Gambling vs. skill games:

Gambling and skill-based games differ fundamentally from a legal perspective in terms of their definition and regulatory regime. In the Czech Republic, gambling is regulated by Act No. 186/2016 Coll., on Gambling, which precisely defines what is considered gambling and what conditions operators must meet. On the other hand, games based purely on the knowledge or skills of players are not subject to this strict regulation. Below we provide an overview of the current facts for 2025 – definitions and criteria distinguishing gambling from skill games in the Czech Republic, applicable legislation and recent amendments, the impact of EU regulations on Czech legislation, practical examples of controversial situations, risks of incorrect assessment and recommendations for companies. In conclusion, we emphasise the role of ARROWS Law Firm in the legal assessment and setup of gaming projects in this area.

Definition and criteria: Gambling vs. skill games in the Czech Republic

Gambling is precisely defined in Czech law.

Section 3(1) of the Gambling Act states that ‘gambling means a game, bet or lottery in which the bettor places a bet whose return is not guaranteed and in which the outcome is determined wholly or partly by chance or unknown circumstances’​.

This definition gives rise to three basic characteristics of gambling:

• Stake (bet) – the player places a bet or other consideration in the game, the return of which is not guaranteed. After placing the bet, it is therefore uncertain whether the player will get their money back.
• Possibility of winning – the game offers the prospect of winning (typically money or goods) in return for the stake placed.
• Element of chance – the outcome of the game (winning or losing) is determined wholly or partly by chance or unknown circumstances. This means that the outcome does not depend solely on the player's actions, but luck or circumstances unknown in advance play a significant role.

If a game fulfils all three of these criteria at the same time, there is a high risk that it will be assessed as gambling by the relevant authorities. In practice, therefore, any game of chance where you can win and where chance (uncertainty of the outcome) plays a role is considered gambling. Typical examples of gambling are lotteries, betting, roulette, slot machines, poker and other casino games – in all of these, the player bets money with an uncertain outcome depending on chance.

Skill-based games, on the other hand, are not covered by gambling legislation because the outcome depends mainly on the skills or knowledge of the players, not on chance. A knowledge game can be defined as a game whose outcome is determined by the knowledge of the competitors – an example is the TV game show ‘Who Wants to Be a Millionaire’, where success depended on correctly answering knowledge questions and competitors could win cash prizes purely on the basis of their knowledge.

A skill game is a game in which the outcome is determined by the individual abilities of the players, such as reaction speed, strategic and combinatorial thinking, etc. Classic examples are chess, go, tic-tac-toe and e-sports, if they are played for prizes – success in such games depends mainly on the player's skill, not on chance.

Purely knowledge-based and purely skill-based games are not considered gambling under gaming law. They are not covered by the law, so no licence is required under the Gambling Act, etc. to operate them. However, it is very important to realise that not every game in which there is a significant element of knowledge or skill automatically falls into the category of knowledge-based or skill-based games. It is sufficient for chance (or another element of uncertainty in the outcome) to play a certain role in the game for the game to fall under the legal definition of gambling.

In other words, the decisive factor is always a specific assessment of all elements of the game – in particular, whether chance is present and whether the game is played for stakes and winnings. If so, it is a game of chance, regardless of how much skill the game otherwise requires.

Summary: The three characteristics listed above are key to distinguishing between games of chance and games of skill in the Czech Republic. A game based on skill does not involve an element of chance (the outcome is predictable given the players' abilities) and often does not involve an irreversible bet.

For example, a chess tournament with an entry fee and prizes is not gambling if the winner is determined solely by the players' abilities and not by luck. On the other hand, a poker tournament for money is typically a game of chance, because even though it requires skill, the dealing of cards and combinations are random – the outcome is at least partly determined by chance, and the game is played for stakes with an uncertain return.

Current legislation in the Czech Republic and amendments to 2025

The current legal regulation of gambling in the Czech Republic is contained in Act No. 186/2016 Coll., on gambling, effective from 1 January 2017. This Act replaced the previous Lottery Act No. 202/1990 Coll. and introduced comprehensive modern regulation of gambling. The Gaming Act defines both the general conditions for the operation of gambling and the individual types of games (lotteries, betting, bingo, technical games – slot machines, live casino games, tombolas, etc. – see Section 3(2) of the Act). The Act introduced a licensing regime for gambling operators and strengthened the supervisory powers of the state with the aim of protecting players from negative phenomena, ensuring transparency and tax collection.

