According to the Games of Chance Act (Official Gazette Nos. 87/09, 35/13, 158/13, 41/14, 143/14 114/22) (the “Games of Chance Act”), gambling is defined as a game in which, in return for a certain payment (a bet), the participant is offered an opportunity to gain money, things, services or rights, whereby the gain or loss depends mostly on chance or some other uncertain event.

The main regulation governing gambling in Croatia is the Games of Chance Act, which comprehensively regulates all gambling games, meaning it defines categories of games of chance, sets up a licencing regime for gambling operators, regulates the methods of distribution of income from gambling, and establishes powers for the Ministry of Finance which enables supervision over the organization and operation of gambling games. Based on the mentioned regulation, the Ministry of Finance as the central authority for the regulation of gambling, issues specific ordinances and rulebooks which detail the technical and operational standards prescribed for organising different categories of gambling games.

Apart from to the mentioned gambling specific regulation, the most relevant regulation applicable to gambling sector includes the Act on the Prevention of Money Laundering and Terrorist Financing (Official Gazette No. 108/17, 39/19, 151/22) (the “AML Act”), the General Tax Act (Official Gazette Nos. 115/16, 106/18, 121/19, 32/20, 42/20, 114/22) and the Corporate Income Tax Act (Official Gazette Nos. 177/04, 90/05, 57/06, 80/10, 22/12, 146/08, 148/13, 143/14, 50/16, 115/16, 106/18, 121/19, 32/20, 138/20 114/22, 114/23).

In Croatia, competent authority in charge of regulation of gambling is the Government of the Republic of Croatia (the “Government”), or more specifically, the Ministry of Finance (the “Ministry”) and their Department for Games of Chance.

Yes, alongside the state-owned company Hrvatska Lutrija LLC, only companies incorporated in Croatia which hold an appropriate licence issued by the Government of the Republic of Croatia can organise gambling games in Croatia.

a. What is the duration of a licence?

The licence is granted for a period of 15 years.

b. What types of licences are available?

Games of Chance Act defines four types of specific categories of gambling (games of chance) games, more specifically:

• lottery games;
• casino games;
• betting games; and
• slot machine games.

Licenses for organising gambling games are issued only for casino games, betting games, and slot machine games, while the state-owned company Hrvatska Lutrija LLC holds the exclusive right to organise lottery games, along with the right to organise all other gambling games.

We note that the maximum number of licenses that can be issued to a certain category of gambling games operators is limited, and in accordance with the relevant decision enacted by the Government the maximum number of gambling games operators in the Republic of Croatia is as follows:

• 20 entities for organizing casino games;
• 20 entities for organizing betting games; and
• 55 entities for organizing slot machines gambling.

The mentioned licensing regime is primarily set up as in relation to the gambling operators organising gambling games in brick-and-mortar shops, while the license to organise online gambling games is regulated as an extension to the respective casino games or betting games operator licence.

c. Are there different types of licences for B2C and B2B operators?

The previously described licencing regime is set up in relation to the B2C operators, while persons offering B2B gambling services (IT support) operating as the subcontractors to the licensed gambling games operators do not require to hold a licence themselves.

d. Do software suppliers need to be licensed?

There is no licensing regime prescribed for entities which provide gambling software or machines to gambling operators, but all software and machines used to operate gambling games must be certified by a laboratory licensed by the Ministry and authorized for conducting compliance reports for the relevant type of machine or software. Such certificate issued by the licenced laboratory is only valid when it is finally approved by the Ministry.

There are no specifically prohibited gambling products or games, as long as their rules and systems are in line with the prescribed norms, technical standards and international gambling standards. Further to this, the lottery organization is practically prohibited, as the only entity authorised to operate lottery games (monopoly) is the state owned Hrvatska Lutrija LLC.

Also, although it is not conventionally considered as a gambling game, the Games of Chance Act expressively prohibits the so called “Ponzi schemes”, meaning any games or activities where participants in such game pay a certain sum of money to participants who joined the game or activity before them, and who then in turn expect a payment of certain sums of money from the participants who would join the game after them.

