Gaming in Bulgaria: overview

Legislative framework of gambling regulation

Legislative framework of gambling regulation

◊ Status: Law stated as at 01-Oct-2016 | Jurisdiction: Bulgaria

Contents

♦ Legislative framework of gambling regulation
   ◊ Overview
   ◊ Definitions of gambling
   ◊ Regulatory authorities
   ◊ Gambling products
♦ Land-based gambling
   ◊ Regulation/licensing
♦ Online gambling
   ◊ Regulation/licensing
   ◊ B2B and B2C
   ◊ Technical measures
♦ Mobile gambling and interactive gambling
♦ Social gaming
♦ Gambling debts
♦ Tax
♦ Advertising
♦ Developments and reform
   ◊ Legal development
   ◊ Reform
♦ The regulatory authorities
   ◊ State Commission on Gambling
♦ Online resources
   ◊ State Commission on Gambling

Overview

images 1. What legislation applies to gambling?
Regulatory framework

A new Gambling Act was adopted in March 2012 and entered into force on 30 June 2012. It replaced the previous Gambling Act 1999. The new Gambling Act preserved the basic principles of the regulatory regime of gambling activities which have been applied in Bulgaria since 1993, that is, the regulation of an exhaustive list of permitted gambling games, which can be organised by state-owned or private entities under a licence (without restrictions on the number of licences in total or to a single operator or other type of monopolisation).

The adoption of the new Gambling Act was a long process (first drafts were published by the government in 2010) and involved a number of revised proposals. Some original proposals involved excessively restrictive rules, particularly in respect of online operators, such as maintaining local physical offices, having five-year local experience as a licensed land based operator, local location of all equipment used for the games, maintaining a bank account with a local bank, and so on. The draft law was submitted to the European Commission in March 2012 and the Commission issued a detailed opinion criticising the proposals and extending the standstill period for the new legislation. The Bulgarian Government responded with significant changes to the draft law removing or modifying most of the problematic provisions and the current wording of the law is generally accepted as compliant with EU law.

Regulatory authority

The regulatory authority, which issues licences and supervises the activity of operators, remains the same, that is, the State Commission on Gambling, which is an administrative body which reports to the Ministry of Finance (see Question 3).

Regulation of online gambling

The new Gambling Act introduced for the first time the express regulation of online gambling activities. Under the Gambling Act of 1999 online gambling activities were not regulated and therefore were considered prohibited.

The basic principles of the regulatory regime for land-based and online gambling activities under the Gambling Act are identical. Certain additional specific rules, however, apply to online gambling as well as to the different categories of permitted games (see Question 7).

Definitions of gambling

images 2. What is the legal definition of gambling in your jurisdiction and what falls within this definition?
General definition

Under the Gambling Act gambling is defined as “every game of chance involving a bet, whereupon winning can be obtained or the bet can be lost” (Article 2, Gambling Act).

The Gambling Act expressly exempts from the definition of gambling (Article 11, Gambling Act) games that are both:

  • Games of sports or of an entertaining nature, which require the participants to demonstrate “deftness, knowledge and skills, and which are not predominantly based on chance”.
  • Where they require participants to pay a fee to form an award fund, allocate that fund fully and exclusively among the participants.

However, this exemption does not apply to “remotely organised games” (including online games) (see Question 12). The meaning of this legal provision is not clear and it will have to be further clarified by the State Commission on Gambling and court practice. One possibility is that it is interpreted as meaning that in the online environment any game is to be considered gambling where the participants both:

  • Pay any fee for participation (even if not a bet on a particular game).
  • May receive a prize (even in the form of an award in a tournament).

This would have overarching consequences. So far there has been no official guidance or any attempts by the Commission to apply and enforce this rule for online games.

Online gambling

The Gambling Act does not define “online gambling” as a separate category of gambling but rather as a specific way of offering the categories of gambling games allowed by the Gambling Act (see Question 4).

The Gambling Act provides that any gambling games allowed by the Gambling Act may be organised “online” via the internet or other electronic means of communication (mobile phones, radio, TV, satellites, and so on), except for:

  • Raffles.
  • Instant lottery.

The Gambling Act refers to such gambling games as “online betting”. This is defined as a way of organising a gambling game, in which players bet directly via the internet or via another electronic means of communication, and the communication between the player and the organiser of the game is conducted directly electronically.

