Bulgaria’s tax on gambling could be raised to 15 per cent as early as next year, according to a Cabinet plan made public on November 4.

Amendments to the Corporate Revenue Act adopted by Parliament at first reading on November 4 increased the tax rate to 12 per cent from 10 per cent. But Parliament’s budget committee chairperson Menda Stoyanova has said that there could be an even more dramatic increase, hinting at the 15 per cent benchmark.

Her proposal came as a poll commissioned by the Ministry of Finance showed that raising the corporate tax on gambling enjoyed the broadest public support and was approved by 84 per cent of the respondents.

Fixed-odds sports betting outfit EuroFootball is now paying the brunt, with sports and national lottery bets now taxed at 10 per cent of turnover and not on the profit. The company said in a statement that the gambling tax was about five or six times higher than the tax imposed on other commercial entities operating on the Bulgarian market because it was based on the entire turnover, without deducing payment and activity expenses.

Poland’s sports minister has resigned amid allegations he was involved in lobbying for the gambling industry.

Miroslaw Drzewiecki announced his decision after Rzeczpospolita newspaper published transcripts of tapped telephone conversations.

In the calls between a politician and a gambling industry boss, Mr Drzewiecki was allegedly named as someone who could help block planned casino taxes.

Mr Drzewiecki denies wrongdoing, saying he has been falsely accused.

The allegations may taint the reputation of PM Donald Tusk’s centrist government.

The politician in the tapped phone calls has been named as Zbigniew Chlebowski, the head of Mr Tusk’s Civic Platform (PO) parliamentary group.

He has been suspended pending an inquiry into what Polish media have dubbed “Black Jack-Gate”.

The bill, which is expected to be debated in parliament soon, proposes higher taxes on the gambling business to channel more money into overstretched state coffers.

Both Mr Chlebowski and Mr Drzewiecki deny wrongdoing.

Drop in support

The sports minister said was resigning to prevent the situation from affecting important projects, such as plans to build football stadiums for children, or football’s Euro 2012 championship, which Poland is set to co-host with Ukraine.

Tusk took power two years ago with a pledge to clean up government

“I believe that when the media frenzy dies down and all the circumstances relating to the gambling bill have been clarified, it will turn out that I have been falsely accused,” he wrote.

“(But) I cannot allow this situation to affect the Euro 2012 preparations or my beloved Orliki project,” he said, referring to the stadium-building plans.

The accusations have dented support for the government, polls suggest, with a 6% drop in support for the PO since the scandal emerged last week.

Mr Tusk took power two years ago with a pledge to clean up government.

An MP’s brother frittered away more than £600,000 he stole from clients through his work as a financial adviser on a gambling addiction, a court heard today. Martin Pearson, brother of Dudley South MP Ian Pearson, was jailed for four and a half years earlier this year after he was convicted of conning seven victims out of a total of almost £700,000. One of his victims lost her entire life savings of £226,000.

Pearson, aged 48, of Sandy Lane, Tettenhall, Wolverhampton, created huge insurance policies and stashed the cash in a savings account. His ill-gotten gains are believed to total around £694,000.

Today a Proceeds of Crime hearing at Wolverhampton Crown Court, sitting at the Waterfront in Brierley Hill, was trying to claim back cash. The court heard that financial investigators had failed to find any assets apart from the home Pearson shared with his wife Doreen and a diamond bracelet recovered from the property worth £6,450.

The hearing, which was expected to conclude today, continues.

Moves to liberalise the online gambling market suffered a setback yesterday when Europe’s highest court ruled that governments could bar foreign online bookmakers if the intention was to combat fraud.

The ruling, in a case brought by Bwin, the Austrian gaming group, against Santa Casa de Misericórdia de Lisboa, Portugal’s state-controlled sports betting monopoly, will add to difficulties for online gaming businesses, which are struggling to secure legal rights to expand across Europe.

Bwin, which operates the website betandwin.com, challenged Portugal’s right to continue operating a nationwide electronic-betting monopoly that excludes other companies from taking internet bets in the country.

Bwin, which used to sponsor the Portuguese football league, had argued that the monopoly broke EU rules on the free movement of services.

But, while the European Court of Justice acknowledged the monopoly was a bar to free trade, which is illegal under EU law, it said that Portugal’s objective — to restrict internet gambling to combat fraud and other crimes — outweighed free trade concerns. It said that betting carried a high risk of fraud, which was exacerbated when bets were made online.

