Miglena Dimitrova – Recent Updates on Bulgaria – (EEGReport – Magazine – Issue2 – February – May 2016)
EEGReport Magazine: The Bulgarian Gambling Law has been recently updated and the new addition and changes have been added to create a better climate for international operators to apply for licenses. Among these changes we have found that the technical standards have now been made much easier to comply. Could you give us an overview regarding these changes in the legal perspective, based on your expertize?
Miglena Dimitrova: First of all, I would like to wish Happy and prosperous New Year to the readers of your magazine.
I could define the last changes in the Bulgarian gambling law in three main areas: taxation, technical standards and competitive mechanisms. From January 2014 we introduced taxing GGR instead of taxation based on the turnover. Months after that change some of the biggest online operators were licensed, and in compliance with the law they were eligible to start their activities before their technical compliance in the fixed transitional period. In that period the Bulgarian regulator had to adopt secondary legislation related to data collection and data transfer. By good fortune the regulator embraced very good approach to discuss all technical matters with the licensed operators in order to establish best European practices in Bulgaria. Unfortunately during that time the Regulator was not maintaining its own server and all the data had to be transferred to National Revenue Agency. Two years after that the Regulator carried out public private procedure to build up its own server and lines, and from the beginning of 2016 the operators are starting sending data directly to the regulator.
From my personal experience I can admit that I have never imagined that these technical matters could be so crucial for gambling businesses. According to Bulgarian gambling law the online operators are obliged to locate a control server in Bulgaria. That local control server has to be connected with the operator’s central computer system, and when the data containing geographically based Bulgarian IPs is received in the central computer system, the operator has to send that data to the local control server. The secondary law provides obligation that data has to be send to National Revenue Agency (NRA) and State Gambling Commission (SGC) in defined HTML format. Could you imagine what difficult task is that for IT teams? The data in the local control server is “dead” but needs to be revived and to be forwarded in the fixed format to the authorities (NRA/SGC).
There is no doubt that in our days the gambling operators attract the best IT specialists. They are really equipped with high educated and talented young people, and fortunately the solution was found. One of the biggest European company specialized in the secure software built the so called SAFE platform, which is used by international operators as local server.
EEGReport Magazine: As we know, there are different regulatory models in every jurisdiction, which makes operators look twice before entering legalized markets. Is this the case of Bulgaria? There hasn’t been a huge interest shown by the large international operators when the first amendments came into force, do you feel that these new changes are going to pave the wave for a much successful market in terms of tax revenues?
Miglena Dimitrova: Where the gambling is permitted the first question considered by the operators is about taxation. They calculate the potential market risks and decide whether to apply for a license or not. This is really very basic, and from my experience when talking with colleagues from Malta, Romania, UK, Spain and other countries I can admit that all we share the view that the operators need more information related to technical matters, competitive mechanisms like bonuses, fees and programs for responsible gambling, sponsorships and so on. Let me give you one simple example: Every operator would prefer to invest in Spain instead on Bulgaria. No need to explain why. But once the operator is there, it has to be visible on the market. That visibility is a very expensive task. Could you imagine what the cost is to sponsor football teams like Real Madrid? Add to this cost bonuses, creative, lawyers, accouters, ITs and you will get not so attractive net result. To compare with the others the Bulgarian market is small but the expenses are not so high, and as a result potential benefit could be bigger that from so called “attractive markets”.
For all the above I find the role of the specialized editions like your magazine as a very positive for the market. The international operators could get here much valuable information than from international audit companies and law offices.
EEGReport Magazine: Do you think that a common regulatory model that can be adopted on EU level would be a good practice? Economically speaking EU countries differ a lot, thus having an all governing law in every country regarding the online gambling sector could prove to be a major setback for many less developed countries in Eastern Europe. This is of course my opinion, what is your expert opinion on such a topic?
Miglena Dimitrova: From the Green book on gambling published by the EU Commission in order to make public the main consideration in regard to the gambling business around Europe, we understand that the EU authorities observe the gambling as a specific activity when the particular subcultural differences need to be considered. Some countries are conservative based on their traditions and ethical understanding. While contemplating this problem from only commercial point of view we won’t be able to see the whole picture. It is also important to take into consideration the fact that online gambling activities attract much more the young generation which is phenomenon for the first time in human history when talking about communication ability. These people spend a large portion of their time in the global net. I really don’t know who is inventing new games – the operators or the players. We will see how popular will became the games of skills and fantasy games in the next years. Regardless subcultural differences these young people are playing together despite their different geographical locations. Therefore I think that the online gambling sector is a very intelligent and dynamic, and the EU authorities would rather prefer to adopt the already established practices than to create something useless.
EEGReport Magazine: Online gambling has always brought along online payment processors. What is the current situation in Bulgaria regarding such activity? Is there a second tier license for such services?
Miglena Dimitrova: Many thanks for this question. During the passing year I have observed how the domestic online operators have being positioned increasingly better on the Bulgarian market. That surprised me especially when considering available public forums, where games and products are discussed. While the players were complaining from the boring products offered by the domestic operators, same operators started to receive more and more bets. And the explanation is very simple. Most popular payment method in Bulgaria is not used by international operators. For the Bulgarian players is much easier to create an account related to already existing one than making a wallet or choose not popular in Bulgaria payment method.
According to Bulgarian gambling law special license for payment services is not required. However, the operators need to open a special bank account in the approved bank within European Economic Area including Swiss Confederation, and to proceed from that account all the payments related to Bulgarian players.
EEGReport Magazine: Looking further afield, in your expert opinion, where are the major emerging opportunities in Eastern Europe for operators at this moment?
Miglena Dimitrova: In my opinion the major opportunities are related to the products. I think that players will become closely connected through the games. The fantasy games will give them more opportunity to reveal their skills, to chat in the tipster rooms, to create teams and discuss the results. The same is for poker. I am not a visionar but it is logical to expect that these people would want to have personnel contacts also, and to go somewhere when they could find people with similar interests. Therefore I think that in the near future the online operators trying to satisfy that need, will start looking for offline activities also.