Land-based gambling

There is no separate definition of land-based gambling. The general definition of gambling applies (see above, General definition).

Regulatory authorities

images 3. What are the regulatory or governmental bodies that are responsible for supervising gambling?

The State Commission on Gambling (Commission) is the main supervisory and regulatory body in the gambling industry. The Commission is an administrative body under the Minister of Finance. It consists of a chairperson and four members who are appointed by the Minister of Finance.

The Commission supervises the activities of the organisers of gaming and producers, importers, distributors and maintenance companies of gambling equipment. It is responsible for compliance and enforcement of the gaming laws.

The Commission is empowered to:

  • Issue licences to operators of gambling games and approve any changes to those licences.
  • Issue licences for production, import, distribution or maintenance of physical gambling equipment and approves any changes to those licences.
  • Issue mandatory general rules and requirements for the organising of gambling and the different categories of games, covering such areas as:
    • premises where gambling operations are held;
    • accounting systems and staff of the operators;
    • technical requirements and specifications of gaming equipment and software.
  • Approve the rules of the games applied by each licensed operator as well as the rules and systems for formation and distribution of the winnings.
  • Approve (after testing and certification by laboratories authorised by the Commission for that purpose) the software of online operators, including any changes.
  • Approve the physical gambling equipment that may be produced or imported and distributed in Bulgaria (after prior testing and certification by laboratories authorised by the Commission for that purpose).
  • Perform general supervision and control over gambling activities and equipment in the territory of Bulgaria.
  • Impose sanctions and other measures in case of established violations.

See box, The regulatory authorities.

Gambling products

images 4. What gambling products have been specifically identified by legislation, and what different requirements have been established for each?

The Gambling Act 2012 provides an exhaustive list of permitted licensed gambling games, covering all main products available internationally. While there are some specific requirements depending on the different categories of games organised, the licensing requirements for all games remain the same.

Poker

Poker is not defined as a separate category of gambling. “Casino games” are defined as a separate category and card games (including poker) are considered part of that category.

Betting

Other than sports betting, there are two categories of betting:

  • Betting on random events (other than sports betting (see below, Sports betting)).
  • Betting related to the knowledge of facts (where the winnings depend on the right answers on questions related to existing facts).
Sports betting

Sports betting (including betting on horse and dog races) is defined as a separate category of gambling.

Casino games

Casino games are defined as a separate category of gambling which includes table games (roulette, cared games, including poker, dice games) and slot machine games.

Slot and other machine gaming

Slot machine games are defined as a separate category for which a separate licence can be obtained.

Terminal-based gaming

Terminal-based gaming is not regulated by the Gambling Act as a separate type or category of gambling game from the game which it provides, such as terminals that offer sports betting (see above, Sports betting). For slot machines, see above, Slot and other machine gaming.

Bingo

Bingo and keno are defined in the Gambling Act as a subcategory of the numerical lottery games, in which a:

  • Bet is made on one or more combinations of numbers.
  • Definite number of numbers forming the winning combinations are drawn.

In the case of bingo, bets must be made with tickets, on which combinations of numbers are printed in advance.

Lottery

Lottery games, are defined as a general category, and include the following sub-categories of games:

  • Traditional lottery.
  • Raffles.
  • Numerical lottery games, with the following specific sub-categories and their variations:
    • pools and lotto;
    • bingo and keno.
  • Instant lotteries.

Land-based gambling

Regulation/licensing

images 5. What is the licensing regime (if any) for land-based gambling?
Available licences

Gambling operations can organised only after the issue of a licence by the State Commission on Gambling (Commission). The licence is game-specific and it indicates expressly the terms and conditions under which the specified categories of games must be organised/performed. A separate licence is needed for each casino or a gaming hall.

A licence is also required for the manufacturing, import or distribution and/or maintenance of gambling equipment. All gambling equipment must also be approved by the Commission (see below, Application procedure: Gambling equipment authorisation).

A licence includes the following details:

  • The legal name and other corporate details of the organiser as well as the names of its statutory representatives.
  • For lottery games and the various types of betting, the addresses of the central office of the organiser and the offices for acceptance of bets and payment of winnings.
  • The name, type, manufacturing number and number of allowed participants and jackpot system(s) of the land based or online gambling equipment.

Any change to these details requires an amendment to the licence.

