More than CZK 330 million per month in tax revenue is lost to the state due to illegal gambling. Hundreds of thousands of Czech players are exposed to the illegal market.

The Czech state loses more than CZK 330 million per month in tax revenue due to illegal gambling. Approximately 400,000 players in Czechia knowingly gamble with illegal operators, while another 400,000 players are unable to determine whether the operator they use is licensed or illegal. Based on current data, Czechs lose approximately CZK 14.5 billion in illegal gambling annually, which represents an unrealized public budget collection of over CZK 4 billion in gambling tax. However, the total cost to public finances is higher due to additional losses in income tax and employee contributions.

These alarming findings are based on two independent studies that form the basis of this year’s edition of the Black Book of Illegal Gambling – a sociological study by Mgr. Robert Klobucký, Ph.D. (Sociological Institute, Slovak Academy of Sciences) and an economic analysis by the Center for Economic and Market Analysis (CETA) led by Ing. Aleš Rod, Ph.D.

Both studies conclude that illegal gambling not only weakens public budgets but also significantly undermines the effectiveness of player protection measures and addiction prevention policies.

The Register of Excluded Persons (REP) is not fulfilling its role

“The register should protect the most vulnerable, but its effectiveness is dramatically reduced in the online environment,” warns Robert Klobucký, author of the study Playing Unlicensed Gambling Games on the Internet.

According to his findings, only 23.6% of players who played online in the last year and were ever registered in the REP never attempted to play games with illegal operators without a Czech license. Most of these respondents (66.2%) play with illegal operators occasionally or regularly.

“We estimate that approximately 400,000 Czechs knowingly play with illegal operators. Another 400,000 players are unable to determine whether the casino they play with holds a Czech license. Based on our estimates, a significant proportion of this second group is also likely to have gambled with illegal operators,” adds Klobucký.

Currently, more than 231,000 people are registered in the REP. People are entered into the register automatically (e.g., due to insolvency, receiving social assistance, or undergoing addiction treatment) or voluntarily at their own request.

Economic losses and impacts on public budgets

The CETA economic study points out that every fourth crown lost in gambling in Czechia ends up in the illegal environment. Czechs lose approximately 14.5 billion crowns in illegal gambling. [1] This money disappears irretrievably from the Czech economy and does not return in the form of taxes, contributions, or investments.

“Illegal gambling is not only a social problem, but also a fundamental economic problem,” says Aleš Rod, co-author of the study.

According to estimates by the CETA analytical team, the state loses between CZK 2.9 and 3.6 billion a year in gambling tax, and municipalities lose another CZK 0.4 to 0.5 billion. The estimated effect is adjusted for GGR lost on the black market by minors or people from socially disadvantaged groups.[2]

“This uncollected public revenue obviously has its price – it could finance sports, culture, addiction prevention, reduce debt, or remain in the pockets of taxpayers if it stayed in the official economy with legal operators. Instead, it ends up in the hands of anonymous operators based beyond the reach of Czech authorities in tax havens. Thanks to higher profitability, illegal operators can provide more aggressive marketing and increase their market share at the expense of law-abiding operators. This problem is constantly worsening as the share of the online market increases,” adds Rod.

Interest in illegal websites is also evidenced by search analysis – the three most popular illegal brands were searched for more than 111,000 times from Czechia in a single month. “Thanks to the available study, we know that interest in illegal gambling is enormous – illegal websites in Czechia are searched for up to 1 million times a month on Google alone. This clearly shows the extent of the problem and the need for effective measures against the black market,” says Petr Čelechovský from Bonver Win a.s.

The extent of illegal gambling is evidenced by a comparison of legal and illegal operators. While there are 27 legal operators in the Czech Republic, we know of 1,113 illegal brands that actively and specifically target Czech players.

Illegal gambling remains a problem even in brick-and-mortar establishments

Although most attention is focused on the internet, illegal gambling persists
in brick-and-mortar gambling establishments. Inspections have long revealed gambling establishments operating without the necessary permits, especially in areas where municipalities and cities have banned legal establishments across the board. Although this segment constitutes a smaller part of the black market, it has a significant social impact, especially in regions with higher rates of social exclusion.

“Illegal operation in brick-and-mortar gambling establishments is still a reality. These are places where the law is broken, municipal regulations are circumvented, and often other forms of crime occur. It is therefore very important for the state to get involved in controlling these operations, ideally by tightening legislation against these entities, which could significantly help the Customs Administration in enforcement,” adds Petr Čelechovský.

Illegal operators abuse brands and players

There are a number of websites on the Czech market that deliberately imitate the visual style and names of legal companies. In doing so, they parasitize on their reputation and confuse players, who often do not realize that they are playing with an illegal operator.

“In recent months, we have recorded dozens of fake websites that abuse the Sazka brand. Players think they are on a trustworthy site, but they are sending their money to unknown entities outside the Czech Republic,” says Aleš Veselý, CEO of SAZKA a.s.

