Speaking with SiGMA News, George Mamulaishvili, head of the Georgian Gambling Business Association, discusses gambling legislation in Georgia.
As an expert and consultant on legislation in the post-Soviet region and the Balkans, Mamulaishvili explains how he collaborated and published various materials on the legislative issues in Georgia, the Balkans and the post-Soviet region related to land based and online casinos.
Mamulaishvili explains how the requirement from the EU was licensing of online casinos and sports betting however it was not acceptable to the business sector. In addition since March, advertising on television and online platforms has been banned. Operators are allowed to sponsor sports clubs and events. He adds that the changes in taxes and income tax of 15 percent saw GGR rise to 10 percent.
The second part of the bill came into force in March. This saw a ban on gaming for people under the age of 25. Civil servants and those who worked in government agencies as well as people who were receiving social benefits were prohibited from gambling. Yet foreign citizens are allowed to gamble on both land-based with an age requirement of 21 years and above and online platforms provided they are over the age of 18. As a result it meant that 1.4 million individuals were banned from gambling. It also involved licensing of online casinos and a ban on organising gambling on board ships in Georgian territory waters.
Moneyval requirements
The requirement from the EU was licensing of online casinos and sports betting however it was not acceptable to the business sector. The requirements of Moneyval and anti money laundering law also needed to be addressed. Mamulaishvili says that although the gambling sector is still at risk, licensing itself is not a problem. Moneyval’s task is to spread the policy of international standards in the field of combating money laundering and the financing of terrorism (AML/CFT) to European countries. “We have a system of financial monitoring in Georgia under the Ministry of Finance and they always operate on the recommendation of the EU. This is one of the recommendation for Georgia’s status.” adds Mamulaishvili.
The second change was already adopted at the end of the year, as I stated, and will come into force at the start of June 2024. The form of the law is why it is not acceptable for us because of the amount of taxes. There will be three licenses, a casino license, a slot machine license, and a sports betting license. That is, if you have a land-based casino, a slot club hall, and a bookmaker’s office, then the license will cost 100,000 GEL each. It’s somewhere around $35,000. Splitting quarterly fees of GEL250,000 ($96,000) quarterly. Until now, there were 2 such licenses and, accordingly, there were also two fees. And if you don’t have land-based facilities, then a casino license will cost 5,000,000 GEL per year, a slot club 1,000,000Gel and a bookmaker’s office 1,000,000 Gel. – George Mamulaishvili, Head of Administration- Georgian Gambling Association
The change in legislation happened at the beginning of the 2021 and was implemented at the beginning of the year. The changes in taxes and income tax was 15 percent of the total winnings which resulted in 10 percent GGR. The second part came into force in March. The gambling ban included people under the age of 25, people working in government agencies and those on social benefits. It excluded foreign citizens who are allowed to used land based and online gambling facilities provided they are over the age of 18 and over the age of 21 for land based casinos. “As a result”, says Mamulashvili adds “more than a million people were not allowed to play. The second reform was rolled out at the end of 2022. This involved licensing online casinos according to the requirements with an additional ban on organised gambling on board ships in Georgian territorial waters.”
The requirement from the EU was licensing of online casinos and sports betting however it was not acceptable to the business sector. In addition since March, advertising on television and online platforms has been banned. Operators are allowed to sponsor sports clubs and events. As for taxes, the gambling tax has become 10 percent from GGR, which results in a tax burden of 65 to 70 percent.
Each legislation has negative consequences
The second change was already adopted at the end of the year and will come into force at the start of June 2024. There will be three types of licenses: a casino licence, a slot machine licence and a sports betting license. It means that if you have a land-based casino, a slot club hall and a bookmaker’s office, then the license will cost 100,000 GEL each (US $35,000). Until now, there were 2 such licenses and, accordingly, there were also two fees. And if you don’t have land-based facilities, then a casino license will cost 5,000,000 GEL per year, a slot club 1,000,000Gel and a bookmaker’s office 1,000,000 Gel. There are 7 operators in Georgia. As for the additional license, this came into force in 2021 and implies permission to provide games online to operators. An activity license costs GEL 100,000 ($35,000). And every game must be certified by either the GLA or another accredited lab.
Georgian Gambling Association (GGA)
The Georgian Gambling Association is a non-profit and non-commercial legal entity that engages in the gambling business and protects the legitimate business interests of member companies. George Mamulaishvili, Head of Administration at the Georgian Gambling Association (everything is correct here)
Mamulashvili says that regardless of changes in legislation, there has been no constructive dialogue.
Regarding changes in legislation. Although to date there has been no constructive dialogue. Several agreements have been reached regarding advertising on foreign platforms to attract foreign players.
we definitely need a reform of the legislation to attract foreign players and ban illegal online operators within the Georgian jurisdiction. Without these changes it will be difficult to deal with illegal sites. It is also important to reduce the age limit, as this will be a problem for the Georgian market in the long run. I can also add that this is the type of change that was carried out in Georgia in 2022 and this resulted in the appearance of many illegal operators on the market, which are a problem not only for business but also for the public and the State.” George Mamulaishvili, Head of Administration – Georgian Gambling Association
He says that in his opinion the best way to eliminate illegal operators is to develop and assist legal operators. The ban does not benefit, but on the contrary, the State receives an anti-effect from the tough laws implemented “Business must be controlled but within reasonable limits. Which in the future benefits not only business but also society and the state.”
Media
he changes come after last year’s already-strict gambling regulations which prohibited gambling advertising on TV, external platforms and Georgian websites. Operators will possibly be allowed to sign sponsorship contracts, mainly in sports.
Only 7 online gaming operators are licenced to operate in the jurisdiction. Online gaming operators will also require additional approvals before they can offer services in the jurisdiction. Permission for each online game made available by the operators to the public will cost GEL 100,000 (US $36,974).
A number of civil societies that make up the lobby group Media Advocacy Coalition (MAC) have been objecting to the further restrictions especially those related to advertising. They claim that research was not thorough enough and was not particularly because not supported by assessments from experts. MAC believe that the new reforms hurt the national broadcasters.
Georgia’s Formula TV disclosed that advertising revenues from the gaming sector currently makes up around 25 percent of all advertising income with almost all entertainment shows on the network being sponsored by betting companies. The media lobby group pointed out that the loss of income from gambling advertising would surely result in a domino effect which will result in TV networks being unable to function due to lack of resources resulting in the possibility that networks would have to close down.
Gambling in the Balkans
Mamulaishvili compares the gambling sector in Georgia with other Balkan countries. He says that in 2021, Georgia had the best legislation both on taxes and the country scored highly on all other points. The recent reforms have brought about some problems which include the emergence of many illegal operators on the market, especially online. In the Balkans, Mamulaishvili argues, “legislation differs from the legislation in Georgia but not radically.” For example, in Romania there is a tax rate of 40 percent when withdrawing winnings from an online casino. This will be detrimental to Romania. There is also problems with responsible gambling in Serbia and other Balkan countries. Part of the legislation in Balkan countries is similar to the legislation in Georgia but in 2021 legislation in the Georgian jurisdiction became more business-oriented. Georgia has a well-regulated identification and verification system. This law was adopted in 2019.
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