Bulgaria places its bets as gambling sector brings in record revenues

Varna, Bulgaria (karel291, CC BY)

For the last 10 years the revenues from gambling in Bulgaria have risen significantly and in 2017 hit a new high of EUR1.5bn. Due to the huge tax benefits, the taxes paid in 2016 were only EUR90.5m.

“If the Bulgarian tobacco market is estimated at EUR1.8bn in 2017, the paid excise duties and VAT are about EUR1.53bn. With huge gambling profits, the tax paid for 2016 are only EUR90.5m,” a report by the Center for the Study of Democracy said. According to official data, licensed gambling operators’ taxes totaled EUR73.6m during the first nine months of 2017.

The Bulgarian government has previously introduced tax breaks for companies operating in the country’s gambling field to encourage investment. Licensed operators are not paying a corporate tax and are instead subjected to an alternative taxation. Land-based gaming facilities pay taxes depending on the number of gaming devices they feature.

Remote gambling operators are taxed at 20 per cent on gambling revenues. They are also required to pay a one-off licensing fee of EUR51,115. Online gambling companies were previously taxed at 15 per cent on their turnover, but the tax base was changed with the re-regulation of the local market in 2013.

Scratch below the surface

According to local media reports at least 40 per cent of adult Bulgarians have engaged in what has been described as a soft form of gambling, such as scratchcards, which maintained their growth momentum and were once again the highest grossing segment in Bulgaria’s gambling industry. Scratchcards quickly became the market leader through aggressive marketing on media outlets and due to the fact that many do not perceive it as a form of gambling. While there is still no information about the revenues generated by scratchcards in 2017, it produced revenues of around EUR163,6m in 2016, up nearly 30 per cent y/y.

National Lottery and Lottery Bulgaria are known to be the largest scratchcard sellers in the country. Both companies are owned by Bulgarian businessman Vasil Bozhkov, one of the country’s richest men.

Playing: the numbers game

According to the report of Amadeus in Bulgaria 1,327 companies engaged in betting and gambling are registered, and according to the annual report on the Bulgarian gaming industry by BTAMOGI (the Bulgarian Trade Association of Manufacturers and Operators in the Gaming Industry) there are 26  casinos and 847 gaming halls – nearly 80 new halls were opened in  Bulgaria in 2017.

The total number of gaming machines has reached 26,877 by September 2017, which is 1,756 more than in 2016. The online game licenses reached 25 in just 3 years (in 2013 there were only 3 licenses).

The three largest gaming clusters are grouped around the companies of Vasil  Bozhkov (New Gaming SA, Eurobet Ltd, National Lottery SA), Sudi Ozkan  (Princess Svilengrad SA, Star Princess JSC) and Sanevian Ltd (Win City  Ltd, Bookmaker 1 Ltd). The number of employees are estimated as follows: Vasil  Bozhkov gambling companies (464 people), Sudi Ozkan (1,307 people) and  Sanevian Ltd (1,762 people).

According to state data, the most profitable are the companies of Vasil Bozhkov. In 2017, New Gaming SA and National Lottery SA announced a turnover of EUR88.5m and EUR15.3m and the total turnover of the biggest gambling companies of the businessman reached EUR296m. After tax, the profit is about EUR76m. By comparison, according to Amadeus, the firms of Sudi Ozkan and Sanevian Ltd have a turnover of EUR167m and EUR69m, and after taxes their profits were EUR3.1m and EUR5.8m.The study also shows that due to large tax benefits, the taxes paid in 2016 are only about EUR90.5m.

In 2017, New Gaming SA and National Lottery SA recorded a turnover of EUR87.4m and EUR15.2m respectively, while the total turnover of the biggest gambling companies from Bozhkov reached EUR294.5m. After tax, the profit hit EUR75.2m.

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