Casino games, betting games and slot machine games may be organized and undertaken by the companies with registered seat in the Republic of Croatia which hold an appropriate license for operating the relevant gambling games, i.e. holding a relevant decision/authorisation of the Government of the Republic of Croatia and approval of the Ministry.  The process of obtaining such authorisation is initiated by the Minister of Finance by announcing the invitation to a public tender for granting a category specific gambling licence.

The mandatory tender application documentation includes the following:

1. Company and registered seat information;
2. Court registry excerpt from which the companies registered activities, share capital and the origin of the share capital are visible;
3. Founding act of the company;
4. List of the owners/shareholders of the company with their names, addresses and their total nominal share in the share capital of the company;
5. If the founder of the company is a foreign legal entity, a court registry (or other respective registry) excerpt with the list of owners/shareholders with their names, addresses and their total nominal share in the share capital of the company;
6. If the founder of the company is a natural person, original or certified copy of a personal identification document, from which a full name, place of residence, date and place of birth are visible;
7. Information on the ultimate beneficial owner of the legal entity;
8. Evidence that there are no criminal proceedings initiated against the key personnel of the company;
9. Evidence that the company and its founders do not have any outstanding tax liabilities;
10. Company’s three-year business plan with the information on expenses, income, number of employees, types of games etc.
11. Evidence that no bankruptcy proceedings were initiated over the applicant company.

After reviewing the received public tender applications and ranking the applicants (mostly in accordance with the proposed financial benefits which are to be gained by the state budget), the Ministry proposes the decision on granting the gambling licence (authorisation) to the best ranking applicants and such decision is then adopted by the Government, after which and on the basis of such, the Ministry and the relevant gambling operator execute the corresponding licensing agreement.

As the licences issued in the previously described tender procedure authorize the holder only for organizing gambling games in brick-and-mortar shops, online gambling operators must also acquire an authorisation for organising online gambling games. Such authorization for organising online gambling is issued as a decision enacted by the Government of the Republic of Croatia which is granted as an extension in addition to the already obtained casino games or betting games license issued at the request of the gambling operator. Only licensed casino games operators who have at least one brick-and-mortar casino in function or betting games operators who at all times have at least 100 employees and are running at least 50 functional betting shops qualify for the respective authorization.

There are no specific application costs that apply. Upon receipt of license, operators pay prescribed administrative fees and taxes as described in more detail in point 11.

Casino personnel which directly operates casino games (e.g., croupiers, supervisors etc.), cashiers, and other managerial position responsible for running casino operations must acquire an appropriate licence for working in a casino by passing the role specific state exam.

No additional requirements are prescribed for individuals.

Advertising of gambling is generally permitted, but the Games of Chance Act specifically prohibits gambling adds and commercials to be shown on radio and television shows or printed material intended for children and youth, meaning that ads targeting persons under the age of 18 is forbidden. Also, as offshore gambling is strictly forbidden, offshore gambling operators are forbidden to perform any kind of advertising activities in the territory of Republic of Croatia.

Gambling regulation in Croatia does not restrict the provision of marketing services in relation to the person performing such activities if such marketing activities are performed in accordance with the previously mentioned restrictions which forbid gambling adds that target children and youth and of offshore non-licensed operators.

Fines for offering, facilitating or marketing unlawful gambling range from approx. 3,980 EUR to 13,270 EUR for natural persons, and from approx. 6,630 EUR to 66,360 EUR for legal entities, whereby in cases where a legal entity was found guilty of an offense, the responsible person in that legal entity would also be fined with a fine ranging from 660 EUR to 6,630 EUR.

Apart from the mentioned fines, all objects used to organise unlawful gambling as well as all proceeds from such will be seized. In addition to the mentioned misdemeanour offences, organising unlawful gambling is also punishable as a criminal offence whereas a natural person can be sentenced to prison for up to three years for a one-time offence, up to five years if he performs unlawful gambling activities regularly, and up to eight years if such activities produced significant material benefits or caused significant material damages.

Gamblers are penalised for participation in unlawful gambling only in cases when a person participates in offshore gambling (fines from approx. 1,320 EUR to 6,630 EUR).