The licence cannot be transferred. Special rules apply in case of corporate reorganisation of the licensee’s legal entity. Generally a transfer to a new company in case of a spin-off or a merger is allowed only if the recipient entity is already a licensed gambling operator (even if for another type of gambling).

Eligibility

Eligible entities. Applications for gambling licences can be made by:

  • Bulgarian companies or companies registered in another member state of the European Economic Area (EEA).
  • The Bulgarian state.
  • Bulgarian sole traders (individuals who are registered as merchants with the Commercial Registry), who may only apply for gaming hall licences.
  • Non-profit organisations registered in Bulgaria or an EEA member country (only for instant lotteries and raffle).

Foreign persons (that is, persons other than companies or individuals registered in or citizens of an EEA member country or the Swiss Confederation) can only obtain a licence or have an interest in a locally licensed company if they either (Gambling Act):

  • Invest at least BGN10 million (about EUR5.1 million) in other Bulgarian activities and create more than 500 jobs.
  • Operate a casino out of a hotel owned by them and ranked four stars or above.

Matters the applicant must prove to be eligible. An applicant must prove:

  • That it or any of its shareholders with qualified participation or a member of its managing or supervisory body have not been:
    • convicted of a crime of general nature (unless legally rehabilitated);
    • declared insolvent where an unsatisfied creditor remains and less than three years have elapsed since the date of declaration of bankruptcy;
    • convicted of crimes against the financial, tax or social security systems or found to have overdue public liabilities exceeding BGN5,000, for which a proper guarantee has not been provided;
    • sanctioned by cancellation of a gambling licence in Bulgaria or another EU member state, member of the EEA or the Swiss Confederation or sanctioned for unlicensed gambling activities.
  • That it has funds available for the performance of activities:
    • BGN1 million for land-based sports betting, betting on other events, traditional lottery, pools and lotto, and for any type of online betting;
    • BGN600,000 for land-based casino games;
    • BGN200,000 for raffles, instant lotteries, bingo and keno games, and gaming machines.
  • The origin of the funds for the licensed activity.
  • That none of its shareholders or a person related to a shareholder is an “unincorporated company” or a company registered in an “offshore zone”.

This last provision is contentious in two respects:

  • It does not refer to a qualified participation, that is, any interest (however insignificant) in the shareholding of the applicant by the above-mentioned entities which would prevent the issue of a licence.
  • The Gambling Act 2012 does not provide a definition for either “offshore zone” or “unincorporated company”. The latter term is defined elsewhere in Bulgarian law but it is not clear how it will be applied to foreign jurisdictions.

In respect of “offshore zones” the prohibitions under the Gambling Act 2012 overlap with the restrictions provided by the 2014 Act on Economic and Financial Relations with Companies Registered in Preferential Tax Treatment Jurisdictions, the Persons Controlled by such Companies and Their Beneficial Owners (Offshore Companies Act). This intends to restrict or at least provide transparency in the participation of offshore companies in local businesses. An entity controlled by a company from an offshore zone is restricted from obtaining a gambling licence. The Minister of Finance publishes a list of offshore zones which currently include popular gambling hubs including the Isle of Man, Alderney, Guernsey, Macao, but exclude Gibraltar. There are some exemptions that include offshore companies being allowed to participate in businesses of local publishers of periodicals provided they submit all required information regarding their beneficial owners through the official channels. Restrictions of offshore participation under the Gambling Act 2012 are wider (not just control but any affiliation triggers the prohibition) and there are no exemptions.

It remains unclear at this stage how the overlapping rules will be interpreted and applied by the regulatory authorities.

Application procedure

Application form. A licence is issued on submission of an application form:

  • Attaching all required documents.
  • Proving compliance with the various legal requirements.

The application and most of the required documents must be executed in a special format approved by the Commission. The necessary documents are listed in a special Ordinance. It is possible to file the application and documents electronically.

Review process. In the licensing process, the Commission reviews and approves the:

  • Applicant’s internal rules, terms and conditions.
  • Rules of the games.

In respect of pools and lotto games, sports and random events betting, the operator must operate a central computer system which provides online communication and transfer of data to servers of the Commission and the National Revenue Agency. The operators’ central systems must be certified by a local licence operator and approved by the Commission in a separate procedure as a pre-condition to the issue of a licence.

