Billions in the (il)legal game

Billions of euros are lost annually from gambling in the countries of the region, with outdated and/or illogical legal solutions when it comes to organizing and taxing games of chance.

The Montenegrin Law on Games of Chance dates back to 2004, with very few changes since then, so it is very outdated. It contains games that no one organizes anymore, while it is only very superficially engaged in organizing games of chance over the Internet, which have become dominant in the meantime.

The intention of drafting a new law was in the plans of all governments since 2011, but only a few sporadic changes took place. In 2018, the Government of Slovakia donated one million euros to Montenegro for the development of a new law on games of chance and the improvement of state online supervision of organizers, but nothing has happened yet.

The ISONIS on-line organizer monitoring system was introduced in 2016, after a ten-year delay, and since then it has enabled state authorities to directly and immediately monitor all payments and payouts to bookmakers, which increased state revenues, but slot machines remained out of control. casinos and internet providers.

The last attempt to change the law failed two days ago, when the Parliament returned the proposal for changes because it was not harmonized with the general Law on Concessions. This proposal provided for an increase in concession fees for organizing games of chance over the Internet and partially for casinos, as well as strengthening measures to prevent money laundering and banning deposits to players' accounts in newsagents, shops and other places outside the area registered for games of chance.

According to the current Law on Games of Chance, bookmakers pay a fixed concession of 500 euros per month and a variable concession of 10 percent on the difference between total payments and payments to players for each payment place. Automat clubs pay 50 euros per month for each machine and 10 percent on the difference between payments and withdrawals.

Casinos have a fixed initial fee of two million euros when issuing a concession that lasts for ten years and can be extended for another five years. They also pay a fixed annual fee of 50 euros each, a variable fee of 10 percent on the difference between payments and withdrawals, and 50 euros per month for each game machine.

Organizers of online games of chance pay 10 thousand euros per month for one site, regardless of how many betting and other games of chance they organize on it. These arrangers are the only ones who do not pay a variable fee on the difference between deposits and withdrawals.

In Montenegro, players do not pay fees when paying stakes for betting, nor when withdrawing winnings.

The state annually earns between 15 and 18 million euros from concessions for games of chance, and the government planned to increase that income to 35 million euros with the changes that were returned from the Assembly on Friday. The main part of the changes was that the organizers of online games of chance pay 10.000 euros for each area of ​​games of chance they organize - bookmaker, online casino or lottery game. It was also planned to introduce a variable fee for these organizers.

The president of the parliamentary Legislative Committee, which determined the illegality of the proposal, Maja Vukićević she said that in 2019, the former government removed games of chance from the basic Law on Concessions and that since then any change to the Law on Games of Chance is illegal, as well as that since then all concessions for this area that have been issued since then are questionable .

"I suspect that someone did this on purpose to allow certain promoters to run games of chance endlessly. It is necessary to amend both laws at the same time", said Vukićević.

For the same reason, at the beginning of the year, this committee already sent back the previous proposal for amendments to the Law on Games of Chance.

The biggest problem with the system of games of chance in Montenegro, apart from the outdated Law, is the work of the inspection for games of chance and their insufficient jurisdiction. This inspection is within the Directorate for Inspection Affairs, not the Directorate for Games of Chance. This inspection only determines some irregularity in three to five controls, and most often it discovers the illegal organization of games of chance once a year.

The previous government tried to change the law to return the inspection to the home administration and to increase its competence, but the proposal did not pass due to the blockade of the parliament. The new government announced similar changes, while the inspections announced that it is better to work as before.

Bosnia and Herzegovina: Initiated amendment of the law

Games of chance and going to betting shops attract more and more BiH. citizens who want to take a bath overnight. According to the data of the FBiH Tax Administration, in the period from January 1 to December 13, 2023, 44.575.876 KM was poured into the federal budget from games of chance.

As confirmed to us, organizers of games of chance by betting, on the basis of paid winnings in the amount of more than 100 KM, paid income tax in the amount of 23.787.131, while on the basis of fees for organizing games of chance, 20.788.745 KM were paid. When it comes to player payments, i.e. the turnover of betting shops, the organizers of the games realized a turnover of 1.626.491.376 KM.

Like most others, this area also needs to be regulated by law in order to prevent abuses.

Sheriff Isovic, the director of the FBiH Tax Administration, told Oslobođenje that the FBiH Tax Administration has on several occasions initiated the amendment of the existing Law on Income Tax and the Law on Games of Chance.

"The proposal of the Tax Administration was that all winnings be taxed with income tax at a rate of 10 percent, which is the same as the income tax of all employees, and that all games of chance be taxed equally. By adopting the proposed changes, all games of chance would be treated and taxed equally, the possibility of abuse would be reduced and the system of control, calculation and revenue collection would be simplified. The calculation and payment of fees for all games of chance would be the same and would be paid as a percentage of 5 percent on each individual payment of the player. The above-mentioned changes to the law were proposed with the aim of abolishing discrimination in the area of ​​taxation of games, because for some games a flat fee of 300 KM per payment place is paid, and for others a fee of 5 percent of the realized turnover", he pointed out.

