Joseph Borg has written an article for iNTERGAMINGi Issue 3 about the Bulgarian licensing regime and the advantages in comparison to some other European regimes.

Over the past few years, many new jurisdictions have started regulating online gaming. Some jurisdictions have implemented completely unworkable regimes that make it impossible for operators to render their business profitable. Other jurisdictions’ regimes are more attractive and profitable. National authorisation regimes, in themselves, pose an array of issues for the industry that include liquidity, added regulatory costs and, in some cases, illogical limitations. However, operators cannot disregard these and have to play ball with the reality that they face.
Every now and again clients ask my opinion on new regimes being implemented around Europe. Recently, I was exposed to the new Bulgarian online gaming regime and I immediately thought that this could be a potentially interesting one. Bulgaria is a very small market with a population of less than 8 million inhabitants and which has a relatively low per capita GDP. Nevertheless, it is a nation that has an interesting gaming history with two of the largest gaming machine manufacturers in Europe originating from, and actually, based there. The latter manufacturer is essentially the second largest VLT manufacturer in Europe. Furthermore, Bulgaria has an exceptional IT infrastructure and some of the best IT professionals in Europe. Most IT industry giants have a base in Bulgaria, including IBM and HP, the latter employing almost 4,000 people in Sofia alone.
When compared to Denmark, which was initially regarded as a model national authorisation regime (but which has a smaller population with just over 5 million inhabitants though with a significantly higher per capita GDP), the Bulgarian regime is less onerous in terms of regulatory compliance costs. It is no surprise that six operators, including Betfair and Pokerstars, have already obtained a licence in Bulgaria and many others are showing interest and following suit.
Some advantages of the Bulgarian online gaming regulatory regime include:
  • Relatively low application fees and an attractive taxation regime (20% on gross gaming revenue)
  • The possibility of using your .com site under the Bulgarian licence
  • The possibility of applying for a licence through any EEA established corporate vehicle
  • According to the Bulgarian Gaming Commission (BGC), there is no need for operators to apply for a tax number in Bulgaria in order to obtain the relevant licences
  • Very few limitations on which products to offer when compared to other national authorization regimes – the only prohibited products are raffles and lotteries;
  • Very few technical requirements which need to be adhered to in order to obtain the licence
  • No need to take out bank guarantees in favour of the regulator or keep players’ funds in a separate bank account
  • Possibility of advertising in Bulgaria
  • A very flexible and pro-business regulator
The Bulgarian law requires the operator to hold bank accounts with a bank which is not only licensed in EEA but which also has a presence in Bulgaria, although the accounts do not necessarily need to be held at a Bulgarian branch. The positive note is that there is a reasonable number of renowned banks established, or at least having a branch, in Bulgaria. Therefore, it is plausible to find the right bank and open the required bank accounts with confidence and peace of mind.
It is also interesting to note that each licensee must have a representative who is a Bulgarian resident. The representative is not required to have signatory powers but is merely a contact person between the Commission and the licensee. Furthermore, it is not necessary for the representative to be employed with the company. This is similar to the Maltese Key Official concept with the difference that it is not mandatory for the representative in Bulgaria to be a director of the company.
The BGC claims that unless complications arise, the application process should be completed in 6 weeks. If an operator is already in possession of a Malta or other EU licence, this simplifies the process in obtaining a licence in Bulgaria. In fact, a number of operators that have already obtained a Bulgarian licence are already in possession of a Malta licence. Furthermore, some of these operators have actually obtained their Bulgarian licence through their Maltese companies. This not an isolated case and our clients have repeatedly experienced the advantage of having a Malta licence when applying for other licences overseas.
All things considered, I believe that the Bulgarian online gaming regime is an exciting one to look into. It would be interesting to assess whether it provides enough assurances to establish a business case and move forward and obtain the necessary licences. In the long run, it could also prove to be an excellent gateway to other attractive markets in Eastern Europe.