For the third consecutive year, the revenue from gambling did not change, although taxes on the sector soared, Angel Iribozov Chairman of the Bulgarian Association of Manufacturers and Operators in the Gaming Industry told the BANKER. He took part in the press conference for the sixth edition of the Eastern European Gaming Summit, which took place in Sofia on October 22 and 23.
Iribozov delivered some devastating data regarding this business. The revenue generated by the gaming industry in the state budget for 2012 was 121 million levs, which is about the same volume as wer the taxes paid in 2011 and in 2010. The overall decline in gambling sector from September 2009 until early this year is about 45%, the largest being the decline in the number of gaming machines and equipment – 10%. The number of gambling halls in the country has decreased by 33% in 2008-2013. While in 2008 they were 975, at the end of September this year, the number had shrunk to 653. The reasons for all this failure is the increased tax burden and taxation of the organizers of gambling on a number of gaming facilities. The ground gambling tax increased by nearly 70% (according to the official data of the State Commission on Gambling).
While the terrestrial gambling can have generated actual losses – both for the operators and the Treasury, with the betting at a distance sector it comes to lost opportunities. It is no secret that the Treasury has had no revenue from taxation of online poker activities in the country since the new Gambling Act was introduced in mid-2012. This is despite the desire of some of the major operators to be licensed and pay taxes in the country, warned experts from Pokernews. According to them, the losers are globally recognized and respected online operators who want to work in the country, the media – as beneficiaries of their advertising budgets – and especially the state which, instead of collecting fees and duties, in fact promotes the development of the shadow sector.
This is a deplorable result of the licensing regime introduced at the beginning of the year and the 15% income tax on gambling sites. As a result, the access to over 130 websites was blocked by a black list because they have no licenses. The electronic gaming industry continues to try and make its voice heard that the tax is unbearable because restated to the financial results, it is approaching 90%.
The contraction in the sector has had an immediate impact on Bulgarian manufacturers of gaming equipment. Their latest developments, including in the field of online and server-based products, at the moment are faring better abroad due to shrinking market at home.
On top of that, after the new law was introduced the related regulations were delayed for more than a year. This is hardly the only reason for the slow process, but what should be added here is the introduced requirement to invest 1 million levs, as well as the higher rate of tax.
Gaming industry also keeps expecting the outlets that organize gambling activities to be added to the places of a special regime where smoking is allowed under the new bill envisaging to repeal the general prohibition of tobacco smoke in indoor public places. These sites represent a significant sector of the entertainment industry with limited access to minors, and in many places in the world for this type of sites, there is an exception to the ban on smoking.
According Iribozov, the ban on smoking in bars affects the gaming industry. In his words, the gambling business is a particular industry, which can be considered complementary to the tourism. That’s why in many places around the world smoking in casinos and gambling halls is permitted.
Sue Rossiter, director of Policy and Projects at the Remote Games Association (RGA), said that what is missing in the legislation is a mechanism for competition and that only minor adjustments are needed to allow more operators to take advantage of options set out in the new law. In this sense, Mrs Rossiter recommended that taxation be linked to turnover and results of the operators.
The BANKER
