Part I — Situation overview

After the Government’s meeting on 16 September 2026, Prime Minister Péter Magyar announced that the current tobacco wholesale monopoly will be abolished, the tobacco-shop system will be fundamentally restructured, and the casino concessions will be renegotiated, “so that it is not a few billionaire oligarchs who benefit from this profit”. According to Portfolio’s summary, the legal and financial review of the 35-year motorway concession contracts was also on the agenda that same day, in preparation for their termination. Since the system of trading in tobacco products is laid down by statute, abolishing the monopoly requires Parliament to amend the law on the basis of a Government proposal. Terminating or renegotiating the concession contracts, in turn, affects contractual legal relationships and carries a risk of damages claims. Also on Wednesday, Magyar Koncessziós Infrastruktúra Fejlesztő Zrt. (MKIF), the concession operator of a large part of the expressway network, asked in a statement that the Ministry of Transport and Investment make public all bids and technical data received for the future operation of the affected section of the M6 motorway. According to the company, despite repeated requests the ministry has not informed it of the factual and legal basis of the decision, and comparing incomparable data makes no professional sense.

The announcement is part of a three-week process. On 3 September the government announced the review of the casino and tobacco-shop concessions, and on 8 September a bill was submitted to Parliament that would abolish the concession tasks of the Supervisory Authority for Regulated Activities (SZTFH) — the body that also supervises gambling organisation and tobacco retail — as well as the Concession Council. Since 2015, tobacco wholesale has been carried out under an exclusive right by Országos Dohányboltellátó Kft.; according to Portfolio’s calculations, in 2025 the company paid a concession fee of 3.5 billion forints on revenue of 1,143 billion forints. For casinos, according to the calculation presented by HVG, the rule introduced in 2013 that made the concession fee deductible from the gaming tax reduced the gaming tax paid by around 59.4 billion forints between 2014 and 2025. MIAK has already published analyses on the waste concession (4 September), on the procedure for terminating the motorway concession (6 September) and on the register of long-term commitments (30 August); it has not so far devoted a separate piece to the tobacco and casino markets.

MIAK’s reading: the tobacco and casino concession is a different kind of problem from the motorway. This is not about operating a piece of infrastructure but about an artificially narrowed market, whose original justification was public health, while its income ended up with a few actors. If the reform only replaces the person of the right-holder, the rent remains. If, however, it dismantles the restriction as a whole, the health objective suffers, and alongside the November excise duty increase smuggling gains ground. The right solution lies between the two: open, conditional licensing with a measurable health objective.

Part II — Foundations in the literature

Three sources provide the interpretive framework. John Stuart Mill (19th-century English philosopher and economist, one of the great synthesisers of classical political economy) formulates two complementary theses in his Principles of Political Economy: restrictions introduced for the sake of collecting consumption taxes increase the capital needed for trade and thus the cost of entry, thereby creating a monopoly-like position for a few dealers. At the same time, an excessively high tax breeds smuggling and illicit trade. The current twofold restructuring of the tobacco market — a tax increase and the abolition of the monopoly — stands precisely at the intersection of these two theses. According to the book Corruption and Government by Susan Rose-Ackerman (American lawyer-economist, professor at Yale, a leading researcher of the institutional economics of corruption), wherever the state allocates a scarce entitlement, the allocator may behave like a monopolist, and abolishing one licensing stage may divert the rent to the remaining decision point. This is why many legal systems have turned gambling into a legal but strictly supervised market. And the Health at a Glance: Europe 2024 report of the OECD (Organisation for Economic Co-operation and Development) and the European Commission shows that Hungary is at the bottom of the EU list for both adult and adolescent smoking, while tax increases and restrictions on youth purchases have proved effective in reducing smoking. The detailed discussion of the literature — by author, with quotations — can be found in section 6.4 Literature in detail.

Part III — MIAK’s concrete proposal

MIAK proposes three measurable measures. The first defines the rule that replaces the wholesale monopoly, the second makes the health objective of the tobacco-shop system measurable, and the third settles the fee and tax structure of the casino concessions.