The ruling will increase concerns in the online gambling industry that European governments will be able to use fraud prevention as an excuse to avoid opening markets to competition.

Egaming bank Ivobank has now announced it is to be shut down after its bankers decided not to fund the business any further.

Ivobank launched in 2008 with the vision of being the largest EGaming online banking service, however, from the start Ivobank has experienced both technical and business problems.

The UKfinancial services authority (FSA) which were the licensers of Ivobank had requested the billionaire owners, the Sampoerna Family to inject more funding, however, the family decided not to do so.

Ivobank will not be accepting new customers from now on and will have more details for current stakeholders in the near future.

Broadcast regulators ordered Camelot, the lottery’s parent company, to drop the emailed advert.

The company breached guidelines of ‘social responsibility’ by trying to get its customers to increase the amounts they gamble.

The online promotion, sent to those with an online account to play the lottery, included the message: “The more you play the more likely you are to win.”

It added: “Give yourself even more of a chance by playing multiple lines at once and playing for the Saturday and Wednesday draws.”

The Advertising Standards Authority upheld a complaint that Camelot encouraged excessive gambling although it rejected the suggesting it implied gambling was ‘indispensable.’

The Lotto owners said it was simply trying to get its customers to play the game online with a light-hearted email listing various excuses they could use not to take part.

In its defence to the ASA, Camelot said: “The ad was designed to stress some of the advantages of playing the Lottery interactively and mentioned features like automated ticket checking, advance play and win notifications.

“It did not encourage excessive play but provided information that helped recipients decide if they wanted to play Lottery games interactively.”

The gambling industry is growing rapidly in south eastern Europe, attracting tourists from neighbouring countries, creating jobs and generating tax revenues. However, the sector is also thought to engage widely in tax evasion and appears to play a role in money laundering for organized crime.

At the higher end of the market, casinos offer roulette wheels, as well as traditional card and dice games such as blackjack and craps. In countries where casinos are tightly regulated, few casinos operate–there is only one full casino in Serbia and one in Bosnia-Herzegovina, compared to 24 in Romania, where the market is completely unregulated. Casinos tend to attract consumers from outside the host countries.

At the lower end of the market are vast halls filled with slot machines, as well as bingo games and lotteries. BiH has 2,000 slot parlours and lottery shops for a population of 3.9 million, while Romania has 25,000 gaming houses for a population of 22.3 million. Gaming houses target the local population rather than tourists.

A recent report by the Organized Crime and Corruption Reporting Project–which brings together regional investigative journalists–estimates that 1.5 billion euros ($2.2 billion) a year is staked in the gambling industry in southeastern Europe. The sector may thus be expected to contribute significantly to the economy, through two main routes:

1.  Tax Revenues

Macedonia reports income of $2 million per year from taxes on gambling; Serbia earned 12 million euros in only the first quarter of 2009 from this source and Bulgaria 57 million euros in 2008. However, there is also widespread tax evasion. Many casinos and gaming houses have been found to keep two sets of accounts, one that records losses and is submitted to the tax authorities, and another authentic record that reveals vast profits.

2.  Job Creation

The industry has created 1,600 jobs in Macedonia, and pays average salaries to its workers of around $650, more than twice the national average. In Bulgaria, the industry is estimated to create 80,000 jobs directly and indirectly, and pays wages around 50% higher than the national average.

Balkan governments urgently need to find effective solutions to regulate the gambling industry, so as to limit access for organized crime and allow the state to benefit from the industry’s vast profits. However, the sector attracts some powerful criminal figures, while regulation is inherently vulnerable to corruption.

The Crown corporation that regulates gambling in British Columbia is raising the weekly limit on its online gaming website from $120 to nearly $10,000.

The B.C. Lottery Corp. sets limits on users’ weekly spending for its Play Now website. The corporation’s president, Michael Graydon, said it wants to give players the opportunity to set limits based on their own economic situation.

The move prompted criticism from the New Democrats, who say groups concerned about problem gambling should have been consulted.

Economic and regulatory concerns in core Eastern European markets have caused first-half earnings at Estonia-based Olympic Entertainment to slide by more than 90 percent.

The Estonian Stock Exchange-listed casino operator said that total consolidated revenues for the first-half of 2009 fell 31 percent to €61.7m, with EBITDA falling sharper still, down 91 percent to just €1.53m from €17.25m in 2008.

