BST privatisation divides Bulgarian politics

The Bulgarian government is moving ahead with a reform of public sector bodies, including the Bulgarian Sports Totalisator (BST), the state-owned betting and lottery company that operates the Toto BG brand. 

The proposed plans will involve the privatisation of six key state-owned properties including BST in the New Year, despite reports from the country suggesting the lottery’s commercialisation will encounter difficulties. 

According to a regional outlet, former Bulgarian Deputy Prime Minister, Kalina Konstantinova, BST will become a joint-stock enterprise’, whilst the remaining three state-owned entities covered under the proposals will become ‘administrative structures’. 

However, in the case of BST, the company may lose its ability to transfer funds to the Ministry of Sports – one of its key founding objectives since its inception in 1957, as a means to support sports and physical education in schools. 

Radositin Vasilev, Bulgaria’s Sports Minister, was reported saying that the commercialisation of the Totalisator was not feasible “for a number of reasons that will lead to extremely difficult, practically impossible, existence of it”.

Essentially, the Sports Minister is referring to the possibility that should it be privatised, Bulgaria’s Sports Ministry would then be unable to directly deduct funds from the BST’s revenue. 

As noted, one of the primary functions of Bulgaria’s state gambling corporation is to provide public funding for sports and school PE activities, with BST transferring BGN 42m (€21.47m) to the Ministry of Sports in 2021.

Additionally, a separate concern has also been raised regarding licences, as some such as instant lotteries can only be held by the state. 

Without changes to the current legislative infrastructure, the Minister argues this could adversely affect the BST’s fiscal contribution to state coffers. As the lottery provider and operator of the Toto BG retail business, the firm paid BGN 42.5m (€21.7m) in licensing fees last year. 

In Vasilev’s view the government should hold off on commercialisation of the Totalisator until these concerns are addressed, arguing that to move ahead with the plans would require changes to current Bulgraian gambling and commercial legislation. 

“I am very worried that it should not happen that, as a commercial enterprise, we lose the funds, which should then go directly to the finances (the state budget),” Vasiliev remarked. 

“The method of distribution will change, we have to touch the Gambling Act, we need to change the Tote Law itself, the Commercial Act needs to be changed on this thing, rather I’m worried that at the moment it shouldn’t be a commercial enterprise, but seeing that there are others who are ready and they are not ready, most likely with no analysis, let’s so, if possible, wait.”

This is the second time that the Totalisator has been the topic of public and political debate in the country in recent months, with the reports coming as legislators also consider an expansion of its games offering and retail coverage.

Last month, the populist/anti-corruption ITN Party proposed a draft bill to the Bulgarian National Assembly that would expand the Toto BG retail division’s sales network from 1,500 betting points to 3,000.

The ITN Party’s primary motivation for proposing this was to fill gaps in state financial support for sports and cultural services – it could be expected that the party will therefore be somewhat alarmed by the concerns regarding the government’s planned commercialisation of BST.

Bulgaria sees itself in a constitutional crisis, as this week President Rumen Radev called for a snap election to be held on October 2, following Prime Minister Kiril Petkov declaring that he could not form a coalition government.

Urgency is required on Bulgaria to form a new government, however political observers outline vast differences on how Bulgaria should tackle its immediate concerns of inflation, pandemic costs and Bulgaria’s standing in the regional conflict between Russia and Ukraine.

Meanwhile, required to participate in Bulgaria’s fourth general election in two years, Bulgarians appear to have lost all confidence in a further frail coalition being formed.

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