Where the applicant already holds a gambling licence issued by a competent authority in another member state of the EEA or the Swiss Confederation, subject to certain terms and conditions, the matters taken into account in that application will be considered as proved in the local application procedure without specific documentary proof. This rule in general requires a co-operation agreement between the Bulgarian Commission and the respective foreign regulator. No such agreements have been signed so far and the rule is hardly ever applied in practice.

Time limits/issue of licence certificate. The Commission must make a decision on the application within 60 days (an extension of up to 60 days is possible in cases of legal or factual complexity). If the Commission requests additional documents or information the decision deadline runs from the submission of that additional information.

Once a decision to issue a licence has been made by the Commission (by majority vote), the permitted gambling operations are only allowed after the issue of the licence certificate. To obtain such a certificate, the licensee must prove to the Commission within six months of the decision to issue the licence that it has invested certain amounts in activities or assets related to the licensed operations. The investments must be made in Bulgaria or in another member of the EEA or the Swiss Confederation.

Depending on the type of gambling operation for which a licence is obtained, the amount of required investments varies, as follows:

  • BGN1 million for land-based sports betting, betting on other events, traditional lottery, pools and lotto.
  • BGN600,000 for land-based casino games and any type of online betting.
  • BGN100,000 for raffles, instant lotteries, bingo and keno games, and gaming machines.

If an applicant wishes to benefit from the extended term of a licence of up to ten years, the investments required increase as follows:

  • BGN10 million for land-based sports betting, betting on other events, traditional lottery, pools and lotto.
  • BGN2 million for land-based casino games and any type of online betting.
  • BGN1 million for land-based bingo and keno games.
  • BGN400,000 for raffles, instant lotteries and gaming machines.

The applicant has up to six months to prove that the required investments have been made and funds are available. Within 30 days of submission of this evidence the Commission must decide whether to issue a licence certificate. The licence certificate is issued by the Commission chairperson within two business days after the decision comes into force.

A licence certificate may be issued simultaneously with the decision to issue the licence itself if evidence of the investments is provided at that time.

Gambling equipment authorisation. All gambling equipment which is to be used in Bulgaria, as well as gambling software to be used by a licensed online operator, must be approved by the Commission on the basis of testing, under terms and conditions established by a special regulation, in authorised laboratories in:

  • Bulgaria.
  • Another member state of the EEA.
  • A member state of the Swiss Confederation.

Currently the list includes nine laboratories (including GLI (www.gaminglabs.com) and eCOGRA (www.ecogra.org)).

Duration of licence and cost

A fee is paid on filing an application for a licence. The fee is non-refundable in the case of a rejected application. Depending on the type of game for which the application is made, the fee is:

  • BGN2,000 for raffle.
  • BGN7,500 for gaming halls.
  • BGN35,000 for casino games.
  • BGN20,000 for all other games.

A separate fee is payable for the issue of the licence in the case of a successful application. Depending on the type of licensed game as well as on the number of machines/tables or gaming seats that will be offered, the fee is as follows:

  • BGN5,000 for raffle.
  • BGN35,000 for casinos with up to five tables and up to 15 gaming machines, plus BGN2,000 for each additional table and BGN100 for each additional gaming machine.
  • The fees for gaming halls range as follows:
    • halls with up to 30 gaming seats: BGN7,500 plus BGN100 for each seat above 15;
    • halls with between 30 and 50 seats: BGN15,000 plus BGN100 for each seat above 30;
    • halls with more than 50 seats: BGN25,000 plus BGN100 for each seat above 50.
  • BGN20,000 for all other games (lotteries, pools and lotto games, bingo, sports and random events betting, and so on).

Licences are issued for five years (or less if the applicant requests). A licence may be issued for an extended ten-year term if the applicant can prove a higher level of investment (see above, Eligibility).

