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Bulgaria: Taxation of online betting in Bulgaria

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Donka Pechilkova

From this year, the final tax rate on online bets, which the State Commission on Gambling in Bulgaria legalised in late 2012, is 15%. Originally the cabinet proposed a much lower rate, 7%, for the online gambling operators with the assumption to attract major international bookmakers to the Bulgarian market, but finally adopted the same 15% tax rate for both traditional and online gambling which will come into effect in 2013. The licensing of the organisers of gambling is now mandatory, and those who do not have the license will be black-listed, the Bulgarian players will not be allowed access to their sites, as the access will be governed by the internet service providers (ISP). This amendment expected to legalise the activity of the online gambling games organisers. Thus, this environment will contribute to the development of long term activities in the Bulgarian market on behalf of the operators, and on the other hand the consumers will have the guarantee that the sites in which they deposit their money will not speculate with them, will not prove to be phantom sites as their activity will have the regulative law frame.

According to the new law for the gambling, part of the preconditions for license acquiring for organising online gambling games will be: Investments not less than BGN600,000 ($400,000) and funds for the organisation of the game itself not less than BGN1 million, the location of the central computer system to be on the territory of the country or the territory of another EU or EEA state member.

How will this affect the casino sector? The legalisation of the online casinos would affect the situation with the traditional casinos that face more expenses – for the venue, staff and the equipment. They pay quarterly a tax fee at the amount of approx €250 ($320) on every gambling machine and, again on a quarterly basis, a tax fee of approx €11,000 for every gambling table with roulette installed in a casino. Another fact besides the cozy homey atmosphere that the online casino gives, another law in Bulgaria, voted this year, gives advantage to gambling online; the prohibiting of smoking in public places. This obviously leads to a shrinking of the business of the traditional casinos and many users would prefer the online option since this is officially regulated by the state.

The situation with the online sports betting is different as they are in the most unfavourable position. Not only do they have to give up part of their gains, but in practice they might even have to operate at loss, and this arises from the fact that here everything is based on mathematical calculations and according to the coefficients the bookmakers pay off the gains to the winning bets. Despite the unfavorable situation the sports betting section is only one of the online products that the big operators in the gambling business include in their portfolio. So in this way the biggest bookmaker companies will most probably prefer to gain advantage from the possibilities that the legalisation of the Bulgarian market offers them, such as attracting more users via sports betting will prove to be a successful marketing tool to attract them to other products.

It is probably a bit early to formulate conclusions about if the legalisation of the organisers of online gambling will lead to more revenues in the state treasury or this tax will discourage many of those operating on the Bulgarian market. But for sure the representatives of the largest networks will benefit from the opportunities that the amendments to the law for gambling offer them.

Donka Pechilkova (donka.pechilkova@eurofast.eu)

Eurofast Global, Sofia Office, Bulgaria

Tel: +359 2 988 69 78

Website: www.eurofast.eu

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