Hrvoje Vincetic was born in Croatia in 1962, the study of Engineering in Agronomy finished at the University of Osijek. His casino career had started in 1990 at the position of craps dealer at an American casino in Poreč, Croatia. Afterward, he’d spent 5 years at HIT Casinos Group in Slovenia, over 5 years at Casino Mulino (HR) and over 3 years as the Managing Director of Royal Casino (Croatia). He’s been managing the Croatian Lottery’s Casino in Vinkovci for about 3 years. With the Croatian Lottery Hrvoje has been engaged all-together for about 9 years on different casino, lottery and betting jobs. In June 2015 Hrvoje’s been offered the Managing Director’s position at the Adriatic Casino in Opatija (Croatia) which he gladly accepted.
EEGReportMagazine: As we know, in accordance with the current gambling legislation online gambling operators who wish to offer their services on the Croatian market must apply for an online gambling license and pay the associated fee, HRK 3 000 000 (about 500 000 EUR) Is the information correct? Could you detail the process of how this works?
Hrvoje: Yes, the amount of the price in HRK is correct, just as it is of some € 400,000. Licenses are issued for the period of 15 years, the minimum share capital of HRK 4 m is required for the company holding an online casino, the bank guarantee of HRK 3 m is required for the disbursement of winnings to the players and the payment of public levies in terms of the General Tax Act.
With the aim of regulating issues, the Government, after the 2009’s Act on Games of Chance, issued two regulations governing the online gaming. The first was Ordinance of Organizing Remote Betting Games and then later in 2010 the Ordinance on Interactive Online Casino Gaming. These two documents lay down general and specific requirements to be met by companies wishing to organize an online gaming in Croatia. The Ordinance relating to the online betting, among other things, requires the presence of the company at the land based betting market, possessing at least 50 brick & mortar betting shops and having employed at least 100 employees. Similar demands we find in the Ordinance on Interactive Online Casino Gaming, where the online operator must have at least one land based operation (casino). So, because of these basic requirements, the number of legal online casino operators is pretty reduced.
EEGReportMagazine: What is the evolution of the market in terms of large operators owning or looking to enter the Croatian online gaming sector?
Hrvoje: Important local operators entered the Croatian online market several years ago, how it came to the rapid development of mobile telephony. Croatian market is relatively small (4 million inhabitants) and quite saturated by local operators so I do not see much of a future interest of global online gambling companies. I think they were particularly repulsive that the Regulator still has not set any limits to illegal operators who carelessly do online betting and casino/poker operations by servers based across the border but in Croatian language. And so it happens for years.
In January 2014 the draft of the new Act on Games of Chance had been published for public consultation. There was a big hassle because the Draft did not receive a very positive opinion from the European Commission, whose opinion was based on the justified complaints of a few strong land based operators, who were protecting their interests. Soon afterward there was a crisis of the Government, the announcement of new elections and the political climate in Croatia was not on the side of the creative legislation so that all fell into oblivion and we are still today regulated by the 2009’s Act and the consequent amendments. The interest of potential strong foreign operators faded because of lack of modern legislation.
EEGReportMagazine: What are the key sectors in the Croatian gambling market based on niches? Sports betting, casino, poker?
Hrvoje: Far away in the first place is the betting business and for now brick & mortar betting continues to lead the overall turnover but the turnover of online betting grows exponentially from year to year. The economy stabilized and the betting market harvests the fruits of economic growth. The brick & mortar and online betting competition is extremely strong, betting odds are consequently solid so that’s what average players recognize. Another important sector is the Online Casino where e.g. the Croatian lottery, according to my information, is experiencing steady growth, but this growth is tied to the company’s monopoly on lottery and bingo games, and these games automatically bring a large number of casino online players (they operate only slots, Black Jack and roulette; no online poker game at the Croatian Lottery). One of the two private companies that offer the online casino, which are essentially the betting companies just having a simple land based casino operation, has just mid-January began offering online poker as a very first legal poker operator in Croatia (the Supersport company). They’ve reached a several hundred poker players daily, especially on the low buy-in limits, so it is still to see how they shall cope with this small market. The illegal operator Pokerstars has swept the Croatian market already, so the guys from the Supersport may expect a big fight for the market.
EEGReportMagazine: Who are the key operators at the moment and how is the taxing done in percentages?