Significant changes and amendments

Since its adoption in 2016, the Gambling Act has undergone several amendments aimed primarily at strengthening player protection and clarifying the rules.

The most important of these is the introduction of the Register of Excluded Persons (RVO) – a central database of persons who are prohibited from participating in gambling.

From 2021, operators are required to verify that players are not listed in the RVO (e.g. persons receiving social assistance, persons in personal bankruptcy or voluntarily excluded). This step significantly increases the responsibility of operators in allowing gambling – the aim is to prevent socially vulnerable groups from gambling. Furthermore, the technical requirements for online games and the rules for remote player identification have been clarified, and the powers of the supervisory authorities (the Ministry of Finance and the Customs Administration) in the fight against illegal gambling have been extended.

Also worth mentioning is the concept of ‘small-scale tournaments’, which Act No. 186/2016 Coll. introduced as a special category of gambling with less stringent regulation. These are small card tournaments (typically poker) with a limited number of players and low stakes – a maximum of 90 participants and a total stake per player of no more than CZK 1,000 per 24 hours.

These tournaments may be organised by a legal entity based in the EU/CZ and must be notified in advance to the municipal authority of the municipality where they are held. The operator of a small tournament may not pay out more than 95% of the stakes in winnings.

This amendment allows smaller poker tournaments to be organised legally without an individual licence from the Ministry of Finance, provided that the above limits and notification requirements are met. For organisers, this means the possibility of operating on a limited scale, but if the limits are exceeded (e.g. higher stakes, more players, failure to notify), the tournament would become illegal.

In 2025, the Gaming Act is a stable norm, but discussions on its further development are still ongoing. The regulator (Ministry of Finance) continuously evaluates new phenomena on the market, such as loot boxes in online games (random boxes with rewards), fantasy sports, and certain competitions that straddle the line between gambling and skill games. These are not yet subject to specific regulations and are assessed according to general criteria of chance and stake.

The government's ‘recovery package’ discussed in 2023 mainly affected gambling taxation (increasing gambling tax rates), but not the definition of gambling as such. However, it can be expected that legislation will continue to respond to technological developments, such as the possible future harmonisation of rules for online elements of games or the implementation of possible European initiatives.

For 2025, however, the difference between gambling and skill games remains primarily defined by the degree of chance and the existence of a bet, as stipulated by the 2016 Act, as amended.

Relevant EU regulations and their impact on national legislation

Gambling regulation in the European Union is largely the responsibility of individual Member States.

There is no uniform European law on gambling that directly defines the terms ‘gambling’ and ‘skill games’ – each country defines these terms in its own legislation.

However, the same principle generally applies as in the Czech Republic: gambling games are games of chance for money, while pure skill games are not considered gambling.

For example, under EU regulations, gambling is characterised as a game of chance involving a monetary bet – for example, the e-commerce directive explicitly excludes from its scope ‘betting games that involve a monetary bet on a game of chance, including lotteries and betting transactions’ (which essentially corresponds to the Czech definition). Anti-money laundering regulations (AMLD) also define ‘gambling’ as services where money is wagered on the outcome of a game of chance, even if it may involve an element of skill, and include lotteries, casino games, poker, betting, etc. – again, a very similar concept to that in the Czech Republic.

Although the EU does not have uniform gambling regulations, it influences national regulations in several ways:

• through general principles of free movement of services and freedom of establishment
• through partial recommendations and cooperation between states

The Czech Gaming Act was adopted with regard to EU law – the aim was to open up the previously closed market to foreign operators from the EU under equal conditions. Today, companies from other EU Member States can also apply for a Czech gambling licence (provided they meet the specified conditions), in accordance with the principle of non-discrimination.

At the same time, however, Member States may regulate gambling relatively strictly and restrict its cross-border provision for reasons of public interest (consumer protection, public order). The European Court of Justice has repeatedly confirmed that gambling is a specific area where strict national licences and even monopolies may be justified and do not conflict with EU law, provided that they pursue a legitimate objective (e.g. combating addiction) and are not discriminatory.

Skill games vs. gambling within the EU

Due to the lack of harmonisation, a certain type of game may be considered gambling in one country and mere competition in another.

