EASTERN EUROPE MARKET REPORT BULGARIA
Population 7.1m Under 15 1m Aged 15-64 4.8m Urban population 71 percent Major cities Sofia (1.2m), Plovdiv (340,000), Varna (330,000) GDP per capita $13,500 Business climate A recent EU entrant but not yet in the eurozone, Bulgaria enjoyed significant inward investment in the second half of the last decade until this was sharply reduced by the global downturn. Corruption and organised crime are major issues.
Bulgarian gaming is in an astonishing decline, with the industry contracting by 25 percent in 2010, and an alarming 40 percent over the last two years. The reason is simple: a 70 percent tax levied on the industry by government. Last year saw the total number of gaming machines slide from 21,232 units to 16,613. The previous year, 2009, began with 26,089 units in January. That’s a fall of almost 10,000 slot machines in two years. The number of arcades has of course fallen sharply too, from 975 in January 2009 to 855 in December 2010.
The new tax law, which came into force on 1 January 2010, means that machines taxed at BGN1200 in 2009 are now liable for BGN2000. Regulators in Bulgaria are raising the question of making
revisions to the existing Gambling Act, but unless something is done soon it will be too little too late for an industry in arrest.
Population 7.3m Under 15 1.1m Aged 15-64 5m Urban population 56 percent Major cities Belgrade (1.1m) GDP per capita $10,900 Business climate Inheriting an economy devastated by the Milosevic period, a pro-business government has adopted policies of liberalisation, privatisation and support for smaller firms. It aims to join the EU in 2014. Signs of recovery from the world economic crisis have been good. But unemployment, corruption, an ageing population, and lack of growth in household incomes are all concerns.
Gaming is a healthy contributor to the Serbian state, delivering ¤49.28m in taxes in 2010 from just over 17,500 slot machines. While there are just two casinos in the country, there are 1798 gaming halls with slots; there are no restrictions on the number of slots that a hall can accommodate, but the average is around ten machines per site, though some hold up to 300 machines. These gaming halls operate under licence, and there are just 72
licence-holders in the country. The major players are Slot Club Aleksandar (GIOIO), which manages around 2000 slots, Admiral Clubs (500 slots), Mozzart (1000), and Grand Casino (300). JAKTA, Serbia’s national association for the amusement and
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gaming sectors, says AWPs are not a part of gaming in the country; instead, business is based on regular slot machines, with Novomatic, IGT, Aristocrat and Casino Technology notably successful. Regulation is currently in a state of flux. Serbia is awaiting the
draft of a paper revising the country’s gambling laws; regulators are optimistic, hoping that the revision will fall in line with EU standards and give them greater powers as they attempt to suppress the country’s illegal gaming operations.
Population 10m Under 15 1.5m Aged 15-64 6.8m Urban population 68 percent Major cities Budapest (1.7m), Debrecen (200,000) GDP per capita $18,800 Business climate An EU member which took the six- month presidency for the first time in 2011, Hungary is one of the wealthier nations in eastern Europe and foreign investment is substantial. The economic downturn hit hard but recovery has been good. Eurozone membership remains a distant prospect.
Another Eastern European market seeing decline in amusement gaming, Hungary has experienced a steady fall in the number of gaming machines. Since a 2004 high of 33,141 machines, the number has steadily decreased and in the first quarter of 2010 the total number of units stood at 25,450. This corresponds with a decline in the number of gaming halls,
falling from 19,941 in 2004 to a low of 14,796 in 2010. The main factor in this decline – as with most other territories experiencing large drops – is taxation, with a marked rise in gaming tax coming into force in 2004. With the global recession affecting the income of players, it’s a combination that makes the industry decline impossible to arrest. A complete smoking ban will be
enforced in Hungary from January 2012, which will all but kill off many in the gaming industry. There are two machine categories: I
and II. However, the categories only refer to the location the machine is in. Category I is for machines in gaming halls, where the main stipulation is two square metres of space for each machine. Category II applies to restaurants and bars, where the law allows a maximum of two machines on each site. There are 813 Category I halls in Hungary, housing 7392 machines; 12870 Category II locations are the homes of 16,614 machines (2010 figures). The industry is currently groaning under the weight of an extra
tax – above the licence costs and existing tax structure – of a stiff ¤380 per month, per machine. When the smoking ban hits, expect the decline of Hungary’s gaming industry to quicken considerably. The annual decrease in business of ten percent in 2009, and the same again in 2010, may seem in retrospect like good times.
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