Serbia Shocks With Low E-gaming Tax Rate
Tihana Jurican, GBGC Research Manager, Zagreb

On 9 May 2011 Serbian authorities published a new draft law for online gambling. After the introduction of a number of laws recently across Europe, most of which are not very good for the operators (e.g. the French legislation), GBGC were pleased to see that Serbian draft works in favour of the operators, as well as the jurisdiction.

The history of online gambling in Eastern Europe started with offshore operators targeting the region for a number of years before any legislation was introduced to address Internet gambling. A few years ago, some governments in the former Yugoslav republics started including Internet gambling in their laws. There has, however, been very little change in the markets in practice.
On one hand, the domestic authorities have proved powerless to stop the illegal targeting of the local market from offshore and on the other, the provisions of the laws have not been attractive for the offshore operators to relocate. 

For example, Macedonia, Montenegro, Republika Srpska (part of Bosnia and Herzegovina), as well as Slovenia, all have provisions for Internet operations run by private firms in their law. But none of them have issued a single licence yet and some are already reviewing their legislation.
Croatia has fared a bit better – Internet gambling has been permitted since 1 January 2010 – but due to the high licence fees only three bookmakers are using the channel at the moment (out of nine operating in Croatia) and there are no Internet casinos (the national lottery will probably launch one, but it may take a while).
The Internet market is closed for foreign operators, as a land based license for the specific type of game is needed for Internet gambling. As for license fees, they range from HRK 3m (US$ 575,000) for both Internet casino and betting, to HRK 500k (US$ 95,000) for land-based casinos and HRK 1m (US$ 195,000) for betting shops, making Internet unattractive to all but the largest operators.
Knowing the history of Internet gambling proposals in the region, it was refreshing to discover that the Serbian draft law works well for the operators, at the same time protecting players by offering legal play and bringing money into the state budget. The draft allows Internet gambling for the national lottery, as well as licensed operators. The operators do not have to own a land based gambling business in Serbia, but have to form a company in the country with the minimum funding capital of €150k. The company also needs to have a €100k deposit or a bank guarantee to secure the payment of winnings.
The licenses will be available for a period of ten years with a license fee of ‚Ǩ1.5k monthly, while the gaming tax has been set at attractive 5% of GGY. 
The draft law also gives more power to the authorities to curb illegal gambling, which is present especially in the gaming machine sector, accounting for as much as 30-40% of total market, according to the Serbian Association of gaming organisers, authorised technicians and producers of gaming equipment, JAKTA.
By allowing foreign operators that are currently not part of the (legal) market and setting small fees and reasonable gaming taxes, Serbia is on the way to becoming the first country in the region with a viable Internet gambling policy. If the draft passes in the current form, we believe that the market with a population of 7.3 million people will be attractive to the operators, protective for the players and that it will bring a significant amount of money in fees, taxes and other related expenses to the government.