The licence can be renewed for the same term on a request by the licensee filed not later than two months before the expiry of the original term. This is subject to the:

  • Licensee meeting the requirements for issuance of a licence.
  • Absence of administrative penalties or compulsory measures issued by the Commission for breach of regulatory requirements during the original term.
images 6. What are the limitations or requirements imposed on land-based gambling operators?
Prohibitions

The following prohibitions apply:

  • Gambling operators must ensure that only individuals of full legal age (above 18 in Bulgaria) and that do not lack legal capacity can participate in gambling games.
  • Gambling operations cannot be held in public state-owned and municipally-owned buildings or premises used by public administration, educational or healthcare organisations.
  • Credit or loans cannot be given to customers by operators in any circumstances.
  • Gambling equipment cannot be stored or held outside the licensed premises.
  • Licensed organisers of gambling games cannot engage in the activities of manufacturing, import, distribution or servicing of gambling equipment, except for the import of gambling equipment for their own needs.
Restrictions

The following restrictions apply:

  • Gaming halls and casinos must not be located within 300 metres of schools and orphanages.
  • Individuals who are intoxicated, without identity documents, in uniform or armed (unless on duty) must not be allowed to enter gaming halls or casinos.
  • Gambling halls cannot use or place signs with names other than “Gaming Hall”.
  • Winnings of amounts exceeding BGN5,000 cannot be paid in cash.
  • Gambling games cannot be offered in any other currency but BGN or EUR. The offering of games in other currencies is only allowed for casino games subject to special approval by the Commission.
Anti-money laundering legislation

Local anti-money laundering laws follow the relevant EU rules and impose obligations on gambling companies as follows:

  • Adopt, within four months of registration, internal rules (IRs) which clearly set out the company’s policy and procedure for the control and prevention of money laundering. The IRs must be submitted for approval by the chairperson of the State Agency National Security (SANS) within 14 days of their adoption.
  • Establish specialised departments to collect, process, store and disclose information about specific operations or transactions.
  • Collect information about their customers and maintain accurate, detailed records of their transactions.
  • Require information about the origin of funds depending on the level of transaction.
  • Implement measures for identification of customers. (This requirement overlaps to some extent with the specific regulatory requirements for identification of customers under the Gambling Act 2012.) The identification of clients must be obtained on the basis of documents, data or information originating from an independent source. A client’s identity is required when an operation or transaction worth over BGN6,000 (or the equivalent in foreign currency) is made. In case of a transaction of over BGN30,000 or its equivalent in foreign currency the licensee must request a declaration about the origin of the funds.
  • Report the collected information to the local SANS office in case of suspected money laundering.

Where money laundering or the criminal origin of funds is suspected, the transaction must be delayed for the regulated time period governing the particular type of activity and the Financial Investigation Directorate of SANS must be notified before the transaction is completed.

Online gambling

Regulation/licensing

images 7. What is the licensing regime (if any) for online gambling?

There are no restrictions on the number of licences. The licensing process is generally the same as for land-based gambling, subject to the following specific requirements:

  • Applicants or their shareholders must not have been subject to a sanction for breach of the Gambling Act or the repealed Gambling Act of 1999 in the period of five years before the date of application.
  • The main servers and systems of the applicant must be located within Bulgaria or in the territory of another member state of the EEA or the Swiss Confederation.
  • For the purposes of making bets and payment of winnings a bank account must be opened with a bank licensed in Bulgaria or in another member state of the EEA or the Swiss Confederation, which operates in Bulgaria (based on the freedom of establishment or freedom to provide services principles).
  • Each foreign licensed operator must appoint a local representative by way of a power of attorney granting powers to sign contracts on behalf of the operator and to provide representation before local state bodies and courts. The law expressly indicates that this representative must not have independent status.
  • If the main systems of the applicant are located outside Bulgaria, the applicant must have a server located in Bulgaria where the data about the Bulgarian operations (including registration and identification of participants, the bets made and winnings paid) must be stored. Local data must be kept for a period of at least ten years from 1 January of the calendar year to which the data refers.
  • The central computer system of the organiser (or the local server, if the central system is located outside Bulgaria) must have a system for submission of information in real time to the National Revenue Agency and the State Commission on Gambling (Commission) about the simultaneous gaming sessions, the bets made by and the winnings paid to each participant.

The gambling software (and any new version of the software) must be approved by the Commission, based on certification by an authorised laboratory (see Question 5, Application procedure: Gambling equipment authorisation).

Available licences

Any category of gambling games can be offered online in Bulgaria subject to a licence, except for raffles and instant lottery games. There is no limitation on the number of licences and the features and duration of the licences are identical to those of land based games.

Eligibility

The requirements of applicants for online gambling licences are the same as for land- based games (see Question 5, Eligibility).

Application procedure

The procedure for obtaining online gambling licences is the same as for land-based games (see Question 5, Application procedure).

