Croatia, officially known as the Republic of Croatia, is a small European country that is also a member of the EU. It was not until 1991 that Croatia was recognized as an independent state which is why the country’s legislative system is fairly new and is still being formed. That said, Croatia has managed to set up pretty good regulations for its gambling industry.
Even while Croatia was a part of the Socialist Federal Republic of Yugoslavia (SFRY), gambling was still a legal and regulated industry in the republic. In fact, Croatia was one of the first members of the Eastern Bloc to recognize gambling as a legal activity that was regulated in the 1960s. After Croatia gained its independence, the gambling industry expanded even further, with numerous tourists flocking to the country’s hotel-based casinos.
In addition to land-based gambling, Croatia has also legalized online gaming and betting activities. That said, there are some restrictions on the types of games available to Croatian players online. Nevertheless, both locals and tourists visiting Croatia have plenty of gambling options to enjoy both online and at land-based gaming facilities.
History of Gambling in Croatia
Since Croatia was one of the six republics that constituted the SFRY, its gaming industry was fully governed by the laws imposed by the socialist country. Sports betting was allowed in a very limited form known as “sports forecasting” and bettors were allowed to place their wagers only at state-owned kiosks.
When Croatia became an independent country in 1991, the so-called tourist gambling helped the exponential growth of the gambling industry in Croatia. This is why it comes as no surprise that most casinos in the country operate along with associated hotels that are mainly located alongside the coastline of Croatia. Nowadays, the country boasts over 20 brick-and-mortar casinos that cater to both locals and foreign tourists.
While gambling was legal in Croatia, the way the industry was regulated remained pretty unclear up until 2014. This was the year the gambling law Zakon o igrama na sreću was passed. Currently, this is the piece of legislation that governs the gambling industry in Croatia and sets the rules to regulate all gambling activities in the country.
Shortly after Croatia gained its independence, sports betting also launched in the country. With the implementation of new laws, private companies were enabled to operate betting shops across the country. The first two operators that took advantage of this opportunity were Prva Sportska Kladionica and Sport Tip, both of which are currently some of the biggest betting companies in Croatia.
Gambling Regulations in Croatia
Gambling has been a legal form of entertainment in Croatia for many years but it started to be properly regulated in 2014 with the enactment of the gambling law Zakon o igrama na sreću. Until this day, this is the piece of legislation that sets up the rules for legal online and offline gambling operations in Croatia. As far as online gambling goes, this industry is also regulated by the Code of Rules for the Organization of Remote Games. Under the Zakon o igrama na sreću, a game of chance is defined as any game that offers its participants to win cash, goods, or services, with the outcome of the game being dependent on another uncertain event.
The law underlines that games of chance may be offered only by operators who abide by the gambling law and have been authorized to do so by the Government of Croatia and the Ministry of Finance. In the gambling law of Croatia, it is also noted that all the rights for operating games of chance in the country are transferred to Hrvatska Lutrija, which is a state-owned company. According to the law, the legal age in Croatia for participation in gambling activities is 18 years.
Gambling Regulator in Croatia
The current piece of legislation that is regulating gambling in Croatia came into effect after the European Commission approved the Zakon o igrama na sreću. Under that law, the licensing responsibility in the country falls under the remit of the Ministry of Finance. As mentioned earlier, applications for online gambling licenses are accepted only from operators that already run land-based gaming facilities in Croatia.
Licenses issued for gambling purposes are valid for 15 years and there are five types of licenses that the regulator can grant. These include:
- Number lotteries – games like joker, bingo, keno, and classic lotteries where the win depends on the number of correctly guessed numbers or symbols
- Instant, electronic lotteries – these are lotteries with a predetermined result and participants learn whether they win or lose only after they have joined the draw
- Slot machines
- Sports betting, including casual betting
- Traditionally played casino games
Online gaming and betting operators are required to utilize a Random Number Generator (RNG) to make sure that the outcomes of all games are free of any bias. The RNG must also be approved by the regulator.
In its role as a gambling regulator, the Ministry of Finance of Croatia is presented with a few duties. The first one is to issue licenses to applicants that meet the requirements for the respective operations. The regulator must also set up the guidelines that licensees must follow while operating under the license issued by the Ministry of Finance. The regulatory body must also oversee the work of licensed operators, support international cooperation, and also regulate the gambling market in Croatia according to the Zakon o igrama na sreću of 2014.
