Vojnović: Bad laws have destroyed Croatian bookmakers, and the same will happen in FBiH

There has been an enormous drop in turnover at the betting points of Croatian bookmakers, and a large part of the money in the domestic market has shifted to the market of machines owned by foreign companies, money has also flowed to the black market and to foreign online bookmakers, whose turnover from players from Croatia has significantly increased. Because of all this, domestic bookmakers in Croatia are on the verge of collapse.

This was warned by Danko Vojnović, director of the Croatian Association of Sports Bookmakers.

Domestic organizers of games of chance in FBiH face the same fate as organizers in Croatia if the House of Peoples of FBiH adopts the amendments to the Law on Games of Chance, as proposed by SDA. With the amendments to the Law on Games of Chance, SDA wants to tax all players by 10 percent upon deposit and by 10 percent upon payout of any winnings. This taxation would apply to all players of games of chance, except for those who play on machines. And, there are machines only in Lutrija BiH. Simply put, if the law is adopted as proposed by SDA, it will be better for players to try their luck on machines due to lower taxes than on any other game offered by domestic organizers of games of chance. This will put domestic organizers of games of chance at a disadvantage compared to machines, which are owned by the Austrian company Novomatic, and which Lutrija BiH only rents. The main part of the profit from these machines goes to the machine owners, i.e., outside of BiH.

Can you compare the previous and current legal measures? How has the current Law on Games of Chance affected the business of private organizers of games of chance in Croatia?

Vojnović: The current Law on Games of Chance in the Republic of Croatia came into force on January 1, 2010, i.e., before Croatia's accession to the European Union on July 1, 2013, and has been amended and supplemented a total of four times since then.

The last amendment introduced taxation of all betting winnings at a rate of 10 percent on winnings up to HRK 10,000, at a rate of 15 percent on winnings above HRK 10,000 to HRK 30,000, at a rate of 20 percent on winnings above HRK 30,000 to HRK 500,000, and at a rate of 30 percent on winnings above HRK 500,000. Although the organizers of games of chance reacted to the proposals for such amendments to the law and sent numerous appeals to state institutions in which they clearly described all the negative consequences of such legal changes, unfortunately, the amendments in question were adopted and have had an extremely negative impact on the business of private betting organizers in Croatia.

There has been an enormous drop in turnover at betting points, and a large part of the money in the domestic market has shifted to the market of machines, to the black market, and to foreign online bookmakers, whose turnover from players from Croatia has significantly increased. From this, it is evident that these legal measures are a complete failure that Croatia is paying dearly for, as it has allowed money to flow out of it unimpeded to other countries, instead of coming to Croatia.

However, to prevent a complete collapse of the games of chance industry in Croatia, the state has allowed bookmakers to set up and operate up to two multigame machines per betting point, and some organizers have decided to try to prevent operating at a loss, and instead try to break even.

Is it possible to make long-term business plans in the games of chance organization sector in Croatia under the existing legal measures?

Vojnović: After the introduction of taxation on all winnings, long-term business planning has become almost impossible, given that it is first necessary to remedy all the negative consequences arising from the introduction of taxes on all betting winnings and to establish traffic stability. Also, making long-term plans is impossible due to the (too) frequent changes in legal regulations. Unfortunately, the trend of players switching from domestic organizers to foreign online bookmakers is becoming more pronounced, and in the future, we can expect an even greater outflow of money to these foreign online bookmakers, which will lead to even more pronounced negative consequences for domestic organizers, and possibly to the complete closure of companies and the dismissal of all employees, because this model of taxing winnings is unsustainable in the long run. It is necessary to equalize the betting conditions for players in domestic organizers and in foreign online bookmakers, so that domestic organizers are more competitive in the domestic and foreign markets and so that they can survive.

Has the current Law on Games of Chance led to a decrease in turnover/profit and the number of jobs for private organizers of games of chance? In other words, has it brought more harm than good to Croatia?

Vojnović: For any responsible company to stabilize its business, it is necessary to conduct continuous analyses and monitor the implementation of both short-term and long-term plans. Bookmakers in Croatia, after the law came into force, could not even dream that there would be such unforeseeable negative consequences of the law amendments for the organizers.

At first glance, the law was favorable for Croatia's budget in the short term, however, after that period, irreparable negative consequences arise because players have largely turned to foreign online bookmakers and the black market, so we are now in a situation where both the state and the organizers will lose due to the "grotesque" legal regulation.

Of course, foreign online bookmakers, who are protected by European Union regulations, are rubbing their hands, and it is no one's fault that Croatia did not know how to enact a good law for its organizers. Turnover is decreasing every day, which means fewer branches and fewer employees, and amending the existing law and harmonizing it with the laws of, for example, the United Kingdom, Ireland, Belgium, Italy, Bulgaria, Austria, Germany, etc., is inevitable, sooner or later.

What can private organizers in FBiH expect if the Bill on Amendments and Supplements to the Law on Games of Chance is adopted? Will there be a shift of players from private betting shops to machines, as well as to foreign online bookmakers and the domestic black market?

Vojnović: We are monitoring the situation in FBiH and see that the proposed amendments to the law stipulate that players pay a 10 percent fee on deposits and a 10 percent tax on all winnings for betting with private organizers, while for betting on machines they will pay only a 10 percent fee on deposits, and for betting on foreign online bookmakers and on the black market, players do not pay any tax, nor will the new legal measures change that.

If such amendments to the law are adopted, private organizers in FBiH can expect the same or even greater negative consequences that have affected organizers in Croatia, i.e., a drop in turnover and loss of players. Such a legislative solution will not bring the expected results for the state, but on the contrary, negative fiscal effects will be realized, as there will be a loss of player interest in playing at domestic bookmakers and a shift of players to foreign online bookmakers and the black market, which, according to the information we have, is very developed in FBiH.

In addition to the loss of revenue due to the drop in turnover, it is expected that the FBiH budget could suffer huge losses due to the inevitable closure of betting points, layoffs, and even the closure of organizers. We are carefully monitoring the situation in FBiH and must say that we notice that various political games are being played there, unfortunately, and that the amendments to the Law on Games of Chance were not approached with a professional analysis of available data, but were framed more as a national issue. This way of amending legal regulations is an ideal recipe for destroying private bookmakers, without considering how many employees they hire and how much they pay into the budget annually. A smart person learns from the mistakes of others; responsible politicians in FBiH could have seen from the mistakes in Croatia that this model of taxation does not work and that it will only harm the FBiH budget and shut down domestic companies, but perhaps that is precisely what they are interested in.