The progress of internet gambling and its regulation in Eastern Europe has not been as rapid or as successful as planned. In general, across the region, it has taken much longer for regulation to be developed than anyone expected. But 2014 is showing signs of movement.

Bulgaria, a country of seven million people and a member of the European Union since 2007, started reviewing its online gambling policy in the same year it joined the EU. However, the law that regulated Internet gambling only actually came into effect some five years later in July 2012. Another year then passed before operators were allowed to apply for online gaming licences. A little before that, the authorities drew up an Internet gambling blacklist, which comprised a total of 171 websites by the start of 2014.
As Internet gambling was already quite well developed in the country before it was regulated, with the likes of Sportingbet, bwin and Betfair targeting the market and advertising there, the authorities expected that the operators would queue up for the new local licenses. But, with high taxes in place, the licences have not proved popular. The Internet gambling tax was set at 15% of handle, the same as for land based betting and lotteries. As a result, by the end of 2013, only two companies were licensed for online gambling: the sports betting monopoly’s Maltese company Eurofootball Limited and the state owned lottery and tote Bulgarian Sports Totalisator.
So the government decided to revise the gambling laws again, a practice deployed every few years. Just before the end of 2013, the Bulgarian parliament passed the state gaming law changes which reduced the tax rate to 20% of GGY/rake. The effects of the lower taxes will be seen in the coming months. But the change in tax base has already spurred PokerStars and Betfair to make licence applications. Other companies are also said to have shown renewed interest in the market now the tax is going to be based on GGY rather than handle. 

In Croatia online gambling has great potential, but its size is limited due to the legislative barriers of entry. The 2010 law changes allowed online gambling for the first time, but only for the existing land based operators and for the games of the same type as the ones offered in land based venues (so bookmakers can offer only betting, casinos only casino games and the state lottery both plus lottery games, same as in bricks and mortar establishments). The law came into effect in 2010, when Croatia was not part of the EU, but with EU entry taking place on 1 July 2013 the requirement for existing local, land-based operations seems incompatible with EU regulations. The annual licence fee is set to HRK 3m (around €400,000), which is three times more than for retail betting and six times more than for a casino.
As a result of these regulatory requirements, four years after the market was liberalised, only five out of nine bookmakers are using the Internet channel, including the lottery, which also conducts sports betting. The lottery is also offering lottery games over the Internet. There are still no operators of Internet casino games, even though Croatia has 13 casino concessionaires plus the lottery.
Despite its small population of only 4.2 million people, Croatia could potentially be a lucrative market for Internet operators due to high propensity to gamble. The leading bookmaker had nearly 40% of its total betting handle coming from the Internet only 15 months after it was launched. At the end of 2012, a little over two years after the launch, the Croatian Lottery’s Internet lottery sales accounted for 5% of total lottery sales, but the Internet accounted for as much as 35% of the total betting handle. By now the leading Croatian bookmaker is seeing well over 50% of turnover coming from the Internet. It would be interesting to see some statistics on casino games, but so far only the Lottery seems interested in launching an Internet casino, but it keeps getting postponed. 
Another example is Montenegro, a tiny country with only 600,000 inhabitants. Montenegro allowed Internet gambling as far back as 2004, one of the first countries in the region to do so. But the small size of the market coupled with a modest infrastructure in this mostly mountainous country sparked no interest from online or existing land based operators. So in 2011 the authorities decided to amend the law. But after two years of working on the new law, the draft legislation was abandoned, due to lack of consensus among various parties. It was then agreed that it will be left to the operators to propose the initial draft of the law, which was due by mid-2013. Based on previous experience we do not expect the new law to be in force before 2015. 

Macedonia also allowed Internet gambling from an early stage, but decided to go down the route of being an Internet gambling hub, forbidding licensees from targeting the local population. No operators applied for a licence, but years passed by before the authorities decided to amend the law to make licensing more attractive.
The new law, passed in 2011, originally allowed targeting of both local and foreign players, but the operator had to have a company registered locally. The licensing fee was set to €50,000, while the tax was set to 0.5% of handle.
But in 2012 the government approved amendments to the law to give the new state lottery exclusive rights to organise Internet gambling. The lottery was allowed to offer lottery games, casino and sports betting online. In summer 2013 the lottery published a tender for a stake in a joint venture, which will allow the successful bidder to operate VLTs and Internet gambling. Casinos Austria International was selected to hold a 49% stake in the JV, with the aim to start blocking foreign websites and offering Internet gambling in H1 2014. 
In the ethnically divided Bosnia and Herzegovina there are three gambling laws, each ruling over one entity or a de facto entity. Only Republika Srpska allows Internet gambling. Licence fees are set to BAM 200k (€100,000) and the licences are valid for five years. The tax is set to 5% of GGY and another 5% of tax/rake is paid for casino games. The first operator launched Internet gambling in January 2011, consisting of sports betting and casino games. The company also operates land based betting shops and slot halls. It targets not only its citizens, but also citizens from other entities and other countries. It is estimated that only about 15% of its players are from Republika Srpska. Another bookmaker launched online betting recently, but the players have to open an account and deposit money in a land based betting shop before they can play online. 

Serbia started drafting a new law, which also allowed Internet gambling for private operators, in 2011. Previously only the state lottery was allowed to operate online. The law came into force at the end of 2011, but sub-legal regulations were completed only in August 2013, allowing for issuance of licenses. The law sets the taxes to reasonable 5% of GGY for non-betting and 15% of GGY for betting. As of early 2014, three bookmakers are offering Internet betting, but players are required to deposit and withdraw funds at land based shops.
So, to sum up, over the six countries detailed above, only 12 operators are active over the Internet with a local licence. As some of these countries have had Internet regulations in place for a number of years, the market should have been well developed by now, but this has not been the case. Croatia is the most advanced country in the region when it comes to Internet gambling, but high licensing fees are still hindering its growth. As most of Eastern Europe has a high propensity to gamble, this might be an good market for foreign operators willing to tackle the problems the industry is facing, especially those stemming from slow regulatory changes.