3.1 Open, conditional wholesale licensing instead of an exclusive right (bill by 31 March 2027, with a 12-month transition)

MIAK proposes that the Government submit to Parliament a legislative amendment that does not entrust the wholesale of tobacco products to a new exclusive right-holder, but opens it to every business that meets pre-set, objective conditions: an excise licence and guarantee, connection to the EU traceability system for the products, and supply of tobacco shops without discrimination, under published conditions. If the conditions are met, the licence must be granted, without discretion. The switch should not happen overnight: the legal and damages risk of terminating the current contract must be assessed according to the exit-cost estimate proposed in MIAK’s analysis of 6 September. Until new licensees enter, a 12-month transition following a public timetable is needed. Before the transition begins, a public baseline estimate should be prepared of the market share of smuggled and counterfeit tobacco products, because the November excise duty increase and the opening of the market together increase precisely this risk. The proposal is a direct application of the G5 competition-policy programme point. According to Mill’s thesis (see 6.4.1), a rule serving tax collection must not in itself create a barrier to entry — so the conditions should be strict, but the number of right-holders open.

3.2 Public scoring of tobacco-shop licences and measuring minors’ access (before the next licensing cycle)

The twenty-year tobacco-shop concessions launched in 2013 expire, as a general rule, around 2033, but the crisis of trust surrounding the system stems from the 2013 allocation. MIAK proposes that every new or vacated retail entitlement be awarded according to publicly announced scoring criteria, together with the applicants’ scores, and that political actors be prohibited from giving opinions on the applications. All contacts during the assessment must be recorded in the A4 lobby register. The only acceptable justification for a restricted retail network is the public-health objective, so this must be measured: there should be an independent annual test purchase to see whether shops serve minors, and the result should be linked, shop by shop, to the renewal of the licence. MIAK would have the guaranteed retail margin reviewed through a one-off, public cost analysis. The data should go into the E4 prevention data programme. According to Rose-Ackerman’s argument (see 6.4.2), with a scarcely allocated entitlement it is the method of allocation that decides who keeps the rent. And according to the OECD data (see 6.4.3), the health objective is served by actually restricting youth purchases, not by the number of shops in itself.

3.3 Separating the casinos’ concession fee from the gaming tax, and a public fee formula (in the 2027 tax package)

MIAK proposes that Parliament, by amending the act on gambling operations, abolish the possibility of offsetting the concession fee against the gaming tax: the fee is the consideration for a state entitlement, while the gaming tax is the tax on the activity, and the two cannot substitute for each other. For renegotiated or newly concluded casino and tobacco wholesale contracts, the fee calculation formula, the underlying revenue and margin data, and the amount actually paid each year should be published on the A1 public-money dashboard. The same rule should apply to the bids received for operating the M6: here MKIF’s request and the ministry’s interest coincide, because public bids both close the dispute and make the decision verifiable. The G6 programme against rent-seeking and the G19 radical transparency programme point ask for exactly this: the price of a privileged position should be known and comparable. According to Rose-Ackerman (see 6.4.2), the precondition of a legalised gambling market is strong state supervision — and the transparent separation of fee and tax is at least as much a part of this as player protection.

The three proposals are linked by one principle: dismantling a monopoly is a reform if the discretionary decision is replaced by a rule known in advance, and the restriction remains only where it serves a measurable public interest. In the tobacco market this is health protection, in the casino market supervision — in neither case can the identity of the right-holders be the subject of regulation.

Part IV — Expected effects and risks

Dimension Expected effect Risk
Economy and budget Wholesale competition reduces the logistics margin; abolishing the gaming-tax offsetting could bring additional revenue of billions per year, based on the order of magnitude of the 2014–2025 loss presented by HVG Terminating the contract may trigger damages claims and a protracted legal dispute; casinos may pass on the additional burden by reducing winning odds or services
Public health Licence renewal linked to test purchases reduces young people’s actual access; the excise duty increase moderates consumption If opening the market is accompanied by an expansion of the retail network, the availability of tobacco products may increase; together with the November tax increase, the share of smuggled products may grow
Transparency and public administration Public scoring and a fee formula make the allocation decision traceable After the abolition of the SZTFH’s concession tasks, a supervisory gap may arise if the body taking over the task is not designated in time

The main dilemma lies between competition and health protection. In wholesale, opening up is clearly beneficial: the identity of the wholesaler is irrelevant from the consumer’s point of view, and excise control can be tied to licensing and traceability, not to exclusivity. In retail, however, restriction is not in itself a flaw — which is why MIAK proposes not abolishing the tobacco-shop system but ensuring fair licensing and measuring the health outcome. The proposal tips towards the risk side if the market opening, the end of the SZTFH’s concession role and the excise duty increase fall within the same few months, and there is no measurement of the illegal market before any of these steps. This is why the transition must be scheduled and the baseline estimate published before the transition.

