Interesting story about gambling regulation in Bulgaria
We often publish articles regarding the legal situation in some country, in an effort to identify the good and the bad ways to go about gambling regulation. This week we talk about Bulgaria, which is a typical case of how gambling is handled in countries that try to blacklist unlicenced operators. However, what makes this story interesting is that the Bulgarian authorities did the imaginable and – corrected their mistake.
If you’re Bulgarian, you’ll find much more info at https://winbig.bg and here we’ll cover the story for the rest of you who are interested to see how does this pan out.
First wave of regulation
In 1993 gambling was legalized by and large, and regulations were introduced in 1998. This is when the State Commission for Gambling started issuing to gambling operators that were present in Bulgaria. At this point, of course, there were no online casinos because Internet didn’t exist. The laws applied to the newly emerging local businesses, and it all worked fine until online casinos came to the market.
From 2008 to 2012 everything was great, until in 2012 the state decided to regulate online gambling. The strict new law said that gambling operators were required to pay 15% of their turnover (not profit!) as tax. And that’s a really large taxation rate for any company. It was possible to get a licence, which is a nice thing that’s usually absent in similar situations in other countries that blacklist online operators. But very few operators were even interested in the licence.
To try to enforce the new law, the Bulgarian government blacklisted the operators that didn’t have a licence, and the list grew continuously, it is now at over 400 sites. The ban is enforced the usual way, through ISP. Many operators chose to ignore the ban and maybe circumvent it by use of mirrors, and Bulgaria didn’t get much from this ban.
The change of heart
Unlike most countries that stubbornly persist in their ban and turn a blind eye to consequences, Bulgaria decided to amend the law in 2013. Since then, the licence has a one-time fee of €50,000 and the companies are no longer required to pay tax on turnover, but 20% of gross profits. This is acceptable and looks more or less like a regular way to do any business.
Already in 2014, there was €40 million in revenue from this taxation system alone.
We must point out that the only way to regulate gambling is to actually allow licences to be issued to foreign operators. You can’t chase them out as the people will gamble anyway, so the only way to go is to have some sort of a licencing authority that issues licences. That way you can oversee the company and the way it does business in your country, and you can also address other important things such as data protection, player protection, gambling addiction and such. Without the licence, you have no way to even talk to the operator about these issues.
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