Bulgarian State Officials recently stated that they will punish online casino operators who conduct business without a government-issued license with up to five years jail time and fines between 20 and 50,000 leva (€10,000 to €25,000). The announcement is one of several controversial maneuvers in what has been a years-long battle between Bulgaria’s Parliament and Internet gaming operators.

To obtain a legal casino operations license in Bulgaria is a difficult task. It requires a €500,000 investment and a physical presence in the country: operators must set up brick and mortar “payments shops” in all 28 Bulgarian provinces. Bulgarian gambling law also requires that servers be located in Bulgaria and ISPs filter the internet, blocking unlicensed sites.

Opponents of the legislation claim that it is against EU law, which states, in Article 56, that EU citizens are entitled to conduct business with cross border service providers. They also claim that requiring operators to establish “payment shops” in each of Bulgaria’s provinces is unworkable and unnecessary. They argue that a) smaller ventures will not have the capital to meet the requirement, and b) what is the point of physical payment processing locations for an online business?

Adding further fuel to the issue, is a November 2009 amendment to the Corporate Income Taxation Act, which upped the tax rate for all online gambling activity to a flat 15%. Though a  2008 Media & Entertainment Consulting Network (MECN) study set the value of the Balkan gambling market at 4.5 billion euro per year, the Bulgarian tax is still one of the largest in the region.

A Representative of the Bulgarian Commission on Gambling (SCG) said the measures would allow the government to oversee remote gambling with "clear national legislation" and "transparent regulating regimes".