Duration of licence and cost

The duration of licences is the same as for land-based games, namely five years. A licence could be issued for an extended ten-year term if the applicant is able to prove a higher amount of investments made for the purposes of organising games in the sum of BGN600,000.

A fee is paid on filing an application for a licence. The fee is non-refundable in case of a rejected application. The amount of the fee depends on the type of game applied for:

  • BGN70,000 for casino games.
  • BGN20,000 for other games.

A one-off fee is payable for the issue of the licence in the case of a successful application in the amount of BGN100,000 (the amount is the same irrespective of the category of the game for which the licence is issued).

Lower fees are also payable for approval of gambling equipment/software or gaming rules of licensed organisers and for approval of changes to the terms of an issued licence.

images 8. What are the limitations or requirements imposed on online gambling operators?
Prohibitions

The following prohibitions apply:

  • Gambling operators must ensure that only individuals of full legal age (above 18 in Bulgaria) can participate in gambling games.
  • Credit or loans cannot be given to customers by operators in any circumstances.
  • Licensed organisers of gambling games cannot engage in the activities of manufacturing, import, distribution or servicing of gambling equipment, except for the import of gambling equipment for their own needs.

See Question 6, Prohibitions.

Restrictions

The operator’s online betting website must contain information in Bulgarian of the following:

  • Operator’s registration details, including tax and/or other identification number.
  • Details of the licence issued by the State Commission on Gambling (Commission).
  • The rules of the games/terms and conditions.
  • Payment methods, help desk services, contact details, including a telephone number and e-mail address for direct and timely contact with the operator and with the Commission.
  • The ways of filing complaints and alerts to the operator and the Commission.

Payments in cash for online games is prohibited. Gambling games can be offered in Bulgaria only in BGN or EUR currency. The offering of games in other currencies is only allowed for casino games subject to special approval by the Commission.

Anti-money laundering legislation

The same rules apply as for land-based operators. Note, however, even if local law is not clear on the point, that Bulgarian anti-money laundering (AML) rules apply only to local companies. Bulgarian AML rules were adopted at a time when only land-based gambling was allowed in Bulgaria. They do not take into account potential online cross-border activities of foreign companies which were made possible under the Gambling Act 2012 (see Question 1). Article 22(2) of Directive 2005/60/EC on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing provides that the “information referred to in paragraph 1” (that is, information where reasonable grounds to suspect that money laundering or terrorist financing is committed or attempted) must be forwarded to the financial information unit (FIU) “of the member state in whose territory the institution or person forwarding the information is situated”. Therefore, no submission of AML rules to the Bulgarian State Agency National Security (SANS) or reporting to a local SANS is required by foreign licensees, however, provided that the licensee is subject to AML rules in its home member country.

B2B and B2C

images 9. Is there a distinction between the law applicable between B2B operations and B2C operations in online gambling?

B2C and B2B are defined, for the purpose of online gambling, as follows:

  • B2C operators are online gambling operators, have a website presence, and enter directly into a contract with customers.
  • B2B operators are either:
    • online gambling operators that contract with the player directly, but through a “white label” site run by a third party;
    • online providers of gambling services who license the products to gambling operators without directly contracting with the customers.

The Gambling Act 2012 does not make any express distinction between B2B and B2C operations. The organiser of the gambling activities is the entity that contracts with customers (by accepting the bets and being under an obligation to pay the winnings) and requires a licence (see Question 4). Therefore, there are no specific requirements for B2B providers. The development and/or licensing of software for online games is not subject to local licensing, in contrast to the manufacturing, trading and maintenance of physical gambling equipment. In the context of the particular licensing procedure of an online operator (B2C provider) the respective software and hardware (if that is provided by a B2B provider) will have to be evaluated, certified by an authorised laboratory and approved by the State Commission on Gambling. The business model of online gambling operators contracting with the player directly, albeit through a white label site run by a third party, would not be allowed under Bulgarian law as the offering of gambling to customers requires the operator’s licence to specify the website used by the operator.

Technical measures

images 10. What technical measures are in place (if any) to protect consumers from unlicensed operators, such as ISP blocking and payment blocking?

ISP blocking measures are imposed at local level. Under the Gambling Act 2012 the State Commission on Gambling (Commission) is entitled to identify and publish on its official website a list of websites offering gambling in Bulgaria without a licence. If the operator of such a website does not cease such activities within three days of publication, the Commission must request a court order to filter and restrict access to the website by local ISPs. The order of the court is published on the website of the Commission and all providers of public electronic networks or services must block access to the unlicensed website within 24 hours. A fine of up to BGN30,000 may be imposed on providers who do not comply with the blocking order.

