Gaming in Bulgaria: overview

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).

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:

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:

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:

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).

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:

See box, The regulatory authorities.

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:

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:

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:

Prohibitions

The following prohibitions apply:

Restrictions

The following restrictions apply:

Anti-money laundering legislation

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

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.

Prohibitions

The following prohibitions apply:

See Question 6, Prohibitions.

Restrictions

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

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.

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

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.

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/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 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.

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.

Land-based gambling

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

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:

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:

Expressly allowed advertising that is not considered direct is:

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.

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).

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.