Entrepreneurs must therefore carefully monitor the definitions in each country where they wish to operate. An example of this is loot boxes (random virtual rewards in video games) – the Belgian and Dutch regulatory authorities have assessed them as illegal gambling and banned their use in games, while in other EU countries (including the Czech Republic) they currently fall into a grey area and are not explicitly regulated.

There are also differences in fantasy sports competitions, poker and e-sports betting – all areas where national regulations may perceive the classification as gambling differently.

There is a working group on gambling within the EU and information is exchanged between regulators, but each country retains its own criteria. For the Czech environment, therefore, the definition according to Act 186/2016 Coll. applies, and any operation of games abroad requires a legal analysis of the local legislation.

The influence of the EU is also evident in the area of technical and operational standards. For example, based on European initiatives, the Czech Republic has introduced the aforementioned Register of Excluded Persons and implemented stricter rules for verifying the identity of online players (required by anti-money laundering directives).

Furthermore, EU regulations (such as the general GDPR) impose requirements on the processing of player data, which are reflected in national gambling operating conditions. Overall, it can be said that the EU leaves it up to Member States to distinguish between gambling and games of skill, but harmonises certain related areas (the fight against terrorist financing, online consumer protection, etc.) that operators must not neglect.

For entrepreneurs, this means that if your game is not considered gambling under Czech law (does not meet the definition of chance/stake/winnings), you can operate it relatively freely in the Czech Republic. However, if you intend to operate in other EU countries, you must check whether the local law considers a similar concept to be gambling. If in doubt, it is advisable to seek the opinion of the local authority or obtain a licence in that country if you do not want to risk being punished for illegal gambling.

Practical examples: What to watch out for

In practice, we often encounter competitions and games that border on gambling and games of skill. From the perspective of game app developers or competition organisers, it is crucial to correctly assess whether the planned product falls within the scope of regulated gambling. Below are some typical situations and points that require attention:

Card or computer game tournaments for money

If you are planning to organise a public tournament (offline or online) in poker, Hearthstone, FIFA or another game where participants place a stake and the winner receives a cash prize, carefully consider whether the outcome depends in part on chance.

In purely strategic games (e.g. chess), even a public tournament with prizes should not be considered gambling (there is no element of chance). However, a poker tournament is gambling – it involves chance in the dealing of cards.

Czech law does allow small-scale poker tournaments (see above), but they must comply with legal limits (maximum stake of CZK 1,000 per player, maximum of 90 players, reporting obligation, etc.). Larger or unreported tournaments would require a full licence from the Ministry of Finance.

Recommendation: For every tournament involving money, check whether the game contains elements of chance. If it does and the influence is not negligible, it is better to treat it as gambling – i.e. either use the exemption (small tournament) or apply for the relevant licence.

Consumer competitions and marketing games

Many companies organise competitions for customers, such as prize draws from purchased tickets, codes under bottle caps, online wheels of fortune, etc. Be careful that such marketing events do not meet the definition of gambling. Czech law also includes in the definition of a bet the ‘difference between the price of goods or services offered and the usual price’ or ‘the amount exceeding the normal price of a telephone call/SMS’ if there is an additional charge for participating in the competition. In general, however, consumer competitions without an additional deposit (e.g. only the purchase of a product at the normal price) do not fall under gambling. However, they must be structured correctly – there must be no additional payment for participation and prizes should not be awarded purely by chance without any element of performance. Example: A prize draw among customers who have purchased a product is not usually gambling if the purchase was not conditional on a higher price due to the competition. However, a competition where participants pay extra for a ‘ticket’ or premium SMS may be considered gambling (as payment above the normal price is considered a bet).

Recommendation: When designing a competition, always check that participation does not require a special deposit from the player and that the selection of the winner is not purely random without any further conditions – otherwise, there is a risk that it will be considered a lottery subject to authorisation.

Loot boxes and virtual items

In the field of video games, loot boxes are a frequent topic – these are chests or packages with random contents that players can purchase for real money and from which they can obtain rare items.

Although loot boxes are not yet regulated as gambling in the Czech Republic, they potentially meet the criteria for gambling (the player pays a non-refundable deposit for an uncertain outcome – an element of chance, the possibility of obtaining a valuable item). The situation in the EU is inconsistent – in some places they are considered an illegal lottery, in others they are not.