He further says that discrimination among players would be abolished because no tax is paid on winnings of up to 100 KM.

"These amendments to the law would remove the suspicion that profits over 100 KM are divided into smaller profits in order to avoid paying taxes. Bearing in mind the fact that organizers of games of chance are exempt from paying VAT according to Article 25, Paragraph 6 of the Law on Value Added Tax of BiH, according to the currently valid laws, their business is not sufficiently taxed. The issue of taxation in this area is first and foremost an economic issue, not a political issue, and the reason for the initiation of changes in the law is fairer taxation, increasing the tax base by taxing income that is not taxed, preventing abuses...", Isović concludes.

This year, RS will earn more than 100 million KM from fees for games of chance, and the Government has adopted a new regulation on the distribution of funds. Most of the money will be directed to the Ministry of Health and Social Protection, 37 percent of the total amount. The Ministry of Family, Youth and Sports is followed by 25 percent, the Ministry of Education and Culture 25 percent, the Ministry of Labor and Veterans' Disability Protection 13 percent, while four percent is distributed among line ministries.

Revenues from fees for organizing games of chance in the RS budget as of November 22, 2023 amount to 95,6 million KM, and it is expected that this amount will reach about 105 million KM for the whole of 2023. When planning the distribution of funds from games of chance in the budget of the RS for 2024, the estimate of the realization of income from 2023 was used, i.e. 105 million KM.

Serbia: 250 million in the budget

A few days ago, the Lotto Week worth 5,1 million euros was drawn. This unexpected New Year's gift goes to Pančevo.

The State Lottery of Serbia (DLS), the only company in Serbia that has the right under the Law on Games of Chance to organize classic games of chance such as Lotto, seems to be doing well in recent years. For the first nine months of this year, DLS turnover is the highest in the last 12 years for that period - 5,5 billion dinars (about 47 million euros).

The net profit realized for nine months was 265 million dinars (about 2,3 million euros). The net profit of DLS for the whole of last year was 292,5 million dinars (about 2,5 million euros).

During these nine months, the State Lottery of Serbia paid 1,66 billion dinars (about 14 million euros) into the national budget.

The largest part refers to the fee for organizing games of chance - 1,46 billion dinars (12,5 million euros), and another 198 million dinars (1,7 million euros) was paid based on the tax on winnings made in games organized by DLS .

Also, the company pays a profit tax of 15 percent of net profit. Last year, DLS paid 51 million dinars (434.000 euros) into the budget for this tax.

According to the Law on Games of Chance, the only person who can organize classic games of chance in the Republic of Serbia is DLS. These games are lottery, instant-lottery and other similar games based on lottery, then sports forecast (guessing the outcome of football and other sports competitions), games such as lotto and keno, tombola, bingo and other similar games based on tombola, as well as other games like font, SMS lottery...

DLS is obliged to pay at least 50 percent of the income from payments for the prize fund in the case of Lotto, and for other games, the prize fund is at least 10 percent of the payments.

In practice, according to DLS data, the prize fund is generally about two-thirds of the income from payments, up to 77 percent in the case of instant lottery tickets.

The fee for organizing classic games of chance is 60 percent of what remains when the winnings fund is deducted from the payment income.

For example, last year, according to the financial reports of DLS, revenues from games amounted to 5,4 billion dinars, while 4,1 billion dinars were paid out for prizes.

The rate of 60 percent is applied to the difference, so last year the obligation based on the fee for organizing the games amounted to 780 million dinars (6,6 million euros).

The state lottery represents only a small part of the gambling industry that is flourishing in Serbia.

There are no summary data on the operations of numerous betting and gambling establishments in Serbia, but according to some promotional texts they place in the media, last year they paid between 240 and 250 million euros to the budget in direct taxes and employ 15.000 people.

Organizers of special games of chance, which include gambling and betting, must by law pay a much lower fee than the Serbian State Lottery. Let's say bookmakers have to pay a fee of only 15 percent of the difference between the total realized payments and the total realized payouts, with the fact that this amount cannot be less than 550 euros per month per bookmaker.

On machines, on which bookmakers generate even greater income than from payments on sports betting in bookmakers, the fee is 10 percent of the difference between the total realized payments and payouts, and it cannot be less than 40 euros per month per machine.

In casinos, or as they are called in law, gambling houses, fees range from three percent of the value of payments received for games in which participants play against each other, such as poker, to 25 percent on the difference between payments and payouts for other types of games. .

Organizers of games of chance have a number of obligations under the law, from payment of approval fees, to providing a certain amount of basic capital, to providing bank guarantees guaranteeing the payment of winnings and tax payments to the state.