iGaming Daily

00:00
Welcome to the concluding part of the iGaming Daily's view on Eastern European market developments with 4H Agency. We are joined by Ilya Makoverian, founder and CEO of 4H Agency to uncover the tectonic regulatory shifts being played out in the Balkans regions, testing political sensitivities. Ilya, how are you doing today? Thank you. Thank you, Ted. Amazing. Thanks for having me. And hello, everyone who is tuning in to this podcast. It's amazing to...

00:27
Amazing opportunity to be here and I'm really excited to speak about Eastern Europe, speak about Central Europe and try and guide SBC audience within intricacies of the regulations of these markets. Ilya, we are witnessing many of regulatory disruptions in the bulk of markets. Can you detail what's currently happening on the ground within that region? Yeah, sure.

00:55
Generally, I really like the Balkans as a region for our industry because there is a lot of ground to cover. Yes, a lot of countries and basically what I mentioned in part one about having this understanding of local specifics is applicable obviously also to the Balkans in general.

01:22
because there are a lot of local, like strong, strong players and a lot of, a lot of happening on the ground. So for example, if we just quickly run through like everything that is happening, Albania decided to reverse their gambling ban in 2019 and they did it in a way that only sports betting is legal. So Albania is famously known by being a country on the verge of like white and gray. Let's put it this way.

01:51
So the industry is like having a blast over there. Both in Hirsegovina, the gambling industry suffers from like the general political structure of the country with free entities governing the industry. obviously, industry and the industry regulations lacks coherence in terms of regulations and how to approach.

02:18
approach different matters on within the regulation and within the industry. Bulgaria is in general, this is I would say the trend that is identifiable like within the whole Balkans is that Bulgaria and other countries that I will mention moving towards stricter advertising and IMO regulations within the country. And also Bulgaria is moving over creation of B2B licensing framework.

02:47
Croatia again, responsible gambling advertising, they are tightening things up and incorporating a more strict requirements. Montenegro, I'm not really fond of this market since there are recent changes of abolishment of any digital payments within the industry. So the players now need to physically top up their...

03:13
physically make deposits in betting halls and whatnot. So North Macedonia. A lot of movements. A lot of explaining. But okay. So let's find some common ground here. these countries are all interconnected. They all have a history, shared history. And how do you think that's shaped the view of gambling there and the gambling experience in the Balkans?

03:42
Well, listen, I think that the same things that are applicable to the general historical and political situation and the Balkans are applicable also to the industry that these countries have a lot of interplay between each other, both in terms of cultural similarities and language similarities to some extent.

04:09
And as I said, this applicable also to the industry because there are a lot of operators and markets that are overlapped to each other. And this is in some way, I would say like for the region, this is good because this overlap, it promotes a lot of cross-border cooperation between the countries. For example, Bulgaria, Serbia, Greece and Romania are working like actively together.

04:35
to combat of short gambling, but at the same time for the again, Western audience and Western sector of our industry. I think that this is an additional layer of complexion that is created when it comes to this region and this market because obviously if you have strong local players who enjoy presence in like

04:56
to or more countries within the region, then it is much harder to penetrate the market obviously, because like they know everyone and they understand everything. Obviously, again, political instability and general, again, history of being a part of unstable region, let's put it this way, also creates additional layer of...

05:23
layer of difficulties with regard to how to work in this market and how they develop themselves. And finally, like honorary mention is that a lot of countries within the region, are heading towards the EU or already there. So Balkans is in between like two different ways of thinking, let's put it this way, because on one hand, we have

05:53
their historical past. we have, again, like Balkan Central Europe and everything like is close to Eastern European countries. But on the other hand, all these markets, they are heading towards the EU. And obviously, they need to adhere to European regulations and they need to adhere to European standards. So this creates, again, an unstable environment where you need to navigate between

06:19
having the benefit of knowing how European regulations works. And in the same time, you need to understand the local specifics and how like these markets operate despite the fact that they are moving towards the EU. Yeah. I mean, you can kind of view it as kind of these tectonic shifts happening. And one of questions I want to ask you is that, okay, different regulations, different markets, but they all seem to be covering kind of the same themes.

06:49
A lot of vulnerabilities going towards protecting under 24s as a risk segment, also in-venue liabilities and the difference between the cities, the urban population versus the provincial towns and provincial protections. Can you talk about these themes? Yeah, well, sure. think that...

