4H Materials

Bulgaria's Gambling Landscape: 2024 Taxation and Regulatory Overhaul

In order to finalize state budget for 2024, Bulgarian Committee on Budget and Finance adopted new changes in second hearings to its current draft law on budget for 2024 in part of gambling taxation system. It was made by reducing the tax burden as it’s calculated on a much smaller base now, but also increasing the tax percent. There was also a raise in the one-time license issuance fee and new penalties for unlicensed gambling.

Previously, there was a gambling tax at rate of 15% on total bets, which affected not only land-based betting, but also lotteries. Now, it is proposed and confirmed a new 20% tax on GGR (the difference between the value of bets received and winnings paid out), which seems more convenient and correct in the Bulgarian legislative scope. Local insiders noted that this would actually result in an increase in operators' activity offline and so far, the changes are viewed positively by the industry.

There were also new license fees calculations, much higher than previous ones, including new pricing for land-based and online verticals as follows:

· Online betting licenses now cost 400,000 BGN (approx. 224,000 USD, whereas previously there was about 56,000 USD).

· Land-based lotteries and betting licenses cost 300,000 BGN (approx. 168,000 USD, and previously there were no fixed fee, only the variable part).

· Land-based casino licenses cost 300,000 BGN for a 5 year term and 600,000 BGN for a 10 year term (approx. 168,000 USD and 336,000 USD accordingly, whereas previously – about 56,000 USD and 112,000 USD accordingly).

· Slot machines licenses cost 75,000 BGN (approx. 42,000 USD) for 5 year term or 150,000 BGN (approx. 84,000 USD) for 10 year term in settlements with up to 500,000 inhabitants, and 150,000 BGN (approx. 84,000 USD) for 5 year or 300,000 BGN (approx. 168,000 USD) for 10 year in settlements with more than 500,000 inhabitants (previously – about 14,000 USD or 28,000 USD for 5 year term with regards to amount of inhabitants accordingly, but only one fee of 56,000 USD for 10 year term without regards to the amount of inhabitants).

In addition, new penalties were introduced almost as a last-minute amendment, ranging from BGN 5,000 (approx. USD 2,800) to BGN 15,000 (approx. USD 8,400). Namely, these penalties concern only those operators, who fails to provide the Bulgarian National Revenue Agency with information on the amount of paid cash and tangible profits to local individuals.

Ivan Kurochkin, Partner and Head of Eastern Europe Desk, comments on the situation:

“New changes to the gambling taxation in Bulgaria are overall a beneficial sign for a future expansion of regulation and unification of the gambling market, since online gambling was already taxed at 20% GGR. These changes were announced by the regulator as a hope for improving the situation with the offshore market in Bulgaria. Though, taxes’ regulation is a questionably working tool for combating offshore operations, especially when united with much higher license fees and new sanctions. It is essential for regulators not only enforce the penalties or make industry stricter, but also ensure to use passive methods of offshore gambling combating – the most vital method of them is moderate ease for the operator to legally enter the market. Low fees, clear regulation, public activity of the regulator, etc.; if the operator will have more benefit for legal operations, than for offshore, it will lower the illegal market significantly. By reducing the tax burden for operators, but increasing the cost for entire market entering, Bulgarian regulator somehow maintains a compromise between rigor and permission, while at the same time not changing anything at all in the current white and grey Bulgarian gambling industry.

However, the industry expects a lot from 2024 in terms of new changes in the regulation of gambling in Bulgaria. New taxes, license fees and sanctions for unlicensed gambling have already entered into force from January 1 of 2024, and relevant amendments can be found in the Gambling Law itself on the government's website”.