The Complicated Case of the Bulgarian Gambling Scene

Bulgarian gambling is a murky area, one that is laced with continuously changing gambling laws and taxation rates, IP blocks and blacklists and government corruption.

With the country’s new Gambling Act amendments, which will bring the country closer to international practices, promising lower tax rates and an end to the blacklists, will Bulgaria’s gambling arena become clearer?

Since gambling was only legalized in Bulgaria in 1993, the country is stumbling like an infant in the brave new regulated gambling world. Prior to its legalization, gambling was pushed underground and turned into a thriving, popular black market.

However, things have not been smooth sailing since the legalization. Casinos and gambling halls have sprung up around the country, but with the advent of online casinos, Bulgaria’s gambling scene turned into a maze of high taxes and website blacklists.

Bulgaria’s New Gambling Age

After the changes in Bulgarian gambling laws in 1993, which allowed for gambling to be regulated in the country, a number of casinos and gambling halls popped up all over the Balkan country.

However, with the legalization of gambling, Bulgaria’s casino and gambling operators were now under the thumb of a new authority.

While casinos and gambling give more to the country in taxes than banks and insurance companies combined, and has been partially responsible for the country’s boom, its casino industry has been shaped by conflicts and a lack of law enforcement action.

Bulgaria’s gambling industry has been said to be dominated by political corruption, bringing with it widespread tax evasion and money laundering. Reports of gambling related government corruption have decreased over the recent years, however.

In Bulgaria’s gambling new age, several large, Vegas-style casinos were built around the country, mostly concentrated in the capital Sofia or attached to expensive hotels in the Black Sea resorts.

Hotel-based casinos mostly cater to Turkish and Israeli tourists who come to Bulgaria with the specific intent to gamble, but small gambling halls and rooms have gained popularity with the locals.

Unfortunately, severe gambling taxation rates have caused 33% of the country’s smaller casino halls to close down in the period spanning 2008-2013.

Things haven’t been easy in the rise of the online gaming world either, especially with the new licensing laws and a harsh 15% income tax, which has put a huge strain on Bulgaria’s online gambling scene.

As a result, at present there are only two-licensed online operators in Bulgaria: the country’s first private sportsbook, Eurofootball, and the government owned Sports Totalisator.

Harsh Gambling Tax Laws

Bulgaria gambling facts:

• Gambling was officially declared legal in 1993, allowing for casinos, lottery and bingo
• The Bulgarian lottery is regulated by the government and is known as the Bulgarian State Lottery
• Bulgaria’s largest and first private sportsbook Eurofootball was set up in 1990
• Sports Totalisator is Bulgaria’s government-run sportsbook combined with the National Lottery

The State Commission on Gambling in Bulgaria legalized online gambling in early 2013, and set the tax rate for online and traditional bookmakers and casino at 15%.

It seems that the new taxation system, coupled with the recent smoking ban in public places, has affected the traditional casinos in Bulgaria, but even if online gambling is licensed, the imposed black list has put a cap on online gambling sites in Bulgaria.

While the large-scale casinos continue to pull in revenue from tourists, small-scale gambling halls have closed all over the country.

The tax increase has also been a stump for online gambling as well.

“High taxes on gambling help the black market and when people want to get into the blocked site, they will find a way,” said Joerg Hofmann, Vice President of Gaming Law Committee of the American Bar Association.

Sports betting has also suffered from the 2013 tax laws, since many bookmakers found they end up operating at a loss, meaning only the biggest companies can gain from the legalization, like Sports Totalisator and Eurofootball.

The Big IP Blacklist

While the high taxation of online casinos and gambling sites operating within Bulgaria have put off many from entering the world of mobile betting and online gaming, the government went one step forward to issue an IP blacklist of foreign sites.

Bulgarian government legislation placed told internet service providers to block access to unregulated gambling sites and drew up a “black list”.

After the new law was put in place, over 170 sites were blocked, including big names like William Hill, Bet365, Betfair, Betfred, Ladbrokes, among others. The high costs and strict regulations have made many companies consider whether it’s even worth entering the Bulgarian market.

Bulgaria’s Gambling Commission commented that the move was there to protect clients, after some websites cheated their customers.

The chairperson of the Gambling Commission, Ivan Enicherov, said that the commission could not tell “whether they all have the option to cheat Bulgarian consumers, given that we cannot carry out partner checks.”

However, the law has changed once again, scrapping the blacklist by changing the way the country taxes members in the gambling industry, both home and abroad.

Bets on Bulgaria’s Future

Changes are afoot in Bulgaria’s gambling scene, as the government passed the Gambling Act amendments at the end of 2013.

The bill will change how gambling is taxed, by scrapping the 15% tax on revenues and replacing it with a licensing fee of around $70,000 and a further tax of 20% on certain incomings.

The new law will make it more attractive for European online operators to return to the country, where they can apply for Bulgarian gambling licenses to pay taxes for their operation there.

The ease in the country’s tax law will hopefully not only attract foreign bookmakers and online casinos to Bulgarian web space, but might also encourage more online sites to be based from home.

At the moment, there is not much of a market for online gambling in Bulgaria, however now the laws have been changed, the conditions are more realistic for Bulgarian-based sites to be set up.

Bulgaria’s gambling landscape is constantly shifting, but once the country’s teething problems are solved, the complexities plaguing Bulgaria’s gambling culture will hopefully be untangled.

The question is whether the law will stay the same for a while to allow Bulgaria’s gambling arena to really find its feet.