North Macedonia has introduced a new Law on Games of Chance, introducing stricter requirements for gambling operators. The law requires gambling venues with gaming machines to be located at least 500 metres away from primary and secondary schools.
It also introduces tighter advertising restrictions and increases various fees and charges, while placing new limits on operators’ acquired rights. The sector has responded strongly, with many operators viewing the law as overly restrictive.
Global Gaming Insider reached out to Zoran Puhać, Secretary-General at the European Organisation for Gaming Law (EOGL), for his assessment of the changes.
What are your main objections to the new Gambling Law in North Macedonia?
The hasty adoption of legislation and the serious lack of meaningful dialogue with industry representatives often result in poor solutions. Firstly, defining a 500-metre distancing rule from educational institutions has no real impact on protecting the population from pathological gambling, especially today, in a digital era.
Betting shops, which are already prohibited from hosting slot machines and will now also be unable to operate VLT machines within the 500-metre radius, are losing their last remaining source of relatively stable income. In the medium term, many face closure. Additionally, allowing betting shops without VLT machines to operate without the 500-metre distance restriction further demonstrates the inconsistency and unclear objectives of the lawmakers.
Sports betting is the only form of gambling where revenue is not always predictable and where there is a real possibility of losses. In contrast, with electronic gaming machines, the law guarantees a certain level of payout for both players and gambling operators. Increasing the tax burden on betting shops further complicates the issue. Betting has one fundamental characteristic: even the best-performing betting operator experiences losses several times a year when most or all major sporting events produce unexpected or highly favourable results for players.
What is your opinion regarding increased fees, restrictions on acquired rights and the state online gambling monopoly?
If we examine the proposed changes to various fees and charges, two main issues emerge. First, the amounts are set to increase significantly. Second, the changes disregard so-called acquired rights, as relocated betting outlets would be treated as entirely new businesses rather than existing operations. European practice on this matter is clear: a stable and predictable legal environment and respect for acquired rights are the foundation of progress.
The state monopoly on organising online gambling is problematic on several levels. A monopoly, in any industry, reduces the incentive for the monopolist to improve operations and can lead to lower service quality. It also sends a negative message to potential investors that the state may introduce monopolies in other sectors.
Furthermore, it directly affects state revenues. If there were multiple online gambling operators operating under the same conditions and with the same level of activity, government revenue would increase through licensing fees and associated costs paid by those operators.
Can you explain the proposed tax model in more detail and why you believe it would be particularly harmful to sports betting operators?
The issue extends beyond the proposed tax model and relates to the broader legislative framework. The potential negative impact would also affect the wider private gambling sector. The 500-metre restriction from educational institutions is extremely restrictive and, in smaller communities, would effectively push all venues offering any type of gaming machines to remote areas or even outside populated areas.
The changes disregard so-called acquired rights, as relocated betting outlets would be treated as entirely new businesses rather than existing operations
With the significant growth of mobile communications and the simultaneous state monopoly on online gambling, it is clear that many players will shift towards the state operator’s services simply due to convenience. The proposed tax model contains a serious inconsistency because it imposes a tax obligation even when an operator is operating at a loss at a particular betting location, effectively taxing non-existent revenue.
Increasing the tax burden on betting shops to a minimum of €1,000 ($1,141) when the tax calculated on the difference between stakes and payouts does not reach that amount means directly taxing something that does not exist, or taxing losses. When this is combined with other provisions in the new law, not only those related to increased taxes and fees, the result is a cumulative and highly negative impact on the operations of private operators.
We saw you recently warned that the proposed reforms could expose North Macedonia to multi-million international arbitration claims. How realistic is this risk and on what legal grounds could operators initiate such proceedings?
This possibility is realistic because there are grounds for such claims when business conditions are significantly changed and acquired rights related to investments are undermined. This could provide a legal basis for initiating proceedings.
Of course, any decision to pursue international arbitration would depend on the business decisions of the affected companies and whether the parties can reach a compromise in the coming period. That is why it is difficult to make any predictions.
You rejected the claim that a state monopoly on online gambling would better protect young people. Why do you believe regulated private operators are better equipped to achieve this goal?
A representative of the state operator made two claims in Parliament: that a monopoly provides better protection for young people and that a monopoly prevents money from leaving North Macedonia.
Experience across Europe and globally has shown that private operators are significantly ahead in implementing the latest and highest-quality software and other advanced solutions for gambling compared with state-owned operators, particularly where state monopolies exist.
A monopoly itself can make the holder less motivated and reduce innovation. It is not the role of the state to protect young people through monopolies, but through high-quality legislation and effective supervision. Regarding the claim that a state monopoly prevents money leaving the country, my modest knowledge of finance tells me that preventing capital outflows is achieved through other economic measures, not through monopolies.
Is it true that the Association of Sports Betting Companies of Macedonia (ASOM) intends to challenge the law before the Constitutional Court? If so, what are, in your opinion, its chances of success?
I have heard such views expressed in Parliament, but the decision rests with individual operators and their associations.
I believe such legal proceedings would have solid chances of success, particularly regarding the violation of companies’ acquired rights, unfair taxation of non-existent revenues and the unjustified monopoly on online gambling.
Operators and industry employees argue that the reforms could result in around 10,000 job losses and increase illegal gambling activity
