Orban’s casino license deals smell of corruption

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Hungary’s Viktor Orban is facing new accusations of corruption and cronyism from local and international media, due to his recent actions that appear to favor his close allies in the casino industry. Although small in number, Hungary’s land casinos have been the subject of a number of controversies in recent years. As this latest scandal breaks, we take a look at how and why it is happening, and who are the main players.

Plans in motion

Hungary is gearing up for a 2022 general election, which promises to be a close-run thing. Incumbent Orban has been in power since 2010, and since Hungary has no term limit restrictions he will be seeking reelection. This time, however, Orban and his ruling Fidesz party will be facing a newly united opposition alliance – and for the first time since he came to power his future is not assured.

Perhaps knowing that his days are numbered, Orban has been getting his house in order, and that seems to include looking after his friends in the public sphere. Earlier this year a bill establishing the 2021 budget was passed, and one of the provisions was to make casino operation a priority for the national economic interest. The casino operations in the country are projected to bring in around $10 million to the economy over the next three years, a relatively modest contribution.

Considering the relatively small contribution that casinos make, this could be seen as a dubious proposal, but it was another provision that allowed Orban to make his latest move.

The change in legislation allowed existing casino tenders to be renewed if they are more than half-way through their original license period. This then opened the door to renew the concessions for the country’s five most profitable sites, which was duly carried out just a few months later. The result being that the five casinos now have new contracts that will take them through to 2056, a period of 35 years.

The move was made in complete secrecy and with no fresh call for tenders. Rather than announcing the news, the Gambling Supervisory Board simply updated the information on their website to reflect the change. The news was broken by the Telex news portal, who investigated the story following a tip-off from a reader.

The Major Players

So, who are the ones who stand to gain from this new arrangement? Perhaps unsurprisingly the two main players in this story are both close allies of Orban. The new licenses were granted to the only five casinos operating in Budapest, all of which belong to the LVC Diamond casino group. This company is jointly owned by Kristof Szalay-Bobrovniczky and Istvan Garancsi.

Garancsi is a wealthy property magnate and businessman known to be a friend of Orban. As well as owning 60% of LVC Diamond, he also has plenty of other interests in the country including ownership of the Videoton football club. Szalay-Bobrovniczky, who owns the other 40%, is a former ambassador to the UK and the husband of government spokesperson Alexandra Szentkiralyi.

The casino industry in Hungary is not large, and the five Budapest sites are the country’s biggest earners by a wide margin. Despite a slight drop in takings during the pandemic, LVC Diamond still turned a profit of around $25 million in 2020 – a 36% decrease which is expected to return to pre-pandemic levels soon. The new concessions were granted only to LVC Diamond casinos, while the remaining six rural sites in the country remained with their existing contracts.