site.btaPM Borissov Reacts to Recent Developments in Gambling Industry

January 23 (BTA) - At the start of Thursday's Cabinet
meeting, Bulgarian Prime Minister Boyko Borissov commented on
recent developments concerning the gambling industry.

Borissov pointed out that many people will face problems if a
watchdog report on private lottery operators over the last five
years proves to be true. "If it doesn't, they have nothing to
worry about. We have fulfilled our obligation to check and find
out, and this is being done in many companies, so now is the
time for this particular check," he added.

The PM was referring to the inconclusive results of a check
conducted by the Public Financial Inspection Agency (PFIA) of
the State Commission on Gambling's operation between 2014 and
2019. Unveiling the results at a news conference on Wednesday,
PFIA Director Georgi Nachev said that over the past five years
only the State-owned Bulgarian Sports Totalizator (BST) paid the
 gambling fee at the rate of 15 per cent of the bets, while two
private lottery operators paid a significantly lower fee: 20 per
 cent on the difference between bets and winnings. As a result,
gambling revenues were undercollected by around 210 million
leva.

Nachev was non-committal as to whether the lower fees were paid
legally and whether the private operators inflicted a detriment
on the Exchequer, arguing that a conclusion on this issue will
have to wait until his inspectors peruse all the relevant
documents. He also pointed out that the discrepancy between the
rates at which the public and private operators paid their fees
is likely to increase substantially once the findings are
finalized.

In an interview for the Bulgarian Service of Radio Free
Europe/Radio Liberty (RFE/RL), published on Wednesday, Vassil
Bozhkov, who chairs the Board of Nove AD Holding (the majority
owner of the two lottery operators in question), insisted that
his companies did not violate the law by paying the lower fees,
but admitted that the private lottery would have gone bankrupt
if it had paid at the rate of the BST. Bozhkov argued "the
amount of tax they pay does not matter to the BST - they are in
the red anyway every year ."

Levski PFC Financing

Borissov said that the PFIC report does not say anything about
Levski PFC, noting that he does not see a connection between the
 non-payment of fees and the club's financing. He said that, as
requested by the football club fans, he will meet with them on
Friday to discuss the issue.

The PM was reacting to a statement by Bozhkov, the principal
sponsor of Levski PFC, who told Levski fans at a meeting on
Monday that he would not have any money to give Levski if the
Gambling Act is amended as proposed by Valeri Simeonov MP of the
 power-sharing United Patriots to ban the operation of lotteries
 by private companies and make this business a State monopoly.
Bozhkov argued that this is an attempt at a State takeover of
his business by "a group of incompetent politicians who show
disregard for, or ignorance of, the Bulgarian Constitution". In
his RFE/RL interview, Bozhkov specified that the proposed
amendments contravene the Constitution because it exhaustively
lists the areas which can be monopolized by the State and
gambling is not among them.

Borissov does not believe that probing a close to 3 billion leva
 business and making sure that it pays taxes and fees is
tantamount to "nationalization". He recalled that the lottery
operators' activity is subject to licensing requirements and
argued that if someone is found to have failed to pay hundreds
of millions in fees due, they will forfeit their licence but not
 their company.

Denying any link between the PFIA report's conclusions and the
proposed Gambling Act amendments, the PM said he had assigned
Finance Minister Vladislav Goranov and Parliamentary Budget
Committee Chair Menda Stoyanova to make sure that the majority
in Parliament seconds a proposal that would guarantee that only
the State will organize this activity and it will be not be
subject to concession awards, outsourcing, contracting or
privatization.

In this way, Borissov dismissed allegations that the proposed
legislative changes are intended to "bring in other players into
 this business".

Later on Thursday, the National Assembly Budget and Finance
Committee voted, 11-0 with six abstentions, to approve
Simeonov's Gambling Act amendment bill. According to the bill,
the Bulgarian Sports Totalizator State-Owned Enterprise, when
licensed accordingly, will be the only operator which can
organize lotteries with the exception of raffles, bingo or their
 varieties. The draft legislation prohibits unlicensed persons
or establishments or chains of establishments from organizing
games of chances, distributing tickets, coupons, cards or other
tokens and paying games-of-chance winnings. Approached by
journalists, Simeonov said that the bill does not need to be
notified to the European Commission and is consistent with the
Constitution because the entire gambling industry is not
monopolized, private operators can still organize gambling in
other substantial forms, and "they, too, will be addressed in
due time".

State Regulation to Be Reorganized

In a related development, the Finance Ministry has published for
 public consultation a bill replacing the State Commission on
Gambling (SCG) by a National Agency on Gambling under the
Minister of Finance. By the same draft legislation, the gambling
 fee on lotteries, pool betting and sports betting would be cut
by some 30-40 per cent, from 15 per cent of the bets to 25 per
cent on the difference between the bets and the winnings. The
proposal is prompted by a need to improve the efficiency, speed,
 transparency and consistency in applying the law and thus
address defects and problems detected in the SCG's operation.
Another reason is to streamline and avoid conflicting
interpretations of the Gambling Act. RY/MT, LG

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