No express payment blocking measures are provided for by the Gambling Act 2012. However, under the general prohibition in the Gambling Act 2012 preventing any person accepting bets, paying out winnings or in any other way assisting the de facto performance of unlicensed gambling operations, local banks/payment systems operators could be liable if they allow payments to/from non-licensed gambling operators. A fine of up to BGN30,000 may be imposed for breach of such a prohibition. However there are no apparent instances of the local authorities trying to enforce this rule against local banks.

Mobile gambling and interactive gambling

images 11. What differences (if any) are there between the regulation of mobile gambling and interactive gambling on television?

Mobile gambling/interactive gambling on television are considered types of online gambling and they are generally subject to the same requirements and restrictions as set out for online gambling.

Social gaming

images 12. How is social gaming regulated in your jurisdiction?

Social gaming is not expressly regulated.

Any games that do not fully meet the general definition of gambling (see Question 2) are not subject to regulation by the Gambling Act 2012 and there are no special regulations for the organisation of these types of games. The Gambling Act 2012 expressly provides that entertainment or sports games, which require skills, agility or knowledge and which are not predominantly based on chance, are not considered gambling games. In the event of an entry fee being required to form an award fund, this must be entirely distributed among participants for the game to benefit from this exemption.

However, the Gambling Act 2012 provides that such rules do not apply to “remotely organised games” (including online games). The application of this rule, particularly to online social games, will need to be clarified by official guidance from the State Commission on Gambling (Commission) and the courts. For further information about this uncertainty, including the current definitions see Question 2, General definition.

The condition for entry fees to be entirely allocated among participants for the exemption to apply, for example, could be contentious. A game that is predominantly based on skill rather than chance should not be regarded as gambling. However, it may turn out to be the case that any sports event or computer game tournament distributing only part of the entry fees among participants (after covering costs and profit margins of organisers) may qualify as gambling, if there is an element of chance involved, even if the games are predominantly dependent on skill.

Similarly, games involving virtual currency with no monetary value, where winnings may only be used as credits to take part in other games, are exempt. If, however, credits or virtual currency may be exchanged for other prizes (cash or objects with some material value) then this is another case where the Commission will need to clarify how the general rules are to be applied.

This uncertainty is relevant only for games which require payment for participation and involve the possibility of winning a monetary prize, otherwise the gambling laws do not apply.

Gambling debts

images 13. Are gambling debts enforceable in your jurisdiction?

The Gambling Act 2012 specifically prohibits operators from providing any form of credit to customers and therefore any gambling debts illegally owed to them are not enforceable. Gambling debts to other creditors are enforceable under the general rules for enforcement of contractual obligations. There are no special rules for treating gambling debts any differently from any other money owed to creditors.

Tax

images 14. What are the applicable tax regimes for land-based and online gambling?
Land-based gambling

Special taxes. The Corporate Income Tax Act 2006 provide for a special taxation regime for the following games:

  • Casino games and gaming machine operations. In respect of casino games and gaming machines operations, a special tax is levied, payable quarterly, for each piece of gambling equipment or player’s seat available on that equipment. Amounts are:
    • BGN22,000 per roulette table;
    • BGN5,000 per other piece of casino equipment;
    • BGN500 per gaming machine or a seat (if a single machine allows more than one players to participate simultaneously).
  • One-time short message service (SMS) games or games played over the phone. A special tax in the amount of 15% is levied where the taxable base is the excess value of the SMS or call exceeding the normal price for the telecommunication service. Such gambling operations are exempted from corporate income tax.

Income tax. The operators of games other than the above are liable for payment under the general rules of corporate income tax according to the usual tax thresholds and percentages. In addition, they are liable for payment of a monthly licence maintenance fee to the Commission of 15% above the total of bets placed. In games where a commission (rake) is paid for participation the fee is 20% of the amount of commissions.

In relation to personal income tax, winnings from gambling games are exempted from taxation under the Individual Incomes Taxes Act 2006.