07:15
These themes and these issues, are generally applicable to any developing markets and jurisdictions because if we are not talking about countries like the UK, like France or Germany, and if you are speaking about countries that can be considered as developing countries, then obviously we see low levels of employment. We see a different population distribution where

07:44
Generally, you have a lot of young people who don't really have anything to do in a way. I mean, they don't have a lot of jobs, they don't have lot of opportunities for education given the economical situation in these countries. And obviously, this leads them to engaging with gambling industry in excessive manner.

08:08
So this obviously is a pain point for any market that is experiencing this like economical situation and that is experiencing the general nature of being a developing market. So for example, the same is applicable to India where you have a lot of young people who like don't really have a lot to do and they need to do something. So they tend to move on to the government industry and therefore the government sees this as an issue.

08:37
Because again, if your youth is not engaged in education and instead they're spending their money and getting in debt for playing on different offshore and onshore gambling websites, this is an issue. This is a matter of national interest. So this is why guess this argument drives a lot of regulatory developments that are happening in these countries. So from my perspective, is, I would say, quite reasonable because

09:06
Again, when we are talking about, I don't know, Nordics, like the economical situation is different and obviously like employment situation is different and generally GDP per capita is very different. But I also think in Western markets, you're talking about a very different demographic in terms of age. And the further East you go, the younger and younger it gets. I was amazed at just how young Georgia is as a nation. Yes. Yeah, in terms of its kind of demographic profile.

09:36
We're going to go into an ad break and when we return, we're going to speak about the political developments going on in Serbia and Croatia. I want to focus on Croatia and Serbia and countries that have gone recent elections and gambling did become an issue there for the issues that you were talking, but do you think that it became kind politicized during the campaigns? And what are these two nations? What do they want from a new gambling framework? Well,

10:05
If we start to speak about politicizing gambling, then I guess we would need part three, part four, and part five. Because this is also one of my favorite topics and I have a lot to say here. Generally, again, if you are within the industry and if you follow different industry media and you follow different markets, you understand that any gambling matter, literally any.

10:34
gambling issue can be heavily politicized because it's a very easy method to take it on the political rally and just use as a vehicle for getting some political influence. The good example, I know that I will touch upon Croatia and Serbia a bit further down the road, but the good example of that is Georgian changes in taxation that happened a couple of years ago.

11:01
when the ruling party just decided out of the blue that we need to get something, some political influence, we need to score some good political stuff. So we just decided to raise taxes for the government industry because this is a universally approved, universally acclaimed thing to do when you are speaking as a policymaker. And for the general public, this is a very

11:29
uh, good news and a very good like title of any like news program that the government decided to tighten, uh, tighten the screws on this evil gambling industry and increase taxes and make them, I don't know, do all the work while standing on the one, one, one leg instead of two. So this obviously creates a very, um, very seducing, like a seducing way.

11:55
to push yourself further in terms of politics and try to get some position within the country. And Croatia and Serbia, are, I guess, the same in a way because like in Croatia, the recent reforms, essentially that has happened regarding their responsible gambling and additional restrictions on advertising, they were piggybacking on the main argument that the government was putting emphasis on public house and use protection.

12:24
as a justification to restrict advertising, restrict sponsorship, restrict venue visibility. So essentially, there is a small regulatory hurdle over there that Croatia introduced these regulations without proper notification to the EU. Therefore, there is some criticism regarding the transparency and bypassing the procedure. But again, this shows that this argument of we are protecting public health and we are protecting youth

12:54
as a really strong and universal argument to put additional restrictions on the gambling industry at any time you would like to do this. And same goes for Serbia because again, the main argument behind the reforms, behind the recent reforms that happened, is again, public concern over youth gambling and amount of operation in general, like saturation of the sector.

13:22
So like, again, this, don't really like when, um, from my perspective as a lawyer and as a regulatory expert, I think that any regulatory changes, changes they need to be, uh, like considered from the perspective of how the market, the legal market will change in, comparison to the offshore market. Because like, we all know that, uh, if you are operating offshore, like under Anjouan or Kurasawa license,

13:52
You do not have any restrictions regarding advertising, regarding like when you spacing, like obviously you don't have any venues, but when we're talking about online, you offshore gambling is a much more favorable position compared to the licensed sector and the legal sector of business. So when the government introduces any regulatory measures that are

14:15
drive being driven by not by the fact that, okay, we understand that offshore gambling is rising and we need to curb it. So we need to consider how we can improve the position of licensed operators by changing the regulations. But instead the government resorts to our well, the public, the youth is playing a lot and we need to restrict advertising for the licensed operators in the country. So effectively,

14:43
If yesterday young people were playing on the licensed website, tomorrow they will go and play on offshore website. So this is some kind of a backwards logic, I would say. But I have to counsel you on certain bits of that. mean, in certain bulk of markets, they're looking for kind of more centralized controls, be it for consumer protections or as a protection of a set to raising taxes, an economic kind of safeguard.

