The Bulgarian Parliament approved at first reading on Wednesday the amendments to the Gambling Act.

The amendments were passed with 110 votes in favor, 79 against and 2 abstained will basically reduce the gambling tax about three times.

The proposal was motioned by Members of the Parliament of the Bulgarian Socialist Party (BSP) and the Movement for Rights and Freedoms (DPS) headed by the chair of the parliamentary budget committee Yordan Tsonev. A discussion with them was held last week.

However, the BSP surprisingly demanded a postponement of the vote, arguing that the draft law had not been discussed in the parliamentary group, although the movers include the economist Petar Kanev and athletes Tanio Kirjakov and Georgi Markov from the left-wing party. Still, during a Tuesday meeting with the parliamentary group Coalition for Bulgaria Yordan Tzonev persuaded his colleagues that despite the opposition GERB party's accusations in lobbying, the amendment should be supported.

The amendments provide that starting next year a corporate tax will be levied on bookmakers, lottery and lotto games organizers, and poker and online casinos. For the issuing and the maintaining of a license for gambling activities, they will pay a two-component fee. The first component will be a single fee amounting to BGN 100,000. The second component will be paid on a monthly basis. It will comprise of 20% of the difference between the bets’ value and the paid winnings.

Currently this type of gambling activities is a subject to a 15% tax on turnover. According to Menda Stoyanova of GERB, the legal amendments will reduce the tax on gambling activities three times, and financiers of BSP claimed that the reduction would be double for the Bulgarian Sports Totalizator and almost triple for online gambling.

The government aims at increasing the budget revenues from this type of gambling activity because the current level of taxation is discouraging for the foreign bookmakers.

Yordan Tzonev expects BGN 22 M less in budget revenues from gambling for next year, provided that there is still a single licensed operator of online games. However, the government hopes that there will be more registered operators. Thus, the revenue will remain the same as it was this year, because online operators are given 6 months to get a license. About BGN 50 M more tax revenues are expected in 2015, and BGN 100 M – in 2016. Tzonev stated that the forecast is based on illegal online gambling data, which is estimated at BGN 1 B.

Initially, the new tax will benefit operators offering sports events betting, such as Eurofootball, Eurobet, the National Sports Totalizator and Eurofootball – Malta.

The previous ruling majority adopted a law that was supposed to achieve the same goals, but a year after its promulgation there is only one licensed company, a few more are still processing the documents, and the Bulgarian State Gambling Commission has already banned about a hundred gambling sites. Meanwhile, internet gambling is increasing and the estimated annual turnover is between BGN 500 M and BGN 700 M.

Foreign bookmakers have been indicating for quite some time that the 15% tax rate on sports betting and events turnover is too high, because over 90% of the earnings are returned as profits.

At present some online betting companies prefer to register in offshore taxation heavens to sidestep Bulgaria’s gambling taxes and are operating in the grey area with no license, but a decrease of the taxation rate would attract them to enter the Bulgarian market officially and to pay their taxes in the country.

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