There is also a player return percentage requirement that license holders must meet. When conducting lotteries, operators must make sure that prizes offered must be equal to or exceed 50% of the amount of the sale price of all lottery tickets. Meanwhile, the winnings granted by slot machines must amount to at least 80% of the fee for participation in the games.
Gambling License Application Process in Croatia
Operators that wish to apply for an online gambling license in Croatia must participate in a tender. To qualify for the tender, applicants must have a share capital of at least HRK 4 million as well as an HRK 3 million bank guarantee to ensure that winnings can be paid out. It is also possible for foreign operators to participate in the tender but they will need to be operating a land-based gambling facility in Croatia.
The application form that applicants must provide must contain the following:
- The name of the company, its headquarter address as well as the company’s personal identification number (OIB)
- A document proving the payment of a license fee of HRK 3 million
- Data concerning hardware, software, network, system, and software support
- Proof provided by an independent international body that the results of testing software, systems used to determine outcomes as well as games provided by the operator comply with imposed regulations
- Rules that apply to every type of provided activity
- Details about a bank account set up at a banking institution that is registered in Croatia
- Data about the physical location of servers which must be located within the territory of Croatia
- Description of personal data protection tools and measures to be utilized (must comply with requirements imposed by the regulator)
- The address of the website/websites
- A copy of the contract signed with the Croatia-registered provider
- Data on the location of the land-based gambling facility owned by the operator, with a description of the number of people it employs
Among the documents that license applicants must also provide there are:
- Copies of the constituent act
- Information on the organization’s activities as well as extracts from the court register
- Proof that the company is compliant with the tax laws in Croatia
- A business plan including the operations for the upcoming three years
After applicants provide the aforementioned documents, the Ministry of Finance informs all the participants about the tender within the period of 30 days. The applicants who have been approved by the regulator will have 60 days to sign the agreement that will authorize them to offer gambling services in Croatia.
Gambling Taxes in Croatia
In addition to the license fee of HRK 3 million, gambling operators in Croatia are also required to pay a gambling tax. The tax rate that is levied on gambling companies depends on the type of activity offered by the operator.
Lottery providers are required to pay a tax of 5% that is levied on the amount generated through lottery ticket sales. Sportsbook companies will also pay a tax of 5%, which will apply to the turnover from betting. The tax that casino companies are required to pay is 15%, which is imposed on the gross gambling revenue of the casino. There is also a 25% that is supposed to be paid on slot operations, with the tax rate levied on the gross revenue generated from slots.
Players from Croatia also need to pay taxes on the winnings they have earned through gambling activities. If the collective amount of one’s winnings is capped at HRK 10,000 (€1,300), the tax imposed on the winnings is 10%. Players who have won between HRK 10,000 and HRK 30,000 will need to pay a tax of 15%. If gambling winnings exceed the amount of HRK 30,000 (€4,000), players are required to pay a tax of 20%. Lastly, there is a 30% tax levied on huge gambling winnings that exceed the amount of HRK 500,000 (€65,000).
The high gambling fees and taxes are some of the reasons why smaller local companies are less likely to join the gambling business in Croatia. Meanwhile, huge international gaming and betting companies have their subsidiaries operating in Croatia, further expanding their presence on the European market.
Gambling is regulated and legal in Croatia pretty much even before the country gained its independence. After Croatia became an independent country in 1991, various forms of casino games were offered throughout the country. Casinos started to be properly regulated, however, in 2010 with the enactment of the Ordinance on Interactive Online Casino. Later, that law was amended to fit the evolving gambling environment in the European country.
Currently, the gambling industry in Croatia is regulated by the Zakon o igrama na sreću of 2014, which came into effect at the beginning of 2015 after it was approved by the European Commission. Under that law, both land-based and online gambling activities are legal in Croatia as long as they are provided by licensed operators. One specific condition for online operations, however, is that companies can apply for an online gambling license only if they already run a land-based gaming facility based in the country.
While the legislative system in Croatia is pretty liberal when it comes to gambling regulations, the high fees and taxes have made it difficult for local small companies to compete with international gambling giants. This is why the land-based and online gambling industry in Croatia is mainly run by popular international companies that have extensive experience in this field and can afford to pay higher fees and taxes.