Part V — Measurability and summary

5.1 What is worth following? (suggested KPIs)

MIAK proposes four performance indicators (KPIs, in English: Key Performance Indicator) from which it will be visible in 12 and 24 months whether the restructuring is heading in the right direction:

  • Number of tobacco wholesale licensees and market concentration: the suggested target is that by the end of 2028 at least three licensees operate, and none of them has a share exceeding 50 per cent.
  • Monthly smoking rate among 15-year-olds: in 2022 more than one in four 15-year-olds in Hungary smoked, compared with an EU average of 17 per cent; it is worth following whether the rate falls in the next two international surveys.
  • Estimated market share of smuggled and counterfeit tobacco products: it is suggested that a public, independent estimate be prepared every year, and that the share should not increase after the November tax increase and the market opening.
  • Public fee data for casinos and tobacco wholesale: the suggested target is that by the end of 2027 the fee formula and annual payment of every contract concerned be available on the public-money dashboard, and that the gaming tax be collected without offsetting.

5.2 Summary

MIAK’s request is twofold. In place of the wholesale monopoly, the Government should submit to Parliament not a new exclusive right-holder but conditional, open licensing, and for casinos it should initiate the separation of the concession fee from the gaming tax. The tobacco-shop system should not be abolished but made measurable: the results of test purchases on serving minors should decide the renewal of licences, not the applicant’s connections. And publishing the M6 bids should be the rule, not an exception made at the operator’s request.

Two MIAK foundational values are at stake. Transparency, because the problem with the tobacco and casino concessions was not that they were secret, but that the calculation of the fee, the allocation criteria and the effect of the tax allowance were not comparable — a public fee formula solves this in a single step. Data-drivenness, because a market restricted on public-health grounds is only defensible if the result of the restriction is measurable; if youth smoking does not fall, the restriction is not health protection but market sharing.

Part VI — Reasoning and further sources

6.1 Press framing by spectrum

In the economic segment, Portfolio published the Prime Minister’s announcement using the head of government’s own wording, under the headline “they will crack down on the billionaire oligarchs”, and presented the tobacco and casino reform in one package with the excise duty increase and the motorway concession; the article noted that an artificial-intelligence assistant had contributed to its preparation. A week earlier, the same outlet had provided the most balanced background piece on the spectrum about tobacco wholesale: it reported the low proportion of the fee and the ten-year profit just as it reported the company’s argument that the fee paid far exceeded the contractual minimum. Portfolio wrote about the MKIF statement in news-agency style, with background explanation of the concessionaire’s ownership structure.

In the public-affairs and left-liberal segment, the framing narrowed almost entirely to the M6. Telex and 24.hu reported MKIF’s request factually, with extensive quotation; 24.hu also presented, in a separate article, the document of Dávid Vitézy, Minister of Transport and Investment, according to which the previous ministry had already designated MKIF as operator in 2025. HVG introduced the minister’s latest rebuttal by contrasting it with Fidesz’s claims and with a strongly worded quotation from the minister, and mentioned the tobacco question only in the title of its morning news roundup, as cigarettes becoming more expensive.

In the conservative segment, Magyar Nemzet ran the MKIF statement in an “urges full publicity” frame, and quoted Fidesz’s position that the minister is falsely claiming that the previous government had commissioned the operation, and that he is preparing to hand the concessions over to foreign interests. Common to the whole spectrum is that, of the day’s government announcements, the abolition of the tobacco wholesale monopoly and the renegotiation of the casino concessions received the least analytical attention — none of the segments dealt with what will replace the monopoly.

