1. Stjepko Čordaš, CEO, NSoft
CEEGC 2016 Federation of Bosnia and Herzegovina: Current Legal Framework and the Effect of the Proposed Changes to the Betting Industry
Stjepko Čordaš, CEO, NSoft

2. 5 min 2 min 2 min 6 min Agenda Current legislation and market overview
Proposed changes to the legislation
2 min
Possible effects by the new changes
2 min
Q&A session
6 min
After the introduction it is important to mention the following:
General intro on NSoft – two sentences: employees
Complex political situation of BiH: FBiH and RS
RS will have similar changes

3. Current Legislation
Voted on Jun
Changes the way the players are being taxed and introduced RNG type virtual games to the market
Players have to pay 5% of their bet as a charge for betting on Sports Betting and 10% of their winnings as tax
Operators have to pay 150 EUR per month per shop for every shop that has virtual games
The current law had support from the operators since they wanted to bring clarity to the market. With the current law in place, betting is probably the most regulated industry in the FBiH. There are several rulebooks that followed the law which were focused on bringing technical details about RNG certification, operating procedures as well as licensing process

4. Current Legislation
Voted on Jun
Changes online requirements and introduces harsh real time monitoring of all operator transactions
Every ticket (transaction) played has to be sent to and processed by the Tax Authority in real-time and assigned a “GUID”; on the other hand the infrastructure for this is non-existent and operators are being punished for this
Online is strictly restricted to players from FBiH and RNG games are forbidden creating barriers to entry
The tax authority was and is not prepared for the volume of transactions – there are millions of transactions being processed each day and their infrastructure is non-existing. There is only one physical server which server all needs of the tax authority
Online requirements show that the people that prepared the law are not in accord with time and technology. They are imposing restrictions which are really hard to achieve and in the future they would be against EU directives as well (and BiH desperately wants to join the EU)

5. Market Overview
Market is comprised of 13 operators with a clear market leader and where players consume virtual games in the same amount as they consume sports betting
Operators are expected to pay to the budget of the FBiH around 38 million EUR in 2016
All operators have a strong focus on retail business with huge network of shops that totals to more than 5000
2016 is expected to see more than 750 million EUR in gross turnover (bets), while GGR is expected to be at around 80 million EUR
Retail shops are mostly small shops equipped with several TVs and equal representation of virtual games and sports betting. They do not cannibalize themselves, since they mostly attract different type of players. One interesting anomaly was that some punters that preferred sports betting shifted to the faster virtual games.

6. Proposed Changes
Changes are being done without consulting the operators or experts
Introduce a 10% flat charge on Sports and Virtual Games betting (on gross turnover – all bets)
More complex conditions on opening new shops
CURRENT UPDATE (Sep 15,2016)
The proposed law was pushed back and will probably see a review by the Ministry of Finances
Additional operator taxes
Possibly increase winnings tax to 20%
The double taxation wherever introduced results in lower revenues for the operators, as well as reducing the money government collets.

7. Destruction or criminalization of the national industry
Possible Effects
Market consolidation into an oligopoly, possible mergers or cartels
Possible opportunity for the international online operators
Destruction or criminalization of the national industry
Loss of work places in order to recover GGR margins
Increase in local black market activities
Online is the future and backward laws are not going to stop this. Betting is always using cutting edge technologies and the legislators could learn a lot from the industry supporters such as software providers, which could bridge the gap between what is necessary, what is practical and show a perspective which could result in a Parreto efficient situation for both the operators and the governemnet.

8. Stjepko Čordaš, CEO, NSoft
CEEGC 2016 Federation of Bosnia and Herzegovina: Current Legal Framework and the Effect of the Proposed Changes to the Betting Industry
Stjepko Čordaš, CEO, NSoft
Q&A session goes here