Emerging Markets | Croatia

20 March 2009
Editor's note: Graph 10 was updated according to new information from GBGC. See footnote.

Before Croatia gained independence from Yugoslavia in 1991, its gaming industry consisted of casinos and the national lottery. The casinos were reserved for foreign visitors and higher ranking Communist Party officials, while ordinary people were only allowed to play with the national lottery, established in 1973.

The country's independence brought about the opening of the gaming industry, along with other sectors of the economy. Gaming halls, called Automat Clubs, and betting shops proliferated. A number of new casinos opened, while the national lottery remained operational and added a number of new games. The lottery is today the most stagnant gaming sector, growing at under 1 percent annually, compared to 26 percent annually on average for total gambling in the last three years.

Betting, currently, is the largest sector of the land-based gaming industry, accounting for 38 percent of the country's total gaming revenues in 2007. Croatia, with its 4.5 million inhabitants, has close to 2,500 betting shops, or 545 shops per million people. The density of betting shops per citizen is nearly four times higher than in the United Kingdom, which has only 144 betting shops per million people.

The highly competitive betting sector has 12 licensed operators, with the national lottery having the most outlets, followed by the market leader Super Sport. The number of betting shops keeps increasing as operators are trying to retain market share through new openings. The strong competition has already forced one bookmaker out of business, while another operator turned to offering betting terminals in bars instead of operating betting shops.

Gaming machines in Automat Clubs are the second most popular form of gambling, accounting for 35 percent of gaming revenues last year. Croatia has 10,000 machines, 80 percent of which are located in the Automat Clubs. More than 50 operators are licensed to offer machine gambling, among them the national lottery and the Austrian company Wettpunkt. In order to attract customers, Wettpunkt has entered into a partnership with the local cinema where casino visitors, on certain days, are given free vouchers worth 3.50 euros to play the machines in one of their Automat Clubs in the capital, Zagreb.

Casinos in Croatia cater mostly to foreign visitors, so most are located along the 5,835 kilometer coastline. The capital has a number of casinos, where poker is increasingly popular. In total Croatia has 26 casinos (three of them seasonal) or nearly six casinos per million people compared to over two in the United Kingdom.

Some casino businesses are reputed to have ties with organized crime, which was confirmed this summer. Namely, the increasing popularity of poker led to organizing of the first Croatia Summer Poker Festival on the island of Brac in August. Unfortunately for the participants, the organizer of the tournament fled with the total pot of 100,000 euros and has not been seen since.

Croatia’s total gambling industry accounted for 0.7 percent of gross domestic product in 2006, more than the United Kingdom at 0.6 percent of G.D.P. This year, the figure has increased to 0.8 percent. Global Betting and Gaming Consultants estimate that land-based gaming revenue will increase from today's $420 million to approximately $700 million by 2012.

At present, participating in foreign online games of chance is forbidden by law in Croatia, together with any promotion of such games. However, the reality is quite different. A number of foreign online operators, mostly bookmakers, target this betting-crazed nation and offer betting on the first Croatian soccer league. Advertising, which is also prohibited, can be seen often, mostly on stadia during sports events and on television while broadcasting sports events. Bwin Interactive Entertainment A.G. and Bet365 Group Ltd. are among most widely advertised bookmakers, while Expekt poker is among most popular online poker operators.

Croatia is currently preparing new gambling legislation, as the current 2002 legislation is deemed outdated. GBGC has been advised that the new laws will also include the legalisation of already present online gambling. The deadline set for publishing the new law is April 2009; however, there could be some delays.* As Croatia is currently negotiating membership to the European Union, it has to harmonize many laws with the European legislation, and gambling is not high on the agenda.

GBGC estimate the online gambling revenues in Croatia at $4 million today, most of it accounted for by online betting, followed by poker. The revenues are still relatively small as only 18 percent of households had broadband access in 2007. GBGC estimate that the broadband penetration rate will reach 40 percent in three years’ time, while total online gaming revenues in Croatia are expected to reach nearly $13 million in 2012 without any legislative change. The revenues could more than double in 2012 if online gambling is legalized, as expected. Once Croatia becomes a member of the European Union, the market should grow even more, but with the current status of the negotiations we do not expect it to happen before 2012.

*On March 20, 2009, Ms. Jurican informed IGamingNews that in conversations she had with the finance ministry, it was revealed that the legislation's introduction will be delayed until September 2009.

Under that legislation, an operator must hold a land-based license to operate online -- a requirement similar to those enforced in the Czech Republic and Slovenia.

"As the minimum capital and deposit (for securing the payment of winnings) requirements are set high, we expect only the largest land-based operators to be interested in acquiring an online license," Ms. Jurican said. "Of course, as this is just an early draft, the requirements can still change."

Ms. Jurican, a research analyst with Global Betting and Gaming Consultants, graduated from the Faculty of Economics and Business, Zagreb University, in 2004 with a major in economic development and analysis. Before entering the gambling industry she worked for the Croatian National Bank's research department as an analyst.