In North Macedonia, gambling is more than just a popular pastime – it’s a major economic driver. Papazoski and Mishev Law Firm Attorney at Law Ivan Mishev, Law office Emil Miftari Attorney at Law Elena Nikodinovska Miftari, and Polenak Law Firm Partner Metodija Velkov discuss the industry’s impact on the economy and the challenges posed by evolving regulations.
A Major Contributor
“The gambling industry is a major economic branch in North Macedonia,” Mishev says. Velkov agrees, adding that “casinos, sports betting, and online gambling are highly popular in North Macedonia, especially in cities like Gevgelija near the border with Greece, where large casinos cater to international visitors. A lot of hotels with five stars have also opened casinos within their premises which also attract a lot of the foreign visitors in the country.”
Nikodinovska Miftari reports that “according to the Association of Sports Betting Shops of Macedonia (ASOM), the gambling industry contributes more than EUR 250 million to the state’s budget and provides employment directly to 7,700 people, and indirectly to 54,000 people. Namely, according to the data provided by ASOM, in 2018, the gambling industry provided EUR 253 million into state and local budgets, of which EUR 135 million from direct revenues and EUR 118 million from indirect revenues from VAT, local fees, payroll contributions and taxes, and lease of office spaces. In addition, gambling companies paid EUR 32 million in salaries for their employees in 2018 and paid EUR 11 million in taxes. Based on the analysis provided by ASOM, the data from 2018, compared to the data for 2017, showed that the gambling industry contribution to the public budget in 2018 increased by 41%.”
In comparison to neighboring countries, Velkov notes that “North Macedonia is smaller in terms of revenue, but gambling is a big source of both tax income and employment. The country stands out due to its cross-border tourism from neighboring countries, particularly Greece, where gambling regulations are stricter.” According to him, “cities like Gevgelija, which is located near the border with Greece, have become major casino hubs, attracting not only locals but also a large number of foreign visitors.”
“In comparison to some neighboring countries that have more restrictive policies, in the Republic of North Macedonia, games of chance are allowed under the conditions prescribed by the law,” Nikodinovska Miftari adds. “However, although the gambling industry in the Republic of North Macedonia has had continued growth, it is probably still less significant than countries like Serbia, Croatia, and Montenegro.”
Growth Over Time
In terms of the development over the past decade, Mishev highlights that “gambling in North Macedonia and the region has always been a popular activity.” Over the last few years, he says, “with the opening of more and more local gambling objects, the introduction of a couple of new online gambling providers, as well as a marketing strategy which covers all major mainstream marketing platforms, gambling’s popularity grew significantly.”
Gambling, Velkov notes, has been a hot topic in North Macedonia, “especially with the proliferation of sports betting shops and online platforms. The rise of digital gambling platforms has been pivotal. Sports betting is especially popular, aided by the introduction of mobile apps and online casinos, making it easier for people to participate.” Velkov also notes that while, in 2020, COVID-19 affected the industry, leading to closures of physical casinos, “the gambling sector quickly rebounded thanks to the surge in online gambling. From that period on, there has been a rise in the popularity of online gambling platforms not only on the side of the customers but also on the side of the gambling providers. A lot of foreign companies have shown interest in investing in the provision of online gambling services.”
Nikodinovska Miftari attributes some of this growth to the more restrictive policies of neighboring countries, noting, “the restrictive policies of some of the neighboring countries have had a positive effect on it. In addition, practice has shown that generally there is an interest in the population for games of chance.”
Mishev says that, as a result of the above, the gaming industry is “present in almost every household in a direct/indirect manner, especially the young generation.”
Regulatory Changes and Challenges
As for the regulatory landscape, Velkov says that “the regulatory environment is very focused on responsible gambling. There are strict controls on advertising, which limit the promotion of gambling activities, especially in areas where vulnerable populations might be exposed. Recent efforts have also been made to introduce zoning laws, ensuring that betting shops and casinos are not located near schools or residential areas.”
“The gambling market is regulated by the Law on Games of Chance and Entertainment Games from 2011 and its amendments,” Nikodinovska Miftari explains. “Although, with the initial text, internet games of chance were allowed, no entity organized them, mostly because it required a bigger investment. Therefore, in 2012 with an amendment of the law, a larger opportunity for foreign investment was given. This is mostly because Macedonian citizens were playing internet games of chance on foreign websites which contributed to a significant outflow of funds from the country.”
Mishev draws attention to economic implications when it comes to regulating the industry. “Taking into consideration that the gaming industry is a local major economic branch, any changes of the relevant regulations cause major concerns,” he notes. “The most recent attempt for change – which has passed the parliamentary process and was formally adopted – has been vetoed by the previous President with the explanation that the changes have not been adopted in accordance with all procedural rules, as well that it would hit the local economy very hard.” Still, Mishev says that “after the recent parliamentary elections and with the change of government, one of the first steps that the new political structure undertook was to revoke the licenses for online gambling providers. Additionally, the new government announced the adoption of changes to the gambling legislation with the purpose of introducing stricter rules on the industry and new tax burdens.”
Hedging Bets for the Future
Looking forward, Mishev anticipates that “following all recent events, it is highly likely that the gambling industry will continue to be a major factor in the economy of North Macedonia and will grow at a steady pace. Online gambling will certainly be the major focus point in the next few years as it is growing in popularity with each year.”
However, future development hinges on regulatory reforms, as Nikodinovska Miftari explains. “At this point, it is still uncertain whether and how the gambling sector would be reformed,” she says. “However, certain social, political, and economic aspects will have an influence on legislative reforms, and thus on the future development of the industry.”
“Even though the gambling industry can attract potential investments and rise in revenues, it, of course, has its negative side,” Velkov notes. “The rise of physical casinos and online betting and gambling platforms can lead the younger generation to a gambling addiction. Indeed, this has sparked a lot of controversies, and there are new proposed amendments to the Law on the Games of Chance and Entertainment Games.” These amendments, he notes, “aim to introduce stricter restrictions on games of chance because the liberal approach allows more and more young people to become victims of gambling and get addicted to it.”
This article was originally published in Issue 11.10 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.