hen the market first opened, Bet365 as well as almost all the major operators found themselves on Bulgaria’s online gambling blacklist. Bet365 was removed from the list after it made a formal license application.
The legal challenge came after Bet365 was awarded a license that was immediately suspended by the State Gambling Commission (SGC). The SGC alleged that Bet365 had broken the restrictions on serving the Bulgarian market while its application was being processed.
Bet365 argued that the SGC wanted to restrict competition
Bet365 responded that the decision was motivated by a desire to keep them out of the market in order to protect the Bulgarian owned incumbents who feared the competition.
According to local news reports, five of the 15 licenses that have been issued are ultimately controlled by a single Bulgarian owner. Ten separate companies have received licenses, but two of those companies can be traced back to the same ownership.
Bet365 raised the issue in the EU, which sent observers to the court to monitor the possibility of anti-competitive practices.
The details of the ruling are not known, but the outcome is clear. Bet365 can now expand its operations legally in the EU member state.
Bet365.com is licensed to offer sports betting as well as betting on horse and dog racing.
It has not yet sought a license to offer online poker.
The market is small but has potential to grow
As a market, Bulgaria is limited. The country has a population of only 7.2 million, and GDP/capita is nominally $6,927. In purchasing power parity terms, this increases to $19,839, but even so that is still low for an EU country.
However, as an EU member, Bulgaria is expected to increase in wealth and converge towards the EU average income. Membership also provides a secure legal framework in which gaming operators can work.
In the Italian regulated market, Bet365 has a market share of around 35.7 percent. If it can replicate that in Bulgaria, it will have added a useful revenue stream.
When Bulgaria first introduced online gambling regulation, taxes were set too high to attract offshore companies like Bet365.
Remarkably, politicians managed to agree to reduce tax rates (paywall) in order to attract international operators.
The move has worked to the extent that PokerStars, Betfair and now Bet365 are all licensed by the SGC.