“Illegal gambling is not fair competition, but a black market that robs the state and the players themselves and damages the reputation of the entire industry.  Legal operators invest in responsible gaming, prevention, and the protection of their customers. Illegal websites do the exact opposite – they exploit weak players, offer unrealistic bonuses, do not pay out their winnings, and even misuse their identities,” warns Petr Knybel, CEO of Tipsport.

“The audacity and confidence of illegal operators is alarming; brand spoofing is the work of highly organized international groups. To give you an idea, last week alone we detected seven betting apps posing as Fortuna,” adds Jakub Kolesa, CEO of FORTUNA GAME a.s.

Joint action by experts and legal operators

The black book was created on the basis of studies by experts, academics, and legal market operators,
under the auspices of the Institute for the Regulation of Gambling (IPRH).

“We want the conclusions of both studies to serve as a basis for effective government action in the fight against illegal gambling. We are in this fight together,” says Jan Řehola, director of IPRH, adding, “Based on the data, we can see that the current repressive measures are not enough. It is necessary to strengthen the technological tools for blocking illegal websites, simplify cooperation with banks and payment service providers, and at the same time systematically raise public awareness of the risks of illegal gambling.”

The Black Book maps new digital forms of gambling

This year’s edition of the Black Book of Illegal Gambling not only provides current data, but also an overview of new trends that are fundamentally changing the black market. The authors draw attention to the rapidly growing area of crypto casinos, betting platforms such as Polymarket, and gaming groups operating through applications such as Telegram or other social networks.

“This is an environment that is virtually beyond any control and often attracts children and young people. They encounter gambling in online communities or on gaming servers before they reach the age of majority,” warns Jan Řehola.

The black book therefore serves as a warning and a tool for better understanding new risks—and as a basis for discussion among state institutions, experts, and operators on how to respond effectively to the digital transformation of illegal gambling.

Institute for the Regulation of Gambling

The Institute for the Regulation of Gambling (IPRH) was established in 2018 as a communication bridge between the regulator and the legal market. Since then, it has become a respected professional partner of the state and institutions involved in gambling policy-making. It brings together 36 companies and represents 95% of the legal market in the Czech Republic. The IPRH has long focused on player protection and addiction prevention through its Responsible Gaming project, which, in cooperation with its main partners, is developing a unique identifier for risky betting and gaming (IRIS).

Mgr. Robert Klobucký, Ph.D.

Robert Klobucký is the deputy director of the Institute of Sociology of the Slovak Academy of Sciences in Bratislava. He also addresses the issue of gambling and addiction as a national expert for population surveys on drugs, to which he added a module on gambling in 2019.

Ing. Aleš Rod, Ph.D.

Aleš Rod is the executive director of the Center for Economic and Market Analysis (CETA) and a member of the National Economic Council of the Government (NERV). He serves on the board of trustees of Anglo-American University (AAU). He received his doctorate in economic theory from the University of Economics in Prague. His research interests include the economics of regulation with applications in energy and waste management, public finance, and banking. He currently consults on projects for the public and private sectors in the Czech Republic and abroad, invests, does business, and helps the non-profit sector in the Neviditelní (Invisible) project.

Gross Gaming Revenue

[1] In an international context, Gross Gaming Revenue (GGR) is used to express the actual volume of the gambling market. This indicator represents the difference between the total bets placed by players and the winnings paid out, and shows how much money operators actually retain after deducting winnings.

However, misleading data based not on GGR but on the total volume of bets (turnover) often appears in the Czech media. A typical example is the claim that Czechs “bet” CZK 983 billion. This figure does not mean that players actually spent that much money – it includes all bets, including repeat bets from winnings. In reality, operators were left with CZK 65.7 billion (GGR) after deducting winnings. Players were returned more than 93% of all money wagered.

The volume of the illegal market is estimated similarly, amounting to approximately CZK 14.5 billion GGR in the Czech Republic. This estimate, as with the legal market, takes into account the actual losses of players – not the total volume of bets – and shows how much money illegal operators actually earn.

Budget allocation of gambling tax

2 A portion of the revenue from gambling tax is distributed to municipalities based on the budgetary allocation of gambling tax. One hundred percent of the tax collected from online gambling goes to the state, as online operations are not subject to municipal jurisdiction. Revenues from land-based technical games (slot machines) are distributed as follows: 55% goes to the state, 22.5% to the municipalities in whose territory slot machines are permitted (according to the number of permitted gaming locations), and 22.5% to all municipalities according to their population. For other land-based games, such as betting, lotteries, and poker, the state’s share is 35% and the share of all municipalities is 65%.

[2] The budgetary allocation of gambling tax means that part of the revenue from this tax is allocated to the state budget and part to municipal budgets on the basis of percentages set by law.