Mission possible: the Bulgaria opportunity

Bulgaria has hit the headlines for all the wrong reasons this year following the abolition of the country’s State Gambling Commission (SGC) amid allegations of wrongdoing and corruption by some of its most senior figures.

Following the passing of a bill back in June, the previous regulatory body was shut down and responsibility for overseeing the country’s gambling industry, both retail and online, was transferred to the National Revenue Agency (NRA). This should very much be seen as a positive step. Bulgaria is a hidden gem for all Central European-facing operators and with the NRA now responsible for auditing and licensing operators, there has been no better time for operators to enter the market.

Of course, applying for and securing a licence in Bulgaria is not without its challenges. But with just five operators currently serving a market worth in excess of €300m per year and growing rapidly, these challenges must and can be overcome. Sportingwin is currently engaged in the licence process in Bulgaria, and below I discuss the opportunities we see in the market, some of the challenges we have faced during the licensing process and what we have done and are doing to overcome them.

The market is significant

The low level of competition in Bulgaria has resulted in an unconsolidated market with the potential for rapid growth. We estimate the market to be worth €300m today but as new operators arrive it could grow at 20% year-on-year to hit €500m per year within five years. At present, the majority of operators live in the market are local land-based brands with a limited online offering. While players are engaging with these sites, they do not offer the superior player experience found at established brands from other European markets.

What’s more, these local brands are not offering the depth of products, markets and odds available in other regions. This includes exchange betting, a niche that we have identified as having huge potential among Bulgarian bettors. Those that can enter the market with even more markets and odds than being offered by the incumbents, and can combine this with a top-quality player experience, stand a strong chance of claiming the lion’s share of the market.

The key challenges operators face

Operators face several barriers to entry which have been and continue to be high. This is certainly the case when it comes to due diligence, but prior to the NRA taking over regulatory responsibility, the SGC also had a habit of rejecting licence applications without clear grounds for doing so.

This is less of a concern now that the NRA is responsible for auditing and licensing prospective operators but to ensure they stand the best chance of approval they must take the necessary steps to make sure they can pass any and all due diligence checks. A final hurdle that can be more difficult to clear, especially for smaller companies and brands looking to enter the market, is the €800k capital reserves the NRA requires operators to have in the bank prior to being awarded a licence.

How these challenges can be overcome

Sportingwin has fully put its trust in the NRA and we are working closely with the new regulator to ensure that we meet and exceed the requirements it has set in order to be awarded a licence. As part of this, we are taking additional steps including appointing a dedicated Bulgarian CEO. He has a proven background in gaming and the NRA can easily and quickly carry out the necessary checks and balances that it needs to in order to ascertain his credibility and therefore suitability for the role.

As a Maltese company, we have also requested that the Maltese consulate in Bulgaria monitor the licensing process from start to finish as the Sportingwin application is the first one to be considered by the new regulator.  Regarding the €800k capital, we are currently raising the money from a local bank so that source of funds can be easily and quickly checked by the NRA and as part of wider efforts to be 100% transparent and open with the regulator.

Again, we are taking this a step further by actively and currently raising a further €1m to help drive forward our ambitious plans for the Bulgarian market, further demonstrating our commitment and dedication to what we see as one of the largest untapped jurisdictions in Europe. Entering a new market is always a tough task, but with the NRA now handling the application process and by taking the transparent and open approach we have to date, we believe that we have created a blueprint for others to follow.

Mark Chakravarti, head of investment and board director at SportingWin, joined the business following a progressive, 10-year career in investment management. Bringing entrepreneurship, commercial acumen and creativity to the board, he has previously assisted in the scaling-up of Canary Wharf Group entrepreneurs, as well as working with Bupa and the Royal Academy of Arts.