REGULATORY REFORM
However, in such a rapidly changing and fast-paced industry such as gambling, it tends to have the opposite effect. It clearly illustrates that none of the recent political regimes has been willing to address the issue seriously or to rethink the state’s role in the industry through a comprehensive reform. Instead, they have simply patched up the law here and there to suit current political and economic interests. The system’s inability to change cannot be attributed to any single specific cause, but rather to several interrelated and mutually reinforcing factors. One such factor is the slow recognition and acceptance that, unlike in the past, the state cannot exercise complete control over the online space. Traditionally, the state has a deeply ingrained belief that it can control all market activity. This may well have been true for a long time in the case of traditional, brick-and-mortar operations, but ceased to be true following the emergence of the online industry. Gambling during the socialist era fell into the category of activities that were tolerated but not supported: it was subject to strict state supervision and was available to the public only to a limited extent. For example, Hungary’s first modern gambling casino under socialist rule opened in Budapest in 1981 and initially admitted only foreign visitors paying in hard currency 2 . This approach was also applied at the time of the transition to a market economy in 1991. There was no question that the lottery – the ‘cash cow’ of state-organized gambling – came under a state monopoly. Meanwhile, other forms of gambling became subject to concessions, allowing the state to decide at its discretion who would be permitted to organize gambling. This fundamental principle continues to underpin the Hungarian gambling regulatory framework to this day.
In response to the rise of online gambling, initial regulations for the sector were introduced in the late 2000s 3 . However, given the borderless nature of the industry, early enforcement proved largely unsuccessful. Despite significant estimates regarding the size of the gray and black markets, it took a decade of gradual effort to establish a regulatory framework capable of delivering measurable results. Today, this three- level defense system relies on the technical blocking of unlicensed websites, a comprehensive ban on advertising prohibited content, and the blocking of related financial transactions. Although official statistics on the exact size of the unregulated market remain unavailable, the robust revenue growth among legal operators over the past three years indicates a successful shift of players away from illegal platforms. For instance, the state operator nearly doubled its total revenue between 2021 and 2025 4 , a surge driven primarily by its betting division. This growth is consistent with stronger channelization, but certainly does not by itself prove migration from unlicensed operators. Even as late as 2024, industry estimates 5 suggested that the gray and black markets still retained a significant market share. However, the soaring profits of the state-run operator and the strong financial performance of the few licensed operators seemingly validated the state's restrictive efforts. Consequently, political decision makers felt little motivation to recognize the inherent limitations of state control in the digital sphere. Instead of adopting a more inclusive regulatory approach – such as fostering regulated cooperation with a broader range of service providers – the government opted to maintain its prohibitive stance. Furthermore, the political drive for reform was dampened by the broader economic boom of the 2010s. The combination of
2 https://www.nytimes.com/1981/05/17/world/new-budapest-casino-pulls-in-western-currency.html 3 https://fdlaw.hu/publications/gaming_betting/Inefficient%20enforcement%20and%20strict%20rules.pdf 4 Please see the annual financial reports of Szerencsejáték Zrt. in the Hungarian language here: https://rolunk.szerencsejatek.hu/hu/ eves-beszamolok 5 https://archive.g3newswire.com/hungary-for-a-piece-of-the-pie-yield-sec/
IMGL MAGAZINE | SEPTEMBER 2026
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