Recommendation: Consider eliminating the monetisation of purely random rewards, or at least make it impossible to convert them into money (e.g. by making it impossible to sell the items obtained for real money). This will reduce the risk of the authorities classifying your system as gambling. If you insist on using loot boxes, closely monitor legislative developments – pressure to regulate these practices is growing across Europe.

Fantasy leagues and e-sports

Online platforms where users can put together their own sports teams (fantasy leagues) or bet on the results of e-sports matches are popular.

In fantasy sports, it depends on the model – if players place a bet and the winner is the one whose team has accumulated real statistics (a combination of skill in team selection and chance, i.e. how the real athletes perform), it may be considered gambling (because the performance of real athletes is effectively an external circumstance beyond the player's control – an element of chance).

E-sports betting is essentially classic odds betting (gambling) if money is wagered on the results of matches.

On the other hand, e-sports tournaments (where players compete in a tournament in a game such as Counter-Strike for a prize pool) can be skill competitions – here it is necessary to assess whether the organiser collects stakes and whether the game itself has elements of chance. Most competitive video games are primarily about skill, but some games contain elements of luck (random spawning of items, etc.).

Recommendation: When organising an e-sports tournament with prizes, do not collect an entry fee from players, or use it in a structured way only to cover costs and not for winnings if the game contains any element of chance. This will avoid the definition of a bet. For fantasy leagues, consider legal consultation – they are assessed differently in different EU countries and are not yet explicitly addressed by law in the UK, so general gambling criteria apply.

Risks and penalties for unauthorised gambling

Operating a gambling game without a valid licence or in violation of the law is highly risky and can have serious consequences for entrepreneurs. The Czech Gaming Act contains detailed provisions on penalties and administrative offences.

The main risks of unauthorised gambling include:

High fines

Supervisory authorities (the Ministry of Finance and the Customs Administration) may impose fines ranging from millions to tens of millions of Czech crowns. Specifically, operating gambling without a licence is punishable by a fine of up to CZK 50,000,000 in administrative proceedings.

Penalties also apply to other offences, such as allowing minors to gamble, violating licence conditions, etc., also with fines in the millions of Czech crowns. Fines can be imposed repeatedly and can have a devastating impact on a company.

Prohibition of activities and blocking of operations

The Ministry of Finance has the power to include illegally operated online games/websites on the List of unauthorised internet games. Internet service providers in the Czech Republic are then required to block access to such websites. Similarly, banks must block payments to the accounts of operators included on the list.

In practice, your gaming website may be made inaccessible to Czech users based on an administrative decision by the Ministry of Finance, and payment flows may be interrupted if it is deemed illegal gambling.

This happened, for example, in 2017, when the Ministry of Finance blocked the website of the foreign betting company 1xbet for the first time. In addition to blocking online gambling, the authority may also order the cessation of illegal gambling in brick-and-mortar establishments, seal off equipment, etc.

Criminal liability

Serious cases of unauthorised gambling may constitute a criminal offence. The Czech Criminal Code punishes the unauthorised operation of lotteries or similar betting games, and if intent is proven, perpetrators may face imprisonment (typically in cases of large-scale or repeated violations). In addition, the legalisation of proceeds from such activities may also be prosecuted. This represents a personal risk for company management.

Reputational and commercial impacts

The discovery that a company has been operating unauthorised gambling may lead to significant damage to its reputation. The loss of trust among customers, partners and investors can have long-term consequences.

There is also a risk of civil liability towards players (e.g. recovery of deposits) and contractual obligations if operations are suddenly terminated due to intervention by the authorities. The company may lose its domain, software, confiscated equipment, etc. In addition, once an entity has been sanctioned, it will be under the scrutiny of the regulator, which complicates any future legal business in the industry.

In short, attempting to circumvent legislation in the gambling sector is highly unprofitable. Czech regulations are strict and penalties are highly dissuasive. In the EU environment, illegal operations may also cause problems in other countries (due to online availability) – foreign regulators may also intervene or coordinate their actions.

It is therefore crucial for entrepreneurs to assess the legal classification of the game at the start of the project and ensure that everything is in compliance with the law.

Recommendations for companies and game developers

Based on the above facts, we offer several recommendations for entrepreneurs in the gaming industry who want to avoid legal problems and ensure that their product is not considered illegal gambling:

1. Conduct a legal analysis of the game concept at the outset

During the development or planning phase of a game product, assess the presence of key elements – stakes, winnings, chance. If you are unsure whether a game falls under the definition of gambling, consult a lawyer. For example, the ARROWS law firm advises start-ups to assess these issues very carefully at the outset of their project. Early analysis will allow you to adjust the rules of the game to make it legally ‘safe’ (e.g., remove the problematic element of chance or cancel the entry fee).

