BULGARIANS MULL ONLINE GAMBLING TAXATION

23 November 2007

Review of gambling tax laws could herald a legalised online gambling environment


The Bulgarians could be considering a more pragmatic approach to online gambling following a review into the taxation of gambling generally in the Eastern European nation.

Reporting on the review, the country's major newspaper 'Trud' claimed that hundreds of millions of leva (2 Bulgarian leva = Euro 1) “leak” through online gambling sites. Apparently Bulgarian legislators have been mulling the issue for over a year, considering measures that would regulate and tax betting over the Internet, at the same time allowing the Bulgarian sports totalisator to start new types of [online] games as well as secure its future development through partnerships with private companies.

If and when this change takes effect, the sports totalisator would have the opportunity to compete for new markets, and regulated online betting would allow the state to impose taxes on the income from the Internet gambling. No formal legislation has yet been launched, however.

The review considered a change in the tax regime for traditional gambling interests, too and has been followed by a proposal that the present 10 percent tax on revenues be amended to allow gambling organisations to deduct winning payouts from total income.

Last week the financial ministry presented its proposals for alterations in these tax laws with a suggestion that tax on numerical games such as toto, lotto or lottery will be imposed only on income remaining after subtracting winnings from revenues. Previously the state imposed a 10 percent tax on the entire revenue of the companies.

'Trud' opines that private companies will not benefit as much as the state-owned gambling companies. The totalisator, and the state lottery too, is required to disburse 50 percent of its revenue as winnings, and together with tax and other mandated payouts this brings total disbursements to a total of over 85 percent of its revenues, leaving the organisation relatively cash-strapped despite the significant revenues that it generates. This has placed constraints on the amount that can be invested in competitive new technologies.

Under the new tax proposal, the position of state companies would be considerably improved.

According to official data, the current revenue from legal betting in Bulgaria is around 700 million leva (Euro 350 million). However, Bulgarian experts claim that another 600 million leva is being gambled illegally and outside the tax net.

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