Tough gambling advertising restrictions implemented in May in Bulgaria have hit operator revenues hard and, with no real respite in sight, they are weighing up their options, including exiting the market altogether.

With a regulatory framework dating back to 1998, Bulgaria is one of the most mature and established gambling markets in Europe – but recent changes to regulation are placing the jurisdiction on shaky ground.

On 18 May this year, the government introduced a tough set of new regulatory measures for the gambling industry, including a near complete ban on advertising. Almost overnight, licensed operators in Bulgaria were barred from taking out ads on radio, television and in newspapers, as well as on online media websites.

Billboards were still permitted, but only if they were at least 300 metres away from schools, universities, playgrounds and other protected areas, with at least 10% of advertising space dedicated to a warning about the dangers of gambling. Advertising on buildings offering gambling services were also strictly controlled, with no more than 50 square metres or 20% of the whole facade allowed to display the advert.

Beyond the crackdown on advertising, MPs also voted to include certain social groups on the national self-exclusion register, including people receiving state support – effectively banning welfare recipients from gambling.

For land-based operators, a particularly odd clause in the law stipulated that gambling venues were no longer permitted in any town with a population under 10,000. Operators in breach of this rule – or located within 300 metres of a protected area like a school or student accommodation – were given three years to close.

Diversification is the only option for local brands

According to Mark Chakravarti, investments director at local operator Sportingwin, the advertising ban has led to a steep decline in revenue for Bulgaria-facing operators.

“Global research shows that when they have these bans put in place, especially limiting TV commercials, there is a drop of 20% revenue in the next two months,” he tells iGB. “I think it’s been very similar in the Bulgarian market.”

Since the ban was introduced back in May, for example, major market players like Sesame, 8888 and Winbet have all seen a double-digit dropoff in website traffic, equating to a similar drop in revenue. For Entain’s Bwin, which has been licensed in Bulgaria since 2016, traffic declined by as much as 17%.

When it comes to weathering the storm, operators like Sportingwin with regional know-how and expertise have proved to be more resilient than their international counterparts, facing a single- rather than a double-digit drop in revenue after the new law was introduced.

Who’s next to leave Bulgaria?

In contrast, major players like Betway and Betfair have chosen to exit the market in recent years, as the regulatory climate has made it more difficult for them to operate. Chakravarti believes that Bwin could be next.

Speaking on an Eastern European Gaming Summit panel on 22 November 2023, Bulgarian Gaming Association chair Angel Iribozov described regulatory changes in Bulgaria as a “perfect storm for operators” and “disastrous” for the market. And the storm already appears to be having a chilling effect on gaming companies active in the region.

“As a small local brand operator, we have a better understanding of the local market, we have better expertise, so we are able to change and adapt,” he said. “But we can see that the big operators that are foreign, international – they are not aware of the local markets, they don’t have the geomarket expertise,” he notes.

Recent clarifications from Bulgaria’s regulator, the National Revenue Agency (NRA), have opened up some new possibilities for online advertising. These limit the ban to online media companies who exercise editorial control over adverts, meaning many social media sites could be exempt from the rules.

However, this minor concession is unlikely to offer much relief while the TV ban – which Chakravarti says is most damaging to operators – remains strictly enforced.

“Around 5% of customers bring in 95% of the revenue,” he explains. “And not many of these come through social media.”

Nevertheless, Sportingwin is currently hedging its bets by exploring three new jurisdictions: the UK, Romania and Brazil. Having reached what it believes is a ceiling in the increasingly tough Bulgarian market, diversification seems to be the only option.

Increased hurdles for market entrants 

For a long time, the regulated Bulgarian market was seen as an attractive option for gambling firms, largely thanks to its low corporation tax, EU membership and relatively low barriers to entry.

Currently, there are 15 licensed operators active in the market, including major local players like Efbet, Winbet and Palmsbet, as well as international brands like Bet365 and Bwin and newer market entrants like Sportingwin and Betmarket.

According to Yield Sec, which tracks online gambling activity in regulated markets, the impact of the advertising ban was felt in the market long before it came into force.

It estimates illegal operators accounted for around 87% of GGR in Bulgaria in 2023, netting around €3.8 billion in revenue compared to the regulated market’s €562 million in revenue. In the first half of 2024, in the lead-up to the new regulations, the illegal market share grew to 91%, according to Yield Sec estimates.

But while there have been attempts to crack down on the black market by blocking payments to unlicensed companies, hurdles for new licensees are also getting higher.

At the end of the last year, the government brought in a hike in the licence fee for new entrants to the online sports betting market – from BGN100,000 (€51,000) to BGN400,000 (€204,000).

From May, the amount of paid-in capital (investor contributions) required for a licence also rose from BGN500,000 (€255,000) to BGN750,000 (€383,000).

Politicians unwilling to hear industry’s concerns

This, along with the ever-changing regulatory landscape, is creating a “challenging” environment for newcomers, Chakravarti says. More worryingly, there seems to be little possibility of dialogue with politicians or the regulator.

“From my knowledge of Bulgaria, there are a lot of regulatory controls that keep changing and politicians are shifting the goalposts, which becomes very challenging for operators,” he explained.

In a particularly worrying sign for the industry, the advertising ban and accompanying regulations were voted through unanimously back in May, as Bulgaria’s parliamentary parties put aside their differences to present a united front against the sector.

With this top-down approach and ever-shifting regulation, operators in Bulgaria appear to be left with just two options: adapt or look elsewhere. As the coming months unfold and old licences expire, we’re sure to find out which of these roads they’ll take.

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