6.2 Facts and data

Datum Value Source
Day of the tobacco and casino concession announcement 16 September 2026 Portfolio, 16 September 2026
Revenue of Országos Dohányboltellátó Kft. 1,143 billion forints (2025) Portfolio, 8 September 2026
Concession fee paid by the company 3.5 billion forints (2025) Portfolio, 8 September 2026
Concession fee paid over ten years / contractual minimum 40.1 billion / 4.5 billion forints Portfolio, 8 September 2026
Cumulative profit of the company 67.6 billion forints (2016–2025) Portfolio, 8 September 2026
Number of tobacco points of sale before 2013 / today around 40–43 thousand / fewer than six thousand tobacco shops Portfolio, 8 September 2026
Duration of the tobacco-shop concessions 20 years, expiring as a general rule around 2033 Portfolio, 8 September 2026
Loss due to offsetting the concession fee against the gaming tax around 59.4 billion forints (2014–2025) HVG, 9 September 2026
Entry into force and expected additional revenue of the excise duty increase on tobacco products 1 November 2026; around 90 billion forints Portfolio and 24.hu, 15 September 2026
Health cost of smoking / excise duty and VAT revenue from tobacco products 1.7 per cent of GDP / around 775 billion forints (2025) calculation by the line ministry (24.hu, 15 September 2026)
Share of adults smoking daily 25% or more in Hungary, EU average 18.4% (2022) OECD – European Commission: Health at a Glance: Europe 2024
Share of 15-year-olds who smoked in the past month more than one in four in Hungary, EU average 17% (2022) OECD – European Commission: Health at a Glance: Europe 2024
Two bid prices for operating the M6 section (2026–2037) 149 billion and 44 billion forints respectively HVG, 16 September 2026

Two data points require a separate note. On the extent of the excise duty increase by product category, the 15 September 2026 articles of Portfolio and 24.hu reported differing percentages, so MIAK does not adopt them. Second: according to Portfolio, Országos Dohányboltellátó partly explained the 2025 decline by the growth of illegal trade and the spread of nicotine products falling outside the monopoly — no public, independent estimate of the share of the illegal market is available, and this is the direct reason for the third indicator in 5.1.

6.3 Policy dimensions

  • Economy (programme points) — G5 (competition policy and anti-monopoly) provides the yardstick for opening up wholesale, G6 (programme against rent-seeking and regulatory capture) the review of the fee and tax-allowance structure, and G19 (radical transparency) the publicity of the fee formula;
  • Transparency and anti-corruption policy (programme points) — A1 (public-money dashboard) the publication of fee payments, A2 (public-procurement transparency) competitive tendering and the publicity of bids, A4 (lobby register) the contacts during the assessment of tobacco-shop licences;
  • Healthcare (programme points) — E4 (prevention data programme) takes in the measurement of minors’ access and of smoking rates;
  • Transport and infrastructure (background material) — the publicity of the M6 operating bids serves the comparability of the operating costs of the expressway network.

6.4 Literature in detail

6.4.1 John Stuart Mill: Principles of Political Economy

In the chapters on taxation, Mill goes through the hidden costs of consumption taxes, and two of these fit the Hungarian tobacco market directly. The first is the side effect of regulation adopted for the sake of collection: the control requirements imposed on producers and dealers mean costs and a greater capital requirement, which narrows competition. In his words:

“Neither ought it to be forgotten that whatever renders a larger capital necessary in any trade or business limits the competition in that business, and, by giving something like a monopoly to a few dealers, may enable them either to keep up the price beyond what would afford the ordinary rate of profit, or to obtain the ordinary rate of profit with a less degree of exertion for improving and cheapening their commodity.”

The second thesis is the upper limit of the tax rate. According to Mill, taxing stimulants is justified because they are easily abused, yet no tax may be so high that the incentive to evade it is stronger than the ordinary means of control:

“No tax ought to be kept so high as to furnish a motive to its evasion, too strong to be counteracted by ordinary means of prevention; and especially no commodity should be taxed so highly as to raise up a class of lawless characters–smugglers, illicit distillers, and the like.”

Since 2015 the Hungarian tobacco market has been a test of both theses. The centralisation of wholesale was justified by controllability, but its effect, in line with Mill’s description, was to concentrate income with a single actor. At the same time, the current restructuring is taking place simultaneously with the excise duty increase, so the second thesis is also sharpened. MIAK therefore proposes that control be ensured by licensing and traceability, not exclusivity, and that the illegal market be measured before the transition.

