Draft Law on Games of Chance Approved

The Government of the Federation of BiH, at today's session in Sarajevo, approved and sent to the FBiH Parliament the Draft Law on Amendments to the Law on Games of Chance. This was preceded by a public debate conducted in accordance with the conclusion of the House of Peoples of the FBiH Parliament.

Provisions have been amended to stipulate that the Law, among other things, regulates matters related to obligations for socially responsible organization of games of chance, prohibited activities, and taxation of winnings from games of chance and prize games.

A different method of calculating and paying monthly fees for organizing betting games based on recorded and computer-generated events (so-called RNG GAMES) has been defined. Instead of the previous lump-sum fee of 300 KM per month per betting shop, a basis for calculating fees has been prescribed, which represents the net result of the game on the principle that the basis equals the stake reduced by player payouts, with a proposed tax rate of 20 percent of the basis.

Rules and obligations regarding the application of the principle of socially responsible organization of games of chance have been prescribed for all organizers of games of chance. Taxation of winnings from classic (lottery) games of chance in the amount of 10 KM and more has been prescribed, with the application of progressive rates of 10 percent, 15 percent, 20 percent, and 30 percent, depending on the amount of the winnings.

The same progressive rates apply to the taxation of all winnings from betting games of chance, regardless of the amount of winnings.

Regarding the allocation of revenue from winnings tax, the revenue from withheld and paid tax will be directed to the budgets of municipalities/cities where the betting shops (branches) where the winnings were achieved are located, with the exception of tax collected from winnings from internet and SMS games, which is revenue for the budget of the Federation of BiH.

The issue of withholding and paying tax on winnings from prize games has also been regulated, with the provision that the amount of the tax-exempt basis will be reduced tenfold (from the current 1,000 KM to 100 KM), and the allocation of revenue from withheld and collected tax on winnings from prize games has been determined;

The rate of the prescribed monthly fee that organizers of games of chance in casinos and slot machine clubs are obliged to pay has been increased from the current five percent to 15 percent of the basis, which is the sum of the calculations for all slot machines and tables on the principle that the basis equals the total stake reduced by total payouts. In this regard, it is important to note that in the text of the Draft Law, considered before the public debate, a rate of 25 percent of the basis was proposed for slot machine games of chance. However, during the public debate, the proposer of the Law took the position that proposals from game organizers requesting the mentioned rates could be accepted to a certain extent.

The draft law clarifies the competencies and authorities of the Federal Administration for Inspection Affairs, in accordance with the Law on Inspections in the FBiH.

Provisions stipulating reasons for revoking licenses have been amended, and the possibility of revoking a license if the organizer fails to obtain approval from the competent federal ministry for each new betting shop has been provided.

The powers of the Federal Ministry of Finance to take concrete actions to prevent the harmful consequences caused by the increasingly prevalent phenomenon of illegal organization of games of chance through domestic and foreign internet sites or web portals accessible to citizens in Bosnia and Herzegovina have been clarified.

For all locations (betting shops, branches) for which a license to organize games of chance is issued, an increase in the mandatory minimum distance from religious buildings, as well as primary and secondary schools, from the current 100 to 200 meters has been prescribed. The powers and obligations of the competent municipal services to determine the existence of the prescribed minimum distance have also been established.

The draft law creates a legal basis for a partial increase in the volume of funds collected from fees for games of chance and directed towards financing programs and projects in the fields of labor and social policy, education, health, culture and sports, entrepreneurship and crafts.

The part of the provisions of Article 108 of the current Law has been amended, thus creating a legal basis for the preparation of amendments to the implementing act, which will, among other things, prescribe the method of calculation and reporting to the Tax Administration of the Federation of BiH on paid winnings tax for organizers.

The repeal of all provisions of the Income Tax Law, which previously regulated the taxation of income from games of chance, has also been prescribed, as this is regulated by the amendments to the Law on Games of Chance.

At the same time, the proposed law harmonizes the amounts of prescribed fines with the provisions of the Law on Misdemeanors in the Federation of BiH.