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Poker News: November 18th, 2008

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Copyright © Budapest Times

HEADLINE: Poker games across the country exploiting tax loophole

Stakes allegedly disguised as membership fee to evade gambling tax

Several hundred million forints are gambled away each weekend at poker tournaments whose organisers evade tax by registering them as sporting events, InfoRádió reported.

Poker is becoming increasingly popular in Hungary. Those who are ready to win – or lose – serious amounts of cash can legally do so in licensed casinos and gambling halls. To cater for the growing demand for poker tournaments, however, in the past two to three years non-licensed places have also started organising games. "These range from pubs and card-playing clubs to sports bars and nightclubs. Most of the time these games are organised as sporting events, where the buy-in is put down as the sport club's registration fee," Attila Török, CEO of Laurus Invest Hungary, a company operating casinos, told InfoRádió.

Török added that the "sporting events" mean serious competition for licensed casinos. "These days in the course of one weekend several thousand places organise gambling of this kind.”

“Roughly 10-15,000 is the minimum number of people who take part each evening. I don't think I underestimate it when I say several hundred million forints, even as much as half a billion forints, are gambled every night."

Krisztián Molnár, head of tax authority APEH's Gambling Supervision Department explained that according to current regulations three circumstances need to be present for a game to qualify as gambling: the participants must make bets, the game must at least partly be based on chance and a participant must win money at the end of the game. If played by these rules, poker games qualify as gambling and can only be organised by licensed casinos. The convenient loophole is provided by the fact that if you take one of the three components and disguise it as something else, the game becomes perfectly innocent in the eyes of the law.

The tax authority's main task is to find out whether the hefty "registration fees" at sporting events really serve a legitimate purpose or are in fact disguised bets. This is easier said than done, according to Molnár. Most organisers are not cooperative when it comes to audits. "The sports associations we investigated were unwilling to provide data voluntarily, and even just entering their premises was quite difficult. It is necessary that we organise the audits with a partner authority to ensure their efficiency."
InfoRádió asked the Ministry of Finance whether it is planning to amend the relevant ruling to ease the collection of gambling tax from poker games. The Ministry said this question was not yet on its agenda.

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Article downloaded from the World Wide Web on November 18th, 2008

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