The “Online Gambling in Bulgaria” article series highlights Kambourov & Partners’ expertise in gambling regulations, specifically in the fields of licensing of gambling operators, requirements for gaming software development and ancillary activities, ethical advertising, responsible gaming, and other areas of interest.
Be sure to regularly check the Kambourov & Partners’ website and social media accounts for analyses, news and updates regarding the regulatory world of online gambling.
Whereas once gambling was mostly organised in specialised physical facilities – casinos, gaming rooms, or sports bookmakers, online gambling is now firmly the norm rather than the exception. This leads to a commercial opportunity for online gambling operators to expand into other markets more quickly and cheaply than ever before.
The present article highlights the relevant starting point from EU and Bulgarian perspectives for those who wish to organise gambling games online. The next article in the series examines when a Bulgarian license is required for those entities who wish to provide ancillary gambling organization activities, e.g. software development or customer support.
While the EU’s single market presents many businesses with seamless expansion opportunities, EU online gambling entities do not benefit from the same unhindered use of the freedom to provide services across the Union(1) taken for granted in so many other industries. The obtainment of a gambling license in one Member State does not lead to mutual recognition in others. The Court of Justice of the EU has consistently held in a long line of decisions that while requiring a separate national license or even limiting gambling authorisations to a single operator usually represents a restriction on the freedom to provide services, such “restrictions may be justified by overriding requirements in the public interest, such as consumer protection and the prevention of fraud and incitement to squander money on gambling”(2).
The lack of direct contact between consumer and operator in an online gambling setting has been cited numerous times as increasing the risk for potential fraud as compared to the traditional market for such games(3). Thus, in the absence of harmonised EU legislation in the area of online gambling, each country is entitled to apply its own set of rules to the provision of services by an operator who lawfully organises gambling games in another Member State, even when subject to the strict legal controls and conditionalities of that other state(4). The reasoning is that those external controls may not translate sufficiently well across borders and provide the required level of national consumer protection against potential fraud and crimes, because of the difficulties liable to be encountered in a transborder online context by national authorities(5). Furthermore, games of chance represent one of those issues where the Court has recognised the presence of significant moral, religious and cultural differences between the Member States(6).
With that said, national authorities are still not free to regulate as they please – the Court has made it clear that applying discriminatory regulatory rules which make it unjustifiably more difficult for a gambling entity based in another Member State to operate is contrary to the service provision freedom(7). Furthermore, the Court has stated incompatibility with EU law of national rules which while not discriminatory per se are applied in a non-transparent manner or in effect prevent or hinder the licensing applications of companies established in other Member States(8).
In this context, the online gambling regulatory framework in Bulgaria represents one of the most open licensing regimes in the European Union, where the organisation of practically all types of gambling games:
(i) raffles, bingo, and keno games;
(ii) betting on outcomes of sports competitions and horse and dog races;
(iii) betting on chance events and betting on guessing facts;
(iv) games played with gambling machines; and
(v) casino games,
is subject to an unlimited number of licenses that can be granted for each game and treats all EU, EEA, and Swiss entities as fully equivalent to Bulgarian companies, without requiring prior operation in the country or the establishment of a local branch. Only the organisation of lotteries with the exception of raffles, bingo, and keno games is reserved for the state(9).
A license for the organisation of online gambling games is granted by the Bulgarian National Revenue Agency (“NRA”) following a strict procedure outlined in the Gambling Act. Any successful application for a license requires careful compilation, drafting, and review of the required documentation. Expert legal assistance is invaluable, especially in relation to the requirements regarding minimum investment and capital amounts, communication systems compliance (including local server and central computer system procedures and connectivity), testing and compliance of the gaming software and equipment, privacy, responsible gaming and other internal procedures.
For any company wishing to expand and offer its gambling games to Bulgarian customers, the regulatory consultants at Kambourov & Partners offer the perfect mix of apt legal expertise, ample relevant experience, and a strong commercial outlook to achieve the desired result.
(1) Article 56, Treaty on the Functioning of the European Union
(2) Stanleybet International & Others, EU:C:2013:33, paragraph 23 and caselaw cited therein
(3) Sporting Exchange & Others (Betfair), EU:C:2010:307, paragraph 34 and caselaw cited therein
(4) Liga Portuguesa de Futebol Profissional & Bwin International, EU:C:2009:519, paragraph 69
(6) Digibet & Albers, EU:C:2014:1756, paragraph 24 caselaw cited therein
(7) Unibet International Ltd, EU:C:2017:491, paragraphs 44-45
(8) ibid., paragraph 46
(9) Paragraph 9, subpara. 1 of the Transitional and Final Provisions to the Amendment and Supplementation Act to the Gambling Act (SG, No. 14 of 2020)