BRIEF REVIEW OF THE GAMING INDUSTRY IN BULGARIA IN 2013

In 2013 Bulgarian gaming market witnessed another dynamic and full of expectations period. New Gambling Act introduced
in 2012 laid the foundations for new opportunities for the industry by legalizing gaming and betting through online, mobile and
other platforms. Regulatory system has evolved and in the last few months it was finally completed with all technical requirements to the organizers, manufacturers and consumers. Although the actual implementation of the new regulatory framework happened more than a year after the legal act entered into force, new processes make progress. Even slowly, there is a trend to adjust and harmonize interests of the participants, with the efforts of business and the state and thanks to the active dialogue between them.

ADJUSTING BUSINESS TO NEW REQUIREMENTS

The year started very dynamically. In early March samples of declarations and application forms required for licensing proceedings before the State Commission on Gambling (SCG) were approved. Their absence hindered most of the organizers of gambling activities and activities under the Gambling Act to adjust their operations in accordance with new regulations and prevented issuance of new licenses. At the end of 2012 BTAMOGI filed a letter to the SCG, that expressed the concerns of the industry. It pointed out that 15-month period to adjust their business operations started with the entry into force of this Act on July 01, 2012, when the process of adoption of by-laws for its implementation was not complete yet. The Association has repeatedly stated that the term should not be aligned with the entry into force of this Act, but of by-laws for its implementation. Unfortunately, the proposal has not been included in the regulatory system and at the time there is no information how many organizers have brought their activities in compliance with the new requirements and how many of them will be forced to stop their business activities because of non-compliance therewith.

ONLINE ORGANIZERS – LEGALLY ILLEGAL

 The adopted legislation regulating online gambling obligates the State Commission on Gambling to publish a list of gambling websites organized by individuals without a license. This list became a reality in June 2013 while the basic by-law governing the requirements for issuance of a license, was not yet in force. For more than a year there was a gap in the legal regulations. While the law provided options for legally pursuing those activities, there were no mechanisms by which to do this. Thus, the possibility of obtaining a license by organizers of remote games was limited until the common technical and functional requirements for game software and communications equipment entered into force in July. At the same time, the suspension of access to gambling websites and poor publicity of the measure raised questions whether the rights of users of these services were actually protected because there was a possibility their resources to be blocked due to lack of access. Balance at the moment is that more than a year after the adoption of the Act only one license for organizing of distance gambling games is issued. The fact is that at the time the legal framework is already in place and the list of gambling websites organized by individuals without a license, includes more than 130 betting online portals. Whether the lack of secondary legislation a year after the introduction of the law is the only reason for this or it is also due to the introduced requirement for 1 million Levs investments, time will show.

STEPS FORWARD IN THE DIALOGUE BETWEEN INDUSTRY AND REGULATORS

Promulgation of the basic by-laws governing technical requirements for gaming equipment, game software and communications equipment for remote gambling in July was preceded by a discussion of stakeholders. Structural changes within the regulator seem to have slowed this process, which could have started as early as 2012. Given the nature of regulated subjects and the fact that these regulations are crucial for a productive sector of the economy, the industry proposed a more broad public debate to discuss them. This debate was held in the form of a round table, where the positions of the industry representatives were examined and discussed together with all the suggestions and objections to the projects. Another gap in the legislation was overcomed in the middle of August, when the ordinance was promulgated, governing the method and the manner to include laboratories that can conduct testing of gaming equipment and gaming software of communication equipment for remote gambling games, as well as the requirements to be met by each laboratory. That same month, the State Commission on Gambling decided to adopt a list of laboratories in Bulgaria and in other EU Member States, as well as in other countries parties to the Agreement on the European Economic Area, or Switzerland, which can carry out tests of gaming equipment and gaming software of communication equipment. In September a project for additions in the ordinance on documents necessary for issue of licenses under the Gambling Act was announced providing the possibility of applying for a license electronically. This innovation is a long-awaited step toward improvement of the regulatory framework. It removes the need for physical lodgment of documents in the records of the Commission, which created a lot of difficulties, especially for companies based not in Sofia. Legislative processes out of context of the specific regulations on gambling have also an important impact on industry. Immediately after the introduction of total smoking ban in enclosed public places in June 2012 began a parliamentary and public debate on the topic. This ban had a significant negative effect on the performance in the gaming sector and only a few months after its entry into force the branch reported 30% drop in revenue. Outflow of visitors led to closure of various sites including casinos and gambling halls, reduction of number of employees and a drop in the tax revenues from the entertainment sector. Public outrage provoked authorities to prepare several bills for liberalization of total smoking ban in certain entertainment facilities. In May, a bill was submitted to the National Assembly calling for repeal of smoking ban in indoor public places. Among the motives of its authors is the fact that the current ban leads to a drop in budget revenues not less than 300 million Levs. It proposes smoking to be allowed in exceptional cases and under certain conditions in eating places, restaurants, and entertainment facilities - clubs, restaurants, pubs, cafes, bistros and bars. Since the listed sites does not include places where gambling activities are organized, the gaming industry issued an stand on the bill proposing these sites to be included in the exceptions list. These sites represent a significant sector of the entertainment industry and access of minors in them is strictly prohibited. It lacks both legal and social arguments the regime for them to be more restrictive than that of cafes, restaurants, bars and discos. This gives reason to believe that the omission was unintentional and will be removed by consideration of the bill. Discussions between industry and state representatives in the past year and resulting plans for changes in regulatory mechanisms show that the regulator is ready to precise texts and to fill gaps in the legislation governing the business operations. Such a dialogical structure is favorable for attracting foreign investments in the sector, as well as for stimulating activities of all companies which own licenses. It shows an improvement in the state policy regarding the economic development of the gaming industry.

Author: Rossi McKee - Editor in Chief