

  Last modified 21 Mar 2019

• Penalties for non-compliance

  In the case of infringement of the provisions of the Gambling Act in connection with prize draws, a fine within the range of approx. EUR 150 (approx. US$170) up to approx. EUR 1,500 (approx. US$1,700) may be imposed by GSA. If the provisions of the Gambling Act are otherwise infringed (e.g. conducting unlawful gambling activity), different amounts of fines can be imposed, depending on the type of infringement. The maximum fine (e.g. in the case of gambling activity without a license) is approx. EUR 310,000 (approx. US$347,000). Carrying out gambling activity without a license may involve criminal charges as well. Misleading consumers in connection with prize promotions may lead to consumer protection fines imposed by the Consumer Protection Authority or the Competition Authority.

  Note: On 25 May 2018, the General Data Protection Regulation (GDPR) of the European Union came into force, which substantially increased the administrative fines for data protection breaches with fines of up to € 20,000,000 (approx. US$22.4m) or 4% of the total worldwide turnover of the infringer from its preceding business year.

  Last modified 21 Mar 2019

• Restrictiveness of regulations

  The rules in Hungary allow for the organization of prize promotions quite easily without formal requirements (except for prize draws). Having said this, it should be taken into account that certain prize promotion mechanisms are prohibited in Hungary and therefore cannot be organized.  Also, GDPR has introduced various obligations around processing personal data which have significant application to prize promotions (e.g. use of submissions including personal data, winner publicity, etc.).

  Last modified 21 Mar 2019

• Regularity of sanctions

  The GSA does not impose serious fines frequently in connection with prize promotions. The GSA is more active in connection with unlawful gambling activities carried out in Hungary.

  Last modified 21 Mar 2019

• Key contacts
  

  Zoltan Kozma

  Counsel DLA Piper Hungary [email protected] T +36 1 510 1100