The first and foremost prerequisite for acquiring a gambling licence is establishing a company with a registered seat in Croatia. After the formerly mentioned, key requirements can for specific category of gambling games consist of (i) share capital requirements, (ii) bank guarantee requirements, and (iii) annual and monthly licensing fee payments.

Casino games operators must have the minimum share capital of EUR 530,891.23 registered with the court registry of the respective Commercial court during the entire licence term. For the purpose of security for winnings and tax pay-outs, casino games operators must also provide the Ministry with a bank guarantee in the amount of EUR 199,084.21 and keep such guarantee valid throughout the whole licencing term. The annual licensing fee for casino games operators amounts to EUR 66.361,40 per casino, while a monthly licencing fee is calculated as the 15% of the net turnover (total pay-ins minus total pay-outs) which a certain operator records on a monthly basis. If the operator also operates online casino games, on top of the mentioned fees he also he pays an additional yearly licensing fee in the amount of EUR 398,168.43.

Betting games operators must have the minimum share capital of EUR 530,891.23 registered with the court registry of the respective Commercial court during the entire licence term. For the purpose of security for winnings and tax pay-outs, betting games operators must also provide the Ministry (yearly) with an appropriate bank guarantee in the amount ranging from EUR 663,614.04 to EUR 1,990,842.13, depending on the total amount of placed bets received last year, and keep such guarantee valid throughout the whole business year. The annual licensing fee for betting games operators amounts to EUR 132,722.81 while a monthly licencing fee is calculated as the 5% of the total amount of placed bets which a certain operator records on a monthly basis. If the operator also operates online betting games, on top of the mentioned fees he also he pays an additional yearly licensing fee in the amount of EUR 398,168.43.

Slot machine games operators must have the minimum share capital of EUR 265,445.62 registered with the court registry of the respective Commercial court during the entire licence term. For the purpose of security for winnings and tax pay-outs, slot machine games operators must also provide the Ministry with a bank guarantee in the amount ranging from EUR 39,816,14 to EUR 663,614.04, depending on the total number of slot machines it holds, and keep such guarantee valid throughout the whole licencing term. Lastly, annual licensing fee for slot machine games operators depends on the total number of machines the operator has in use, whereas a fee in the amount of EUR 1,327.23 is paid for general slot machines, while EUR 5,308.91 is paid for roulette machines, and if a roulette machine has more than six seats then the fee amounts to EUR 6,636.14. In addition to the yearly licence, slot machine gambling operators pay a monthly licencing fee that is calculated as the 25% of the net turnover (total pay-ins minus total pay-outs) which slot machines of a certain operator record on a monthly basis.

Gambling operators in Republic of Croatia are obliged to conduct know your customer (KYC) anti-money laundering checks for all transactions (pay-ins, pay-outs, consecutive connected bets etc.) which amount to or go above the EUR 2,000 threshold, which is prescribed only for industries with the highest risk of money laundering. The main request is that the person must identify itself personally or via video call to be able to register as a player.

All other general anti-money laundering requirements applicable across all industries like suspicious transactions reporting and relevant organisational measures for detection and prevention of money laundering are based on the common EU anti-money laundering framework as set out in the “AML” directives package enacted by the EU.

In regard to the safer gabling requirements, in scope of the Games of Chance Act there are no notable provisions which regulate responsible gaming requirements, apart from the obligation to publish a responsible gaming pamphlet in the premises stating the possible harmful effects arising from gambling, realistic prospects for winning, and a telephone number for the problem gambling support line.

Further to the above-described legal framework, operators themselves prescribe industry bylaws and principles to be followed in this respect.

Licensed gambling games operators have the obligation to provide evidence of their shareholders as well as their ultimate beneficial owners as part of the application procedure for license. Any subsequent changes to the shareholding structure of the licenced gambling operator will in turn activate the procedure for deciding on the retention of the right to organize relevant gambling games which is conducted by the Ministry, and by which the Ministry has the right to decide to revoke the licence issued to the relevant gambling operator.

Apart from the obligation to report any changes in its shareholding structure, the licenced gambling operator has the obligation to report to the Ministry any changes in information related to its management or supervisory board, authorise representatives, lower management or any other circumstances that may be important for running his business operations.