Online gambling

Local operators of online games are liable for payment of corporate income tax under the general rules. Foreign operators, that do not have their main servers in Bulgaria, are not usually subject to local corporate income tax unless they have some assets or operations in Bulgaria that qualify as a permanent establishment for local tax purposes. The required local server and local representative do not by themselves represent a permanent establishment.

In addition, online operators are liable for payment of a monthly licence maintenance fee to the Commission at a rate of 20% of either or both of:

  • Gross gaming revenue (GGR), which is defined as the positive difference between the bets placed and winnings paid.
  • Rakes or commission, for operators collecting rakes or commissions.

Advertising

images 15. To what extent is the advertising of gambling permitted in your jurisdiction? To the extent that advertising is permitted, how is it regulated?
Land-based gambling

The Gambling Act 2012 prohibits the direct advertising of gambling including unsolicited electronic messages containing information about gambling. “Direct advertising” is a defined term and means information distributed in any form and with any means whatsoever, which directly invites customers to take part in gambling games, including by:

  • Creating the impression that by participating in the game the consumers may solve personal or financial problems or achieve wellbeing.
  • Inviting citizens to participate in the game with promises of big winnings.

Expressly allowed advertising that is not considered direct is:

  • The names of the games.
  • The registered trade mark of the organiser.
  • The holding of the drawings (for example, lottery results).
  • The results of the games.
  • The winnings paid.

The law expressly prohibits media companies from publishing or distributing any information about gambling games other than those listed above. When signing publishing or distribution contracts media operators must request evidence that the respective gambling operator is duly licensed.

Breach of these obligations by media operators can result in a fine of up to BGN30,000.

Licensed operators can sponsor events supporting sports, culture, health services, education and social welfare. The Gambling Act 2012 provides that the National Ethical Standards for Advertising and Commercial Communication in Bulgaria (adopted by a special self-regulatory body of the advertising industry in Bulgaria, the National Council for Self-regulation) must adopt special rules in respect of gambling advertising, which are mandatory for all media operators.

Online gambling

See above, Land-based gambling.

Developments and reform

Legal development

images 16. Has the legal status of land-based and online gambling changed significantly in recent years, and if so how?
Land-based gambling

There have been no significant changes since the adoption of the Gambling Act 2012 (see Question 1).

Online gambling

There have been no significant changes since the adoption of the Gambling Act 2012 (see Question 1).

Reform

images 17. What, if any, are the likely short-term and long-term developments/legislative amendments concerning gambling in your jurisdiction? Are there any proposals for reform?

No significant reforms in the legal framework of gambling in Bulgaria are currently planned. Measures to simplify the regime for online gambling have been discussed for a long time. These include the waiver of the requirement to maintain a local data storage server in Bulgaria and for the operators’ systems to be connected with the National Revenue Agency (leaving only a connection to the State Commission on Gambling (Commission)) (see Question 7). However, no legislative proposals have been prepared or are planned in the short term.

Land-based gambling

Some ideas for improvement of the taxation regime for land based operators and in particular the introducing of gross gaming revenue (GGR) as a basis for the license maintenance fees (similarly to online games) have been discussed in the media but no particular legislative proposals have been prepared or are planned in the short term.

The regulatory authorities

State Commission on Gambling

W www.dkh.minfin.bg/en

Description. The State Commission on Gambling is the main supervisory and regulatory body in the gambling industry, and is generally entitled to:

  • Issue licences.
  • Supervise activities:
    • related to the organisation and offering of games of chance;
    • of the producers, importers, distributors and maintenance companies of physical gambling equipment.

Online resources

State Commission on Gambling

W www.dkh.minfin.bg

Description. The official Bulgarian language website of the Commission on Gambling is regularly updated and contains a lot of information in Bulgarian about the sector, including the:

  • Official registry of all issued licences.
  • So-called “blacklist” of websites operating without a local licence which must be blocked by local ISPs.
  • Approved models of licensing documents.
  • Annual reports of the Commission on the sector.
  • Full transcript of all sessions of the Commission and the decisions taken.

W www.dkh.minfin.bg/en

Description. The Commission on Gambling maintains an English language version of its official website. The English version provides more limited contents than the official Bulgarian language version and is not regularly updated. Nevertheless it is source of useful information and English language unofficial versions of the main applicable legislation (translations are for guidance only and only the official Bulgarian versions are binding).

Source: Practical Law

Categories
Legislative FrameworkREGULATION

RG MAGAZINE Gambling and Social Responsibility
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