Why Bulgaria Could Appeal to Gambling Titans
In many ways, the iGaming market in the UK is the most mature and lucrative in the whole of Europe. It certainly boasts an incredible regulatory framework, for example, whilst producing an impressive gross gaming yield (GGY) of £14.5 billion in the year ending September 2018.
However, beneath these headline numbers the UK market is facing a number of unique challenges, from Brexit and the recently rolled-out FOBT cap to the impending 6% hike in remote gaming duty (RGD). These factors are combining to create something of a perfect storm in the iGaming market, and forcing even the market-leading operators to reconsider their strategies.
In this post, we’ll explore this further, whilst asking why Bulgaria could be the latest European jurisdiction to emerge as a safe-haven for UK operators.
Why is Bulgaria a Hot-spot for some of the biggest iGaming Operators like 888 Casino
The European market has reacted to the challenges facing the UK, with a number of different jurisdictions looking to slash their own tax rates in order to create more favourable conditions for British-based operators.
The Spanish government announced a 5% tax reduction for its online operators last summer, for example, whilst autonomous locations such as Cueta were also afforded more autonomy to provide incentives for overseas gambling brands to relocate.
As a result, Spain now applies a basic 20% on gross gaming revenue (a 5% drop), which will soon be 1% than the UK’s RGD when the new legislation is unveiled in October. Regions such as Cueta will offer even lower tax rates to international firms, in a bid to tempt UK operators and build on 27% revenue growth recorded at the beginning of 2018.
With Malta already an iGaming safe haven and capable of providing serious competition to the UK and its overseas territory Gibraltar, there’s now considerably more choice for British operators who feel as though they’re currently getting a raw deal.
Bulgaria is another European nation that has thrown its hat into the ring this year, thanks to a combination of huge tax cuts and unrestrained growth across a number of iGaming verticals.
The results of this are borne out by the statistics, with Novite.com reporting that Bulgaria-based gambling operators raked in a staggering $1.9 billion in 2017 alone, which is more than double the GGY reported a decade ago.
This growth has undoubtedly been driven by participation from marketing leading European operators, with many of the UK’s dominant players now well-represented in Bulgaria. Many of the high-end casinos featured on bestonlinecasino.uk are now active in the region, with the 888 Casino review one of many highlighting the brand’s access to international markets.
Aside from this, Bulgaria has also become an iGaming safe haven on the back of huge tax incentives, many of which have been introduced to operators over the course of the last few years.
According to data produced by Moody’s Amadeus, licensed operators in Bulgaria paid taxes worth just $111 million in 2016 and a paltry $90.32 million during the first nine months of the following year. Given the total yield of £1.9 billion in 2017, this represents an extremely low tax percentage and one that will be extremely appealing to operators from across the globe.
To put this into further context, the tobacco product market paid about £3 billion Bulgarian levs in tax and excise duties in 2017, on revenues of just £3.5 billion levs. This is a marked increase in tax repayment, and one that highlights to way in which the government is looking to incentivise and drive growth in the iGaming marketplace.
The most recent tax laws were rolled out in 2013, with this legislation liftin the corporate tax burden on operators and instead subjecting to an alternative (and ultimately lower) duty. This took the form of a basic 20% point-of-consumption tax on all iGaming yields, whilst bricks-and-mortar entities are now required to pay levy on each gaming device included on their premises.
The Last Word and the Outlook for the UK Market
The favourable tax rate in Bulgaria has already proved attractive to domestic gambling operators, whilst others have also relocated from overseas.
As a result, there are an impressive 1,327 registered companies engaged in gambling and betting nationwide, including UK operators who have sought to claim a slice of this burgeoning marketplace.
The question that remains, of course, is whether the real-time market conditions in the UK will encourage operators to consider relocating to regions such as Bulgaria in the future? This is a more complex question, and one that will ultimately depend on how successfully British brands will adapt to more stringent taxes and regulatory measures and create lucrative business models going forward.
For now, UK firms are unlikely to leave the UK, at least until they have greater clarity on Brexit and the impact of the RGD hike. Many operators are also looking to increase their presence in the States, as this rapidly growing market provides a huge opportunity for firms to boost their revenues post-Brexit.
If companies struggle to navigate through the suddenly choppy waters of the iGaming market, however, then regions such as Bulgaria may suddenly become more attractive to UK operators.
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