Croatia tightens gambling laws, industry voices black market fears
Croatia’s Recent Gambling Law Reforms: Implications and Industry Dynamics
The Croatian government has recently unveiled significant changes to its gambling regulations, emphasizing the enforcement of stricter advertising restrictions and increased taxation on operators. Local experts caution that these tax hikes could result in market consolidation and even the exit of some operators. As concerns about the burgeoning black market continue to escalate, the question arises: will these new regulations address the issue effectively?
Overview of the Regulatory Changes
In early October, the Croatian government presented a comprehensive strategy titled “Combating Addiction to Games of Chance and Betting,” detailing the forthcoming amendments to its gambling laws.
Prime Minister Andrej Plenković has committed to tightening regulations to mitigate the rising tide of gambling addiction within Croatia. According to research conducted by the Faculty of Education and Rehabilitation, an alarming 72.9% of high school students have engaged in gambling at least once, with 12.9% exhibiting signs of high-risk gambling behavior.
The proposed revisions focus primarily on curtailing "aggressive" advertising tactics that the government believes contribute to problem gambling. The key proposals include:
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Advertising Restrictions: A ban on advertising between 6 AM and 11 PM across various platforms, including the internet and radio. Additionally, the use of celebrities in gambling promotions will be prohibited, and advertisements must be inaccessible to individuals under the legal gambling age of 18.
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Self-Exclusion Measures: Introduction of a self-exclusion program to help individuals manage their gambling habits.
- Prohibition of Self-Service Betting Terminals (SSBTs): SSBTs will be banned in public venues like restaurants and cafes to limit impulse betting.
Taxation Changes: A Double-Edged Sword
The revisions also include substantial increases in taxation for gambling operators, a move set to reshape the financial landscape of the industry. Below is a comparison of current versus proposed tax rates:
| Tax Rate | Current Regulations | Proposed Regulations |
|---|---|---|
| 10% | On winnings up to €1,327.23 | On winnings up to €1,500 |
| 15% | On winnings between €1,327.23-€3,981.68 | On winnings between €1,500-€4,000 |
| 20% | On winnings between €3,981.69-€66,361.40 | On winnings between €4,000-€70,000 |
| 30% | On winnings above €66,361.40 | On winnings above €70,000 |
License fees for operators are also set to rise dramatically:
| Vertical | Current License Fee | Proposed License Fee | Increase (%) |
|---|---|---|---|
| Land-based Casinos | €400,000 | €600,000 | 50% |
| Online Casinos | €265,445 | €398,168 | 50% |
| Land-based Betting Shops | €132,722 | €200,000 | 50.7% |
Rationale Behind the Reforms
Marko Tomic, a partner at the law firm Siketić & Tomić, notes that these reforms represent the first significant modifications to Croatian gambling legislation in over a decade. Despite a thriving market—evidenced by Entain’s acquisition of SuperSport—there is a pressing need for regulatory change.
The motives for these reforms are twofold:
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Protecting Minors: There is growing political pressure to safeguard young individuals from underage gambling. The introduction of stricter regulations aims to shield minors from potential gambling-related harms.
- Combatting the Black Market: Tomic highlights the necessity of protecting legal operators from illegal entities that threaten both market stability and tax revenue. By implementing tighter regulations, the government aims to create a more level playing field for licensed operators.
Potential Impacts on Operators
Industry experts like Tomic and former MaxBet managing director Lazar Miucin anticipate that the regulatory changes will come into effect before the target date of January 1, 2026. While the long-term impact on operators remains uncertain, Miucin predicts that consolidation may occur as smaller firms struggle to adapt to the new landscape.
“Some mergers and acquisitions are likely, as smaller operators may find it challenging to remain competitive,” states Miucin. Conversely, Tomic asserts that the changes in tax rates may not compel operators to exit the market, citing their significant investments and contributions to employment in Croatia’s gambling sector.
Addressing Black Market Concerns
Combatting illegal gambling operations remains a primary objective of the government. Despite previous attempts to restrict access through IP blocking, Tomic notes that this approach has not effectively curtailed illegal activity. Thus, the government is now focusing on financial institutions, aiming to prevent transactions with unlicensed providers.
“The tax authority will be vigilant in monitoring transactions, specifically targeting suspected interactions with illegal gambling entities,” Tomic explains. This pivotal change is expected to foster a more compliant market, where licensed operators feel incentivized to adhere to regulations, even in light of increased fees.
Conclusion: Implications for Future Growth
The Croatian gambling sector has experienced robust growth in recent years. However, the upcoming reforms could redefine its trajectory. While the government argues that these measures will enhance player protection and curb illegal activities, past experiences indicate that heightened taxation and advertising restrictions might unintentionally bolster the black market, as players seek out less regulated environments.
As Croatia aligns its gambling policies with broader European trends—similar to shifts seen in the Netherlands and the UK—the industry stands at a crossroads, forced to navigate the balance between regulation and growth in a rapidly evolving landscape.
