The gambling sector in Bulgaria is experiencing rapid growth, as detailed in the Association of Gaming Industry in Bulgaria (AGIB) financial report for the first nine months of 2024. However, despite this expansion, the industry’s tax contributions have declined due to legislative changes made by the Bulgarian Parliament in late 2023. These changes, while fostering growth in certain areas, have resulted in a nuanced financial landscape for the sector.
Booming Betting Industry Fueled by Regulatory Adjustments
The AGIB report highlights that both retail and online betting continue to thrive. The number of betting kiosks has steadily increased, while the online gambling sector has flourished, with 24 companies now holding online gambling licenses. The amendments to Bulgaria’s gambling laws at the end of 2023 played a pivotal role in this growth.
Under the new regulations, taxation for the lottery and sports betting sectors was significantly reduced. Previously taxed at 15% of their betting handle, these sectors now face a flat BGN 300,000 ($162,019) one-time fee, alongside a 20% tax on net revenues (the difference between the betting handle and winnings paid out). This shift has greatly benefitted local sportsbooks and betting kiosks, enabling them to flourish under a lighter tax burden.
Decline in Tax Contributions Despite Growth
Despite the robust expansion, tax revenues from the lottery and sports betting sectors decreased by 11% year-on-year. In the first nine months of 2024, these sectors contributed BGN 37 million ($20 million) in taxes, compared to the same period in 2023. Meanwhile, the iGaming sector saw its licensing fee quadrupled from BGN 100,000 ($54,006) to BGN 400,000 ($216,025). Despite this increase, total contributions from the iGaming sector also dropped by 6.6% during the year-to-date period.
One of the key drivers behind the tax revenue decline is the structural shift in taxation policies. By focusing on lower upfront taxes for some sectors, the government aimed to stimulate growth and attract more operators. However, this strategy has yet to deliver significant increases in overall tax revenue for these specific sectors.
Retail Casino Sector Adjusts to Higher Taxes and New Regulations
Retail casinos and gaming halls have faced a contrasting situation. A substantial 60% tax increase was introduced for this sector, leading to a 41% rise in taxes paid year-on-year. This tax hike has put additional financial pressure on casinos, coinciding with stricter regulations. New rules now prohibit gambling halls from operating near schools or in underpopulated areas, resulting in a slight reduction in the total number of gambling halls to 1,098 as of September 30, 2024.
Moreover, the number of gambling machines in the country declined by 1,200 units, reflecting the combined impact of higher taxes and regulatory restrictions. However, the number of casinos in Bulgaria has remained stable at 20, indicating resilience in this segment despite the challenges.
Increased Contributions Despite Sectoral Declines
Despite the declines in lottery, sports betting, and iGaming taxes, the overall contributions from the gambling industry to Bulgaria’s national budget have seen a significant rise. For the first nine months of 2024, the industry’s total contributions exceeded the entirety of its 2023 contributions. Approximately BGN 80 million ($43.2 million) of the total BGN 380 million ($205.2 million) came from one-time fees, a substantial boost to the overall revenue.
Looking ahead, the AGIB predicts total gaming contributions will reach BGN 480 million ($259.2 million) by the end of 2024. This projection highlights the growing financial significance of the gambling sector, despite fluctuations in individual tax categories.
Regulatory Framework
The Bulgarian Gambling Act (GA) of 2012 serves as the cornerstone of the country’s gambling regulations, encompassing both land-based and online gambling activities. The National Revenue Agency (NRA) oversees the licensing and regulation of gambling operators, ensuring compliance with standards of fairness, integrity, and social responsibility. In 2023, the NRA established an anti-money laundering (AML) unit to enhance oversight and align with international standards.
Taxation and Licensing
Bulgaria offers a competitive tax regime for gambling operators. Land-based casinos are taxed based on a percentage of turnover or gross gaming revenue, while online operators face a flat tax on revenue. This structure has attracted numerous international operators, contributing to the industry’s expansion. The licensing process is stringent, requiring operators to demonstrate financial stability and transparency.
Market Growth and Statistics
The Bulgarian gambling market has seen remarkable growth, with tax revenues increasing by over 50% between 2020 and 2022. In 2021, the industry contributed approximately BGN 241 million ($128.6 million) in tax revenue, a 25% rise from the previous year. The first nine months of 2022 alone saw contributions of BGN 233 million ($128 million), indicating a continued upward trend.
The online gambling sector has been a significant driver of this growth. The number of licensed online gambling operators increased from six in 2020 to 18 by September 2022. Revenue in Bulgaria’s online gambling market is projected to reach $147.30 million in 2024, with an expected annual growth rate of 4.80%, leading to a market volume of $186.20 million by 2029.
Several major operators have established a strong presence in Bulgaria’s gambling market. Entain plc holds a significant market share, with a reported revenue of €675 million in 2024. Flutter Entertainment plc and Bet365 Group Ltd are also prominent players, with revenues of €841 million and €10 million, respectively, in the same year.
Advertising Restrictions
In May 2024, Bulgaria implemented stringent restrictions on gambling advertising, particularly affecting online media. These measures have impacted operator revenues and are prompting some to reconsider their presence in the market.
Gambling Regulations in Neighboring Countries
Bulgaria’s neighboring countries exhibit diverse approaches to gambling regulation. In North Macedonia, gambling is legal both online and offline, with the minimum gambling age set at 18. However, in February 2024, the government passed a law mandating that gambling establishments be located at least 500 meters from primary and secondary schools, aiming to protect minors. This legislation has faced criticism from the industry, citing potential job losses.
In Turkey, gambling is heavily restricted. While certain forms of betting, such as state-controlled sports betting and lotteries, are permitted, most other gambling activities are illegal. The government maintains strict control over the industry, with severe penalties for unauthorized gambling operations.
Greece has a well-regulated gambling market, encompassing both land-based and online gambling. Recent legislative amendments have introduced new restrictions and innovations, particularly in online gaming. The country has implemented a cohesive legal regime to oversee gambling activities, ensuring consumer protection and market integrity.
Romania has developed a comprehensive regulatory framework for gambling, legalizing both land-based and online operations. The National Gambling Office oversees licensing and regulation, with a focus on responsible gambling and consumer protection. The market has attracted numerous international operators, contributing to its growth.
Serbia permits various forms of gambling, including casinos, sports betting, and lotteries. The Games of Chance Administration regulates the industry, ensuring compliance with national laws. The country has seen growth in both land-based and online gambling sectors, with efforts to align regulations with European standards.