2. If the game falls under gambling, consider modification or licensing

If you find that your intended project meets the criteria for gambling, you basically have two options: either modify the mechanics of the game so that it no longer falls under the definition of gambling (e.g. making chance a purely cosmetic element with no influence on the possibility of winning, or allowing players to compete for free and generating revenue from advertising, etc.), or accept that it will be regulated gambling and ensure compliance with all legal requirements.

The latter means obtaining the necessary permits from the Ministry of Finance (or registering for small tournaments), implementing systems to verify the age and identity of players, joining the Register of Excluded Persons, complying with betting and loss limits, paying gambling taxes, meeting responsible gaming requirements, etc. This path is costly and lengthy, but necessary for gambling projects.

An alternative may be to partner with an already licensed entity.

3. Do not abuse exceptions – comply with ‘small game’ limits.

If you use exceptions such as small-scale tournaments or organise a closed competition for a limited group of people, strictly adhere to the set limits. For example, in a card tournament, keep an eye on the maximum number of players and the amount of stakes; in raffles, comply with the total prize limit (up to £10,000, otherwise the raffle would require a licence).

Do not try to circumvent the licence by ‘inflating’ a small game – the authorities check this and the penalties are severe.

4. Keep track of legislative developments and regulations in the industry

Gambling law is constantly evolving. Follow the news from the Ministry of Finance, which issues methodological opinions and warnings. For example, if lawmakers start regulating new phenomena (loot boxes, cryptocurrencies in games, etc.), you will know about it in time and can adapt.

The same applies abroad – if you operate globally, keep track of where laws are tightening. Ignorance is no excuse, and the argument ‘it's legal here’ will not help you abroad.

5. Secure expert legal advice

The gaming industry is undergoing rapid innovation, which lawyers and regulators are closely monitoring. It is definitely worth involving an experienced legal advisor specialising in gaming law or gambling regulation in your project. They will help you assess where the line between skill and gambling lies, recommend product design adjustments, prepare the necessary documents (game rules, competition rules, terms and conditions of participation) and, if necessary, guide your company through the licensing process. The cost of legal services is many times lower than the potential fines or losses incurred if your project is suspended.

The role of ARROWS Law Firm in assessing gaming projects

The issue of gambling and skill games is complex and represents uncharted territory for many entrepreneurs.

ARROWS Law Firm has long specialised in this area and helps clients set up their projects so that they are in compliance with applicable legislation and minimise legal risks. ARROWS lawyers have experience in gambling law, IT law and consumer protection, which enables them to provide comprehensive advice to mobile game developers, online platform operators, competition organisers and marketing agencies, for example.

ARROWS offers clients legal audits of game concepts, identifying any gambling elements and proposing adjustments. In the case of gambling, we oversee the process of obtaining the necessary permits from the Ministry of Finance, set up contractual documentation and internal rules (e.g. addiction prevention programmes, general terms and conditions for players, etc.) in accordance with legal requirements.

In the case of skill games, it helps to formally establish the terms and conditions of the competition so that they are transparent and fair and so that the operator avoids accusations of circumventing the law. Clients of ARROWS thus gain the certainty that their business is based on a solid legal foundation and that they will avoid mistakes that could lead to sanctions.

ARROWS Law Firm is also actively involved in educating the public in this area – it has published professional articles (e.g. on the legal perspective on knowledge and skill games) and organises webinars on current topics in gambling regulation. This allows it to keep abreast of the latest developments and advise clients proactively, alerting them to future changes in the law, new trends in the EU or court decisions that may affect their business. ARROWS thus acts as a reliable guide for companies in the gaming industry.

Conclusion

Distinguishing between gambling and skill games is essential for anyone who wants to legally operate in the gaming and competition industry. Both Czech and European regulations emphasise the protection of players and public order, so even the slightest element of chance in combination with a stake can mean a transition to strict gambling rules.

Prevention is better than cure – we therefore recommend that you always consult experts about your intended project. ARROWS Law Firm is ready to assist you in this regard, assess your intentions and guide you through the regulations so that you can offer your gaming products safely, legally and successfully.