Gambling reform bill passes first reading in Bulgarian parliament

Members of the Bulgarian parliament passed the first reading of the country’s extensive gambling and taxation reform bill Wednesday, with 110 votes in favour, 79 against and 2 abstentions.

Local experts said that the bill will effectively reduce the gambling tax payable by three times, encouraging more participation in the industry by foreign land and online operators.

The proposal was introduced by MPs of the Bulgarian Socialist Party (BSP) and the Movement for Rights and Freedoms (DPS) headed by the chair of the parliamentary budget committee Yordan Tsonev, the Focus news agency reports.

It followed a postponement of the vote last week , arguing that the draft law had not been discussed in the parliamentary group.

It was anticipated that the postponement would push the debate on the bill into 2014, but during a Tuesday meeting with the parliamentary group Coalition for Bulgaria, Tzonev persuaded his colleagues that despite the amendment should be supported.

The amendments provide that starting next year a corporate tax will be levied on bookmakers, lottery and lotto games organisers, and poker and online casinos.

For the issuing and the maintaining of a license for gambling activities, they will pay a two-component fee, Focus reports.

The first component will be a single fee amounting to BGN 100,000 (about GBP 42,000). The second component will be paid on a monthly basis and will comprise 20 percent of the difference between the wagers placed and winnings paid. Currently this type of gambling activity is subject to a 15 percent tax on turnover.

According to Menda Stoyanova of the opposition party GERB, the legal amendments will reduce tax revenues on gambling activities three times, whilst Bulgarian Socialist Party spokesmen claimed that the reduction in tax revenues would be double for the Bulgarian Sports Totalizator and almost triple for online gambling.

Tzonev warned that he expects BGN 22 million (GBP 9.35 million) less in budget revenues from gambling for next year, if the status quo is allowed to continue and there remains a single licensed operator of online games.

However, the government hopes that there will be more registered operators, although revenue will likely remain the same, because online operators are given 6 months to get a license.

About BGN 50 million (GBP 2.12 million) more in tax revenues are expected in 2015, and BGN 100 million (GBP 4.25 million) in 2016. Tzonev bases the forecast on current illegal online gambling data, which is estimated at BGN 1 billion.

Initially, the new tax will benefit operators offering sports events betting, such as Eurofootball, Eurobet, the National Sports Totalizator and Eurofootball – Malta.

The previous ruling political administration adopted a law that was supposed to encourage online expansion, but the heavy taxation acted as a deterrent, and there is at present only one licensed company, with a few others in process. The Bulgarian State Gambling Commission has already launched a black list that now includes over a hundred illegal betting sites .

Whilst the political manoeuvering is on-going, Internet gambling is growing, and the estimated annual turnover in Bulgaria is between BGN 500 million (GBP 21.25 million) and BGN 700 million (GBP 29.75 million).

Foreign bookmakers have been indicating for quite some time that the 15 percent tax rate on sports betting and events turnover is too high, and encourages illegal activity by offshore operators who pay no tax to Bulgaria.

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