As the authorised regulatory and supervisory body, the Ministry has the authority to, in a broadest sense, supervise and search all operations, machines, registries and all parts of the business premises of the gambling operators, all in purpose of determining if games of chances are organised in line with the set-out gambling regulation. If the Ministry finds any irregularities in conducting their supervision, they are authorised to issue and impose fines, but also to issue seize and desist warrants, whereas they also have the right to destroy all the seized assets found as unlawful.

Ministry is also authorized to (and exercises this right) to issue seize and desist orders that refer to offshore non-licensed gambling operators in the territory.

Corporate income tax is generally paid at a rate of 18%, while for taxpayers with a fiscal year revenue under EUR 1,000,000 the rate of 10% is applied.

Additionally, it should be noted that in Croatia there is a tax on winnings gained from games of chance, whereby natural persons who gain winnings are subject to the following tax rates:

1. 10% tax rate applies to winnings up to €1,327.23;
2. 15% tax rate applies to winnings exceeding €1,327.23 and up to €3,981.68;
3. 20% tax rate applies to winnings exceeding €3,981.68 and up to €66,361.40;
4. 30% tax rate applies to winnings exceeding €66,361.40.

In Croatia, significant amendments to the Games of Chance Act are currently in the parliamentary procedure, which are expected to bring substantial changes to gambling regulations in the coming months. These changes are aimed at addressing social concerns related to gambling addiction and improving regulatory mechanisms for the sector. Key proposed changes include:

1. Mandatory Identification of Players: All players entering land-based gambling establishments will be required to undergo identification. This measure aims to strengthen the protection of minors and reduce the potential for gambling addiction. Lotteries, however, will be exempt from this requirement as they are considered low-risk games of chance.
2. Unified Player Exclusion System: The proposal introduces a national registry of self-excluded players, which would prevent a player excluded by one gambling operator from participating with other operators. This measure seeks to curb excessive gambling by improving the efficiency of player exclusion systems.
3. Stricter Advertising Regulations: New advertising restrictions are proposed, including a ban on gambling advertisements in the media between 6:00 AM and 11:00 PM, with limited exceptions for live sporting events. Advertisements promoting bonuses will also be restricted, except on licensed gambling operators’ websites.
4. Enforcement Against Unlicensed Online Gambling: The proposal suggests new measures, including blocking payment transactions to unlicensed online gambling operators, to combat the participation of Croatian citizens in illegal gambling activities.

The Ministry of Finance, based on recommendations from a special working group, aims to implement these amendments, with key provisions taking effect between 2024 and 2026. The registry of self-excluded players, for example, is expected to be fully operational by January 1, 2026.

Respective amendments to the Act are most likely to enter into force in the 1Q of 2025.

Several regulatory developments are on the horizon, driven by the need to align Croatia’s gambling laws with evolving market conditions and technological advancements. These include:

1. Responsible Gambling Measures: Enhanced measures for responsible gambling are a priority, particularly through mandatory player identification and a unified exclusion system. These developments reflect growing concerns about gambling addiction and aim to balance public health interests with the economic benefits of gambling.
2. Stricter Advertising and Visibility Controls: The proposed regulations will significantly limit advertising and visibility of gambling activities, especially on public-facing platforms and media outlets. This is part of a broader effort to reduce the social impact of gambling promotions, especially among vulnerable groups.
3. Combatting Illegal Gambling: New measures to block unlicensed online gambling activities are expected, focusing on cutting off payment channels for these operators. This regulatory change is part of the 2024 legislative agenda and aims to be fully enforced by January 2025.

These regulatory developments are expected to be finalized within the next 12-24 months, as the Croatian Ministry of Finance and other stakeholders work to modernize and enforce gambling laws in alignment with public health and market trends.

We do not foresee any imminent risks to the growth of the gambling market in Croatia. On the contrary, we anticipate a positive trend in the industry, particularly in light of the proposed changes to the Games of Chance Act, which aim to enhance regulatory clarity and potentially attract further investment in the sector.

We would say that the main positive factor is organized licensing system and the availability of quality experts in the IT and supporting industries. Also, in comparison to the neighbouring jurisdictions, Croatian market has one of the highest numbers of registered players and industry turnover.