15:13
But don't you find that there actually is a ground for that in certain Balkan markets where you need kind of a protection against black market encroachment and that might have to be centralized? Like this is a good question as well because like for example in Serbia the market is

15:36
dominated by local guys, by local operators and they enjoy like a very, very large presence. But in the same time, in other markets, this is not really like the case. And I would say that, again, this is a general, how to put it, the threat of domination of offshore operators is

16:02
I would say a general argument that any government needs to consider when they are introducing any changes to the regulatory framework of the industry. Because if the government starts to consider only local, local specifics and local context, then they are basically missing the point of regulation. Because even if, for example, like the government pushes because of the saturation of the market, they decide to restrict it, they decide to, I don't know, limit the amount of licenses to be issued.

16:30
increase taxes, increase licenses, whatever the government would like to do. After that, market, okay, the legal market shrinks, but in the same time, we all know what happens next, that illegal market will grow. So this is like the thing that they need to understand and that we need to consider as well when we're considering this market for expansion, that this is like the issue that we might face if we approach them in a different way than it needs to be approached.

17:00
That's my final two questions. Do you kind of see any harmonization in the bulking's area in terms of how they approach the application of gambling reforms, but also safeguards and consumer protections? Do you think like there's going to be a kind of unified or harmonized framework in any sense? Well, I think that the answer here lies within

17:25
the bigger question of when and how and which part of the Balkans will join the EU. Because I would say that the very interesting difference between within the Balkans can be found if we look at Romania, for example, which is a part of the EU and like Serbia, which is not part of the EU. So Romania is like I would even say famous within the gambling industry as

17:55
probably the first market to expand into when you're considering 10 to Eastern Europe because Romania has a very established gambling regulatory framework. hasn't been easy for them though. Yes. Yeah. No, yeah. Fair enough. Fair enough. But nevertheless, they have a very well-developed regulations on the ground. And I think that like a lot of, um, like the big chunk of reasons for why they actually have like this proper regulations is because they're part of the EU.

18:25
So they need to adhere to different EU regulations. They need to adhere to particular standards in regulatory governance and policy development that are in place within the European Union. But when it comes to the countries which are outside of the EU, it gets more more more interesting because there is no standards. There is no larger governmental body that you need to like...

18:53
please in a way, you need to comply with the requirements from which you need to comply with. So this creates this disharmony within the region when geographically and culturally and even historically, the region seemed to be harmonized and this probably to some extent natural to consider that, probably they know what they are doing and they're speaking with each other and trying to build somewhat similar.

19:20
But if we add the EU into play, when we understand that the harmonization is far away, and for example, with Croatia, despite the fact that Croatia entered the EU as well, and they still decided to bypass the notification of the EU. it's complicated, a complicated picture of national interests and interests of the European Union being in conflict to some extent between each other.

19:48
And basically the current regulations are the twisted outcome of this interplay between local specifics and European Union specifics within the region. Okay. My final one, there's so many interconnections and interplays, but do you see any kind of bulk and market settling reforms in 2025? Just a quick summary. terms of quick summary, like...

20:15
To be honest, I don't think that some of the countries will do something monumental in terms of regulations. However, I would say and I expect like impact to reforms in Romania, in Croatia and in Montenegro, especially in Montenegro where I believe that highly likely that Montenegro will, I hope that they will backpedal on this ban on digital payments.

20:45
like because this is not in alignment again with the European Union standards on anti-money laundering and general industry backlash. So I think that the countries to watch is definitely Romania, Croatia, Montenegro, also maybe Serbia to some extent because Serbia is generally a very interesting market, I would say, at least for me, we have an office in Belgrade. basically, yes, I guess that in terms of

21:11
like anticipated reforms in the near future. These are the countries that we need to look into. Ilya, you've been fantastic. I can't wait to meet up with you and the RRI gave and gave the audiences. Thank you for tuning in. It's a pleasure. Thank you. Thank you very much, Thanks for having me and it was a huge pleasure to share some knowledge with the audience and to meet with you, Thank you. Thank you very much, guys.