Last year, the Czech Government ("Government") approved a new gambling regulation which should have completely replaced the current Lottery Act. Since the very beginning of the legislative process, the bill has caused displeasure amongst both the national and foreign gambling providers. As for foreign operators, the main reason was that the bill provided for a requirement of a legal presence in the Czech Republic as a prerequisite for obtaining a gambling licence from the Czech Ministry of Finance ("Ministry"). Although the Ministry defended the proposal, the results of the notification procedure commenced in accordance with the Directive 98/34/EC illustrated that the bill is not considered compliant with the freedom of services as defined by the Treaty on the Functioning of the European Union. The arguments made by the Czech Republic against the concerns expressed during the notification procedure by Malta and the Commission were turned down by the Commission.

As a reaction to the results of the notification procedure, the Government revoked, by resolution No. 173, dated 13 March 2013, its previous approval of the original bill and ordered the Ministry to prepare a completely new bill by the end of June 2013. In this context, it is important to mention that the Ministry already expressed its opinion that a new bill is inevitable to prevent any doubts about the compliance of the new regulation with the European legislation and also to ensure that the new bill contains a complex regulation of online gambling.

This means that there is a real chance that the gambling business environment in the Czech Republic will become more friendly to foreign entrepreneurs quite soon, in particular by eliminating the requirement of the local legal presence for gambling providers as well as the current uncertainty about the conditions under which the provision of various online gambling services by foreign entities is allowed under Czech law. We understand that the bill should be passed as soon as possible so that it becomes effective by no later than 1 January 2014, to avoid possible infringement of the Treaty on the Functioning of the European Union.

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