📖 Source: John Stuart Mill: Principles of Political Economy

6.4.2 Susan Rose-Ackerman: Corruption and Government

In her economic analysis of corruption, Rose-Ackerman separately discusses cases in which the state allocates a scarce entitlement. If the quantity to be allocated is scarce but the office can influence it, the allocator may behave like a private monopolist: it allocates less than the rule would allow in order to increase the rent to be distributed, and if several bodies take part in the allocation, each may demand a share of it. This applies to the tobacco-shop system because the number of entitlements is the result not of a market decision but of an administrative one, and profitability was later further increased by the guaranteed margin.

Among the reform options, the author names abolishing the programme as the simplest route, but warns that eliminating one licensing stage may create an even greater rent at the remaining decision point, and that dismantling entry barriers may also open new opportunities for abuse elsewhere. Using the example of gambling, she shows that many American jurisdictions turned an activity that was previously prohibited — and therefore corrupted the police — into a legal line of business under strong state supervision, sometimes state-owned. The Hungarian casino market is a distorted version of this model: supervision exists, but the deductibility of the concession fee from the gaming tax reduced the state’s share. MIAK therefore proposes for casinos not abolishing the market but separating the fee from the tax and publishing the fee formula. For tobacco shops, it proposes that the remaining licensing decision be made according to scoring published in advance.

📖 Source: Susan Rose-Ackerman: Corruption and Government — Causes, Consequences, and Reform

6.4.3 OECD and European Commission: Health at a Glance: Europe 2024

The joint report of the Organisation for Economic Co-operation and Development (OECD) and the European Commission describes smoking as the leading cause of preventable mortality in the European Union. Hungary is among the worst-placed countries on both main indicators: in 2022 at least a quarter of adults smoked daily, and among 15-year-olds the country is also one of the four member states where more than one in four young people smoked in the previous month. The report also summarises the tools with which member states have reduced youth smoking:

“EU countries have used a mix of policies to reduce smoking rates among adolescents and the rest of the population, including taxes to increase prices, smoking bans in indoor public places, restrictions on youth purchase of tobacco, advertising restrictions, plain packaging of tobacco products, and greater education.”

Reducing the number of points of sale does not appear in the list as a separate tool, but restricting youth purchases does. In 2013 the Hungarian tobacco-shop system narrowed the previous several tens of thousands of points of sale down to a few thousand shops, yet adolescent smoking remained above the EU average. MIAK concludes from this that the health value of retail restriction comes not from the number of shops but from actually preventing sales to minors — which is why it proposes test purchases and linking licence renewal to them.

📖 Source: OECD – European Commission: Health at a Glance: Europe 2024 — State of Health in the EU Cycle

6.5 International comparison

In European tobacco markets restricted retail is not rare, but a private wholesaler with an exclusive right is. In France tobacco shops operate on the basis of a contract with the customs authority, and in Italy the same customs and monopolies agency issues tobacco retail licences and supervises the gambling market. In Austria, applicants with reduced working capacity enjoy priority in the allocation of tobacco-shop licences — that is, the restricted network there comes with an explicit, pre-set public-interest allocation criterion. For the control of wholesale, a cigarette traceability system has operated in every member state since 2019 under the EU Tobacco Products Directive, tracking licensed traders with unique identifiers. This is the operational basis for what Mill’s thesis states at the level of principle: excise control does not require an exclusive right-holder if every shipment of the licensed traders is traceable.

Economy

  • G5 — Competition policy and anti-monopoly
  • G6 — Programme against rent-seeking and regulatory capture
  • G19 — Radical transparency in economic decision-making

Transparency and anti-corruption policy

  • A1 — Public-money dashboard
  • A2 — Public-procurement transparency
  • A4 — Lobby register

Healthcare

  • E4 — Prevention data programme

Proposed new programme point: Public, concession-by-concession statement of concession fees and tax allowances — for the Economy policy area.

6.7 List of sources

Press sources (MIAK press monitor, 17 September 2026 — topic 1):

Supplementary press sources (background):

Knowledge-base references (books):

  • 📖 John Stuart Mill: Principles of Political Economy
  • 📖 Susan Rose-Ackerman: Corruption and Government — Causes, Consequences, and Reform
  • 📖 OECD – European Commission: Health at a Glance: Europe 2024 — State of Health in the EU Cycle

MIAK internal materials:

Supplementary public data sources:

  • NAV (National Tax and Customs Administration) — excise statistics and seizure data
  • European Commission — the EU traceability system for tobacco products (Directive 2014/40/EU)
  • HBSC international school health survey — smoking data for 15-year-olds

Generation metadata