Parliament passes controversial bill to nationalize lottery games

In a record time of several weeks Parliament passed a bill of amendments banning private actors from operating lotteries. The bill was introduced by one of the coalition partner leaders, Valeri Simeonov in January. The final vote for the bill took a total of 21 minutes and although it will wipe out a substantial portion of the private sector, MPs did not feel the need to debate the new law at all. They moved to vote without anyone taking the floor to speak. The change is a major shift in the country’s economy. According to recent estimates the gambling sector totals at about 3.2 billion leva or about 3% of GDP. This is the largest share in the EU and positions the country just behind North Macedonia in this respect.

The idea to give the state sole right to operate lotteries came at a moment when the government and prosecutors made moves, which clearly indicated Vassil Bozhkov - one of the richest Bulgarian businessmen and owner of the two largest private lotteries – had become an unfriendly figure. This was evidently decided in the circles of power as it took no more than several weeks to issue a European warrant for his arrest (he managed to leave the country before the warrant), charge him of seven counts of extortion, organized crime, tax fraud and more, raid his homes and foundations, and pass a bill to effectively nationalize his lottery business.

Bozhkov gave an interview to Svobodna Evropa a few weeks back (the first in over a decade), in which he threatened to sue the state if Parliament passes the bill to law.

The Bulgarian government has – officially and otherwise – protected Bozhkov’s private lotteries. One of the collaterals from the attacks on Bozhkov over the past weeks were officials from the State Gambling Commission: the head of the commission, Alexander Georgiev admitted he helped and provided state protection to Bozhkov’s lotteries.

The two largest private lotteries, owned by Bozkov pay about 50% less in fees thanks to a legal loophole. According to estimates the lotteries have managed to save 250 million leva in fees and taxes over the past five years. In Prosecutor General Ivan Geshev’s words, the number is closer to 550 million. While the loophole is there, it is not solid and definitely invites interpretation. The fact the state authorities have not raised the question of how the two largest private lotteries are forming their taxes and fees is telling enough about the state’s role in the well-being and security of these businesses.

Bulgaria clearly has a major gambling problem: lottery tickets are sold everywhere, while Bozhkov’s lotteries top the TV advertisers rankings every year. In the last decade the gambling business in Bulgaria has tripled in size. However, this has only been possible thanks to a more than accommodating government. Which begs a very serious question: is this bill aimed at tackling Bulgaria’s gambling problem or is it a campaign to take down Bozhkov.

It becomes more apparent every day that the answer is the latter.

Valeri Simeonov’s bill for example does not touch on the problem with TV advertising. This is in keeping with at least one business owner with close ties to the government. If the lotteries simply change ownership, they will continue to be one of the top incomes for the second largest private TV network NOVA TV. The network was acquired by the government-friendly notorious businessmen the Domuschiev brothers last year, after (and thanks to) two curious and convenient rulings by the state anti-monopoly body.

The bill introduces some limitations as to where tickets could be sold but they are not substantial. At the same time it fails to address another growing problem entirely: the rapid expansion of casino sites and their unregulated aggressive street advertising.

After the vote Simeonov told reporters that he expects the nationalization of the lottery games to shed light on the sector, as it was often associated with high crimes like homicide and extortion. He took the opportunity to suggest state regulative bodies such as the State Gambling Commission was complicit or silent in covering up – for example, tax eversion – because officials were fearful of the fact such business owners were apparently untouchable. An interesting suggestion, given that the only difference between then and now is that the government just decided otherwise.