Croatia to make registration compulsory for foreign online betting sites

The Croatian Ministry of Finance is planning to enforce a legislation that would make registration within the country compulsory for foreign online betting sites. Only the registered websites will considered legal. This will be applicable to all international betting sites, which offer online gambling services to Croatian gaming enthusiasts.

Many experts have wondered why a financially underperforming country like Croatia is not taxing the online betting companies. It has been estimated that the country is ignoring two billion kuna a year, which is the estimated value of the online betting business in Croatia.

The scenario will change now. The following are the analysis on what happened till date and what could happen in the future.

The problem of the non-taxing of online gambling providers is not just a consequence of the reluctance of tax authorities to deal with this issue. The control and blocking of web betting sites should also include other institutions, such as Carnet and the State Attorney’s Office, and even the courts which are the only ones that can enforce the prohibition of business activities.

At the level of entrepreneurial freedom, what betting sites are doing is similar to tactics used by Amazon, Apple or Google on the European Union market, where they try to take advantage of under-regulation, risking enormous fines. Amazon, for example, recently paid 282 million euro in penalties for tax evasion in Luxembourg, following a European Commission’s action against it.

Advocates of the current situation in the sports betting market believe that fees for betting and related winnings are already too high and unjust, so it is quite acceptable for some players to turn to online betting. In addition to the manipulative costs of five per cent of the amount paid, which legal betting agents must charge for all tickets, players pay a minimum of ten per cent tax on their payouts, which increases up to a maximum of 30 per cent of winnings of over 500,000 kuna.

The usual reason for the inclusion of internet service is that it breaks state monopoly in the market, but in the case of sports betting this is not true since the two largest legal betting chains in Croatian market, Super Sport and Hattrick-PSK, are privately-owned.

There is also another issue. While gamblers using the services of legal betting shops on the internet must register so that it can be determined whether they are over 18, underage users can access the betting services more easily with the providers who have not aligned themselves with the local regulations.