Olympic Entertainment operates almost 90 casino venues across eight Eastern European countries, but has been hard hit by the parlous economic situation in key Baltic markets, as well as the suspension of all casino and slot machine operations in Ukraine under new legislation rushed through the country’s parliament in May and June.

The company said revenues fell sharpest in its domestic market, Estonia, down 56 percent, but casino operations in Latvia and Lithuania also reported sharp declines for the first six months of the year of 40 percent and 38 percent respectively. The revenue declines plunged the company to a consolidated loss of €22.5m for the period, down from a €6.4m profit in the prior year.

Olympic said it closed a total of 27 loss-making casino venues over the first six months of 2009 – 13 of which were in Estonia and seven in Latvia – to add to the ten the group had already shuttered in 2008. The number of staff was also cut by 616, or 16 percent, Olympic told investors in a stock exchange filing last week.

The global downturn has led to grave concerns being voiced over the short-term economic future of Eastern Europe as a whole. Several countries – including Latvia and Hungary – have already turned to the IMF for help, while analysts believe others – such as Lithuania – could follow later in the year.

GDP fell by record levels of around 20 percent in both Latvia and Lithuania in the second-quarter and the region’s economic growth of recent years has become but a distant memory since the global economic situation worsened towards the backend of last year.

Nonetheless, certain economists consider Eastern Europe’s crisis to have essentially ‘bottomed out’ in the earlier months of 2009, with the threat of mass sovereign defaults having now rescinded.

Such a view was backed up by Olympic’s figures. The company said revenues from continuing operations were up very marginally (0.7 percent) in the second quarter from the first. “In spite of negative developments on markets, in the second quarter of the year the level of consolidated revenues has stabilised after significant decline during the first two months of this year,” the group said.

Olympic said that the month-long shutdown of all gambling venues in Ukraine in May and June, imposed by the government following a tragic fire at a slot hall in Dneprepetovsk, had cost the firm a total of €1.2m in lost revenues.

Olympic liquidated its three Ukrainian subsidiaries after that original month-long ban became more permanent when a controversial new gambling law was approved by President Viktor Yuschenko as the quarter drew to a close.

The legislation bans all gambling businesses in Ukraine only until new rules are drafted to establish Russian-style gaming zones in more remote parts of the country, although most commentators consider the ban likely to be in force for an indefinite period of time.

Olympic estimates its impairment losses as a result of Ukraine’s legal changes to be in the region of €12m, but reiterated its intention to pursue compensation from the country’s government over the cancellation of its gambling licences. The company confirmed that the process to pursue redress under bilateral trade agreements signed between Estonian and Ukrainian governments had already begun.

Publication of Olympic’s first-half results came just over a week after ratings agency Moody’s confirmed fellow Eastern European gaming operator Ritzio Entertainment had entered restructuring talks with creditors following the adverse regulatory changes in Ukraine that saw the company default on a coupon payment due July 27.

Ritzio has also been negatively affected by the shutdown of casinos and slot machine parlours in neighbouring Russia – whose own gambling ban took formal effect on July 1 of this year.

The gambling blackout in the region’s two largest countries has seen Eastern Europe’s gambling map radically redrawn this summer.

With the Russian and Ukrainian markets now off-limits to operators, several nearby countries – including Latvia, Belarus and Bulgaria – have already floated plans to liberalise their gaming sectors in order to attract visitors from Russia and Ukraine. However, local observers remain cautious that any plans to attract investment will remain contingent on the broader economic situation in individual Eastern European countries.

By contrast to the turbulent situations in the three Baltic states, Olympic said it had seen first-half gaming revenues grow in Slovakia, Romania and Belarus, while revenues from Poland witnessed a more modest single-digit drop.

We can make no bones about it – online payment processing is one of the most contentious areas of online gambling. With financial services often targeted by governments looking to gain a handle on the industry, it can prove a hotbed for potential conflict – which makes Paypal’s re-entry into the market all the more interesting.

Having previously declined to accept online gambling business in Europe, the company have now reversed the decision, giving Paypal some hope of moving into the US market should it re-open. American players are still unable to use Paypal to settle wagers at the moment, although the fact that their British counterparts can now move funds into their online casino and bingo sites will certainly be encouraging.

Paypal’s softening towards online gambling follows a general trend among European companies, with Google being another which has a new found acceptance of online gambling operators.

Eyes will now be cast towards the US and European governments to see if any more restrictions will be imposed on the likes of Paypal, Ivobank and other money processing companies.

Courtesy of Gambling Online Magazine