EU Censure Forces Bulgarian Online Gambling Rethink

Bulgaria’s plans to license internet gambling this year have been dealt a set back as its gambling bill, which has drawn the ire of online and offline operators alike, has been blasted by a detailed opinion from the European Commission.

The intervention from the European Union's executive body, coupled with a detailed opinion from Malta, urges Bulgaria's government to rethink parts of its draft law and keeps the gambling reforms on hold until 20 July. Online operators eyeing the emerging market yesterday highlighted the proposed blanket ban on gambling adverts and the need for five years experience in Bulgaria as areas which the government should reconsider during the hiatus. Bulgaria's incumbent land-based operators, which reported a revenue decline of almost 25 percent last year, also called for a rethink to a bill that they believe threatens to shrink the industry even further. The Finance Ministry hoped to send the bill, which has already gone through a series of revisions, to parliament in June or July, but said yesterday this was not an option now. The contents of the European Commission's detailed opinion have not been published, but online gambling trade group, the European Gaming and Betting Association (EGBA), said the message to Bulgaria's government was unambiguous. "They need to reflect on this very clear feedback from the Commission," Sigrid Ligné, secretary general of Brussels-based EGBA, said. "Some of the main requirements in the bill are not something that would motivate any operator to take a licence. There are lots of question marks still. We need to see how the government responds to the detailed opinion." Those applying for an internet gambling licence would need to be in business with someone with five years experience in Bulgaria, channel bets and winnings through Bulgarian banks, and locate some of its equipment on Bulgarian soil. "These are all requirements that are very national," Ligné commented, before adding that the European Commission has consistently taken issue with such conditions. Bulgaria's corporation tax rate of 15 percent on turnover, and the ambiguous requirement for online gambling licensees to invest €500,000 (1m Bulgarian lev) in Bulgaria if based outside of the European Economic Area, have also caused concern. "There are some very nasty licensing requirements, so I really would have been surprised if the Commisson had not issued a detailed opinion," a source at one of the online operators paying close attention to Bulgaria said yesterday. He added that all together the requirements constitute "one huge breach of EU law" in his opinion. As they weigh up the EU's opposition, Bulgarian government officials visited London yesterday for talks with the UK Gambling Commission and online trade group the Remote Gambling Association (RGA) about their licensing plans. Clive Hawkswood, RGA's chief executive, said the central message would be that Bulgaria needs viable regulations to make its licensing system work. In particular the RGA, which invited the officials, intended to push for greater clarity on what presence operators need to have in Bulgaria, but said it would leave tax negotiations to one side. "There are not many jurisdictions where the door is wholly closed," Hawkswood said of the chance for operator-friendly amendments. "It's a jurisdiction that could be attractive and could be made to work. There are some black holes in the legislation so you can't be sure. There are certainly a number of companies looking at it." Many of Europe's largest online gambling firms are already advertising and taking bets in Bulgaria, and their presence has contributed to the squeeze on the country's bricks-and-mortar industry, according to local operators. Land-based gambling group BTAMOGI said "unfair competition" from offshore operators was aggravating the effects of the economic crisis and last year's hefty tax hike, which saw some sectors facing a 17 percent tax increase to 67 percent. "That is why the regulation of online gaming is needed for the industry and in general the new draft law on gambling is a positive step towards modernizing the legislation in Bulgaria," Nadia Hristova, member of BTAMOGI's management board, said. But Hristova warned: "There are some provisions in the new draft law, which will mean the Bulgarian gaming business faces a further crisis and will prevent a smooth transition to the new regulation." The prohibition on all gambling adverts, except publicising factual details and results of the games offered, was one such problem area, and constitutes a form of "legal censorship", according to Hristova. BTAMOGI's members, which were forced to lay off an estimated 30 percent of their workforce last year, also face having their current licences effectively terminated in 10 months, she added.

Source: 22 Jun, 2011 / GamblingCompliance / Daniel Macadam