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1 Year since Changes in Gambling Legislation

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The FINANCIAL — The number of registered organizations involved in the gambling and betting business is increasing year on year in Georgia.

 

The FINANCIAL — The number of registered organizations involved in the gambling and betting business is increasing year on year in Georgia. 819 organizations were registered in 2011 while 763 organizations were registered in 2010 and 706 in 2009, according to the National Statistics Office of Georgia. The number of licenses reached 219 in 2012, according to the Revenue Service.

The number of licenses and registered organizations do not match each other. Out of 819 registered organizations only 219 of them have a license according to the Revenue Service. In contrast to the increased number of registered organizations the number of given licenses has been decreasing since 2008. That year 1,291 licenses were given, while 624 licenses were given in 2009 and 486 in 2010.

In order to support the gambling business in Georgia the law has recently been amended. According to a new law licenses for slot machines’ saloons, totalizators, lotto and bingo are given for five years and for casinos – for a year. The cost of licenses has been increased as well and the gambling business has become one of the biggest taxpayers to the budget, The FINANCIAL was told.

“Today a license costs GEL 1 million whereas before its price was GEL 20,000,” said an anonymous source, a director of one of the gambling companies in Georgia. “This price is for promotional gambling. For a casino it costs GEL 5 million. The term of the license for promotional gambling is five years. As we pay GEL 1 million per year, it turns out that we are paying GEL 5 million for a one-time license. Casinos pay license fees per year as their term last only a year. A five-year license costs five times more for company owners, which in turn means that gambling houses with a small turnover will close en masse and will be replaced by larger companies. In fact, this process has already begun. Lots of small companies could not pay and have had to quit their business,” he added.

While Shangri La casino representatives think this new legislation will not cause any significant changes in the development of the gambling business in Georgia, other companies’ officials say the opposite. “The new law creates a legal basis for healthy competition in the gambling business and supports its development,” said Giorgi Gedevanishvili, Executive Director of Europe-Bet. “The gambling business is quite developed in Georgia, especially if we take into account Batumi, the place where tourists go specifically to play. As annual license taxes had been increased, lots of little companies stopped operating in the country. This is good for the gambling business as it was almost impossible to control so many small gambling companies before. At present gambling companies run their companies in a far more civilized and accurate way,” added Gedevanishvili.

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“The new legislation is much more profitable for our business and for the state as well. Gambling companies pay more to the budget now. The fact that gambling companies have to pay more for the license did not impact their turnover as closed companies’ customers have been redirected to the existing companies and now we have more customers than before. In addition, the income tax has been cancelled, which was consisting of 20 percent of total income,” said the anonymous source.

Gambling business representatives say that Georgian gambling companies do not suffer from a lack of customers as lots of Turkish, Azerbaijani and Israeli people come to Georgia to play. “Gambling is prohibited in Azerbaijan and Turkey. Georgia is a neighbour country for them and people from these countries come to Georgia specifically for to play. This tendency is not noticeable in Tbilisi but it is in Batumi and other regions. The same happens with Israeli,” he said.

The annual turnover and profit of casinos is confidential, but as they pay GEL 5 million per year for a license it means that their profit is much higher.

According to Georgian legislation the government sets the gambling rules and determines the prize fund. The Georgian Government devolved the authority about supervising gambling to the Revenue Service, which is a legal entity of public law of the Ministry of Finance of Georgia. “Any type of betting or gambling, which take place on the territory of Georgia, needs a special license of permission,” said Irakli Kandashvili, Lawyer, and Executive Director at the Center of Professional Development For Lawyers. “The Revenue Service issues the permits and regulates the cancellation of gambling in Georgia. If an entity violates the permit conditions he/she will be forced by the Revenue Service or the Ministry of Internal Affairs to pay a fine. Fines are determined by the Tax Code. The price of fines varies from GEL 1,000 to GEL 20,000 depending on the reason of breaking the law. If a person does not correct the permit conditions, then the fine will be tripled. And in the case of failure to pay the fine, the permission will be cancelled,” he added.

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“For getting the license a volunteer should provide the scanned documents on www.rs.ge and choose the duration of the permit,” said Madina Makhashvili, Deputy Head of the Department, Revenue Service. “One working day costs GEL 2,000, five working days – GEL 800, ten working days – GEL 400 and twenty working days is free of charge,” she added.

Georgian legislation determines the number of gambling tables installed at casinos as well. At least seven gambling tables must have casinos in Georgia to get a permit, according to the law. The fee for a casino license is calculated by multiplying the number of gaming tables. Otherwise, it is almost impossible to find out how much it costs to pay for the license as every structure says it is confidential. Representatives of the casinos say that some years ago the fee for casino per each gaming table was GEL 30,000 per quarter and for each slot machine it was GEL 1,500.

Due to high taxes the casino Grand Georgia has been closed. Company representatives say that casinos are popular for Georgians but two casinos are enough for such a scale of city like Tbilisi in the event that the casino owners do not attract customers from abroad.

“We found out that running a casino business in Georgia was not profitable,” said Tamuna Lomtadze, former Head of the Marketing Department at Grand Georgia. “The taxes were too high to pay – GEL 5 million per year and GEL 15,000 for gaming tables per quarter. Our management was developed incorrectly. Casino Iveria was successfully competing against us. People needed to have at least USD 100 to be allowed to play at our casino. This amount of money was very small as well. In such conditions it was almost impossible to run the casino and we decided to close,” she added.

Georgian players pay at least GEL 5 per day for online gambling and USD 100 at casinos, specialists say. If on average the number of visitors reaches 1,500 players in a day it means that the online casino gets about GEL 7,500 per day.

 

 

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