Hrvoje: The before mentioned Supersport is far the strongest online and land based (betting) operator in the Croatian market. They are followed by the Croatian lottery with their monopoly on online lottery and bingo games, then comes the “Prva sportska kladionica” and a number of smaller operators, some of which are important international operators, too (Stanleybet, Hattrick with numerous betting terminals, Germania, Favbet). Taxation on online casino games for online casino operators is at the rate of 15% of GGR on monthly basis and for online poker tournaments it is 25%. Online betting games are taxed at 5 % of turnover (plus initial HRK 3 m/year for both categories – online betting and casino).
Player winnings at online/land based betting are taxed by several rates:
10 % for winnings up to HRK 10.000
15 % for winnings among HRK 10.000-30.000
20 % for winnings among HRK 30.000-500.000
30 % for winnings over HRK 500.000
EEGReportMagazine: What advice would you give to potential new entrants considering Croatia (operators, affiliates, suppliers etc)?
Hrvoje: As recently after a long time there was a change of Government and Croatia finally feels political stability, it is expected of us to retry editing gambling market. The failed draft of 2014 had not contained a lot of good solutions, except in terms of breaking the influence of illegal operators. It was its only real bright spot and all the happiness the Draft had not been adopted in that way. Now we hope that the new Government will seriously start to regulate modern issues such as e.g. affiliate business. I would recommend to potential investors and other stakeholders to wait until the release of the new regulation for which we may expect to be in the spirit of positive European examples from the region – Bulgaria, Romania – because these are the countries that found a great way to regulate online gaming and which example we should follow. The Bulgarian online regulation is particularly bright example.
EEGReportMagazine: Is it possible in any way to consider that, more and more people get drawn to gaming activities, thus making the industry more prosperous?
Hrvoje: Yes, there are all the more players. In Croatia, the legal advertising of games of chance is not prohibited. Of course, it’s limited to a small number of media and very carefully maintained so that less affects minors. This advertising is, therefore, controlled. The second story is the story of illegal advertising which is prohibited by the regulations in force but there is not a service which would report it and block advertisers. The pressure of illegal organizers of games of chance and their advertising over the Internet is enormous. There are dozens of websites and forums in the Croatian language that shamelessly promote illegal online operators and exert great influence on the younger generation so they, by no great effort and cost for operators, become players. This is one of the important factors that led to the fact that Croatian population has become a plaything population and it will be even more. Yes, the industry will surely become more prosperous.
EEGReportMagazine: What can we expect in the following years? Not only 2017, but in the long-termed future?
Hrvoje: We can expect more coherent online gaming market which is certainly not going to be seen in 2017 but during 2018 there should be some results. Similar to Bulgaria, we can expect the entry of large operators but in smaller numbers due to the limited population. The general growth of the Croatian economy is expected, particularly through tourism which experienced a huge boom. As online gaming is always related to the domestic players who will strengthen in economy sense, higher consumer spending is expected, which will certainly reflect on spending on online gaming. Thus, in this closed circle everybody will be getting better and a new area for investments will open. Large foreign operators have been waiting for a long time for an acceptable Croatian gaming legislation, and their entry to market will do just good for us because it will raise the standards of doing business in this important sector, which is ultimately always good for clients.
EEGReportMagazine: Which is in your opinion, the most in-fluent factor in the development of the industry?
Hrvoje: The regulation is far the most important and in-fluent factor. As we can see, there is no country in surroundings that have made any progress in online gaming before they had put in function a good regulation. Of course, we also have examples where the regulation is relatively well designed but the general level of democracy of the society and the applicability of the law is at a lower level and ultimately the foreign investments are absent and at the same time the domestic companies are fighting for survival.
Another influential factor is the wealth or poverty of the society. In poor societies it is difficult to develop a good business, because there are many keen players who are not able to play for larger amounts. Thus, in our country the gaming industry is far more developed in the western and southern provinces which have significantly higher standard, although the number of players on average is not different than in the eastern, poorer provinces. For this reason, the French and the German market, as rich societies, are the strongest markets in Europe with the highest consumption per capita.
EEGReportMagazine: Looking further afield, where are the major emerging opportunities in Central Europe for operators at this moment?
Hrvoje: In my opinion it might be online gaming in Romania, which is on track to attract large investors if they enforce the law as it is and if they do not allow bureaucratic complications which usually stop large operators such as happened in Serbia. Italy is still very attractive and it seems that nothing and nobody can put enough to saturate this huge market. Slovenia prepares and releases new legislation and after decades of closeness announced liberalization of gambling market and it would be good to keep them on eye. Slovenian gaming revenue per capita is one of the strongest in Europe.
As a concluding word I have to say with regret that we shall wait for some time to see Croatia as the major merging opportunity for gaming operators in Central Europe.