Review on gambling in Georgia - profits, problems and policy of government

Georgia Gambling is developing successfully enough. Georgia considers being one of the most suitable country for gambling industry among CIS states. Nowadays in Georgia there are 10 official casinos, 107 bookmaker offices, 72 halls with slot machines and other venues. Annually 400 000 men visit Georgian gambling sites. In 2015 earnings from gambling in Georgia made GEL 2,25 milliard (USD 884 million). State collects taxes in amount about GEL 105 million (USD 39 million), that creates 1,4% of the budget.

Gambling business in Georgia

Gambling industry in Georgia is developing successfully. Georgia is one of CIS`s countries with the most favorable climate for gambling. While in Russia and Ukraine participants of such a business suffer from certain difficulties, in Kazakhstan, Belarus and Georgia this field gradually develops and comes to the civilized regulation.

Today in Georgia exist such official venues:

• 72 hall with slot machines;
• 107 bookmaker offices;
• 3 bingo companies;
• 41 lotteries;
• 3 gambling clubs;
• 10 casinos.

Online gambling industry develops like a house on fire – every year 400 000 men visit Georgian gambling sites. Legal internet casino can be run only by local operators, who also own land-based gambling venues. Online Georgian gambling machines are available day and night.

Even if online slots for money in your country are forbidden, free slot machines are absolutely legal. Games won`t start, in case, when provider things that presented games contain some elements of gambling entertainment, and in separate occasions access to the slot is closed without explanation of reasons.

A couple of words about Georgia

Georgia locates between Asia and Europe. It is bordered by Russia, Turkey, Armenia and Azerbaijan. Country claimed its independence on 9^th April 1991 after collapse of the USSR.

Now it is presidential and parliamentary republic. Population of the state consists about 4,49 million of residents. Capital – Tbilisi, currency – lari (GEL). GEL exchange rate against the dollar: GEL 1 = USD 0,37 or USD 1 = GEL 2,65.

In the period since 2003 to 2015 Georgia showed significant economic growth, annually economy growth is 6,3%. One of the reasons of success lies in growth of foreign investments. GDP per capita in 2015 made USD 3 743. Georgia is one of the most rapidly developing countries in Eastern Europe.

Now country stays on 15^th place in ranking of states, where it is comfortable to run business. Georgia has clear and understandable system of taxes.

Short characteristic of gambling business in Georgia

Georgian`s gambling industry is quite profitable. In 2015 gains of this sphere were GEL 2,25 milliard (USD 844 million). Every year state receives taxes in amount about GEL 105 million (USD 39 million), that makes 1,4% of the whole budget.

Already to October 2014 Georgia gave 213 licenses of different types. In general, almost 100 companies act as Georgian gambling boats. Majority of them run their business in Tbilisi, Batumi and Kutaisi. More than 5 000 employees work in the industry – it is 0,3% of working population.

History of gambling business in Georgia

Georgian kingdom became part of the Russian Empire in 1801. Gambling business submitted to rules of Empire, which in one moment allowed it, in the other – forbade.

Soviet Union permitted gambling industry in 1921. That time Tiflis (Tbilisi) could boast of two casinos and some lotto clubs, and its card factory, in addition.

However, Georgian gambling laws included very strict taxes. Gambling venues of Georgian SSR gave to the state following kinds of taxes:

• 95% earnings from gambling games;
• 65% gains from commercial games;
• 65% from entrance fees to venues.

Punishment for casino`s establishment in Georgian SSR

Casinos worked legally not for a long – in 1928 games were forbidden on the whole territory of the USSR. The authority introduced new article to Criminal Code – 235 of the Criminal Code of the Georgian SSR, which strictly punished for “keeping dens for gambling”. Organizer of a venue was appointed one of punishments` types:

1. Prison term to 3 years, with execution of property;
2. Exile to 5 years, with execution too;
3. Fine to 300 rubles.

It is worthy noticing that RUB exchange rate to dollar was: RUB 1,95 to USD 1. For one ruble it was possible to buy 4 tickets of money-clothes lottery. The scholarship in college equaled 30 rubles.

First racetrack with betting appeared in 1959, and for a long time it remained the only entertainment for gamblers.

Casinos of Georgia after collapse of the USSR

Casinos began working in epoch of the USSR, yet. First illegal casino appeared in 1989 in Batumi. It situated in club “Interclub”, where were three playing tables.

Gambling business was legalized in 1990. First allowed casino was opened in basement of Philharmonic. Venue was called Ori Juja, it was led by Georgians and Swedes Gletea International. Sweden brought French roulette and set 5 tables: roulette, two poker tables and two ones for Black Jack. First staff contained Latvians, because Georgians hadn`t enough experience.

Because then wasn`t detailed legislation, casinos themselves determined limits. Ori Juja invited guests older than 23 years old. When casinos opened in other cities of the country, Georgian gambling age reduced to 18 years old.

Individual phenomenon – slot machines. Slots with an opportunity of money receiving appeared in 1990 in hall of Tbilisi hotel “Inturist” and Soviet-Spanish institution “Fortuna” in Ochamchire.

It was quite difficult to receive permission, that is why, underground casinos grew, like mushrooms after the rain. In 1990-s were established several casinos:

• Digomi;
• Derbi;
• Mtachminda;
• Argo;
• Sakartvelo.

Nowadays situation with gambling business is absolutely different. Government adopts important regulating acts and determines fairly reasonable tax rates. Industry develops very quickly. Read about its status in section “modern gambling business”.

Legislation of gambling business in Georgia

Governmental regulations of gambling business in Georgia – Tax Service of Georgia, and also Revenue Service of the Ministry of Finance.

Gambling business in Georgia is controlled by following acts:

• Law of Georgia "On the organization of lotteries, gambling and profitable games" from 25.03.2005 №1180;
• Law of Georgia "On Licenses and Permits" from 24.06.2005 №1775;
• “About licensing and licensing fees" Law of Georgia from 12.08.2003 №2937;
• Law of Georgia "On the collection of gambling" from 29.12.2006 №4250;
• Tax Code of Georgia from 17.09.2010 №3591;
• Mutual order of Finance Minister and Interior Minister of Georgia “On approval of rules about check of owners` implementation of gambling permissions and other profitable games” from 14.12.2011 №611-1013;
• Order of the Head of the Financial Monitoring Service of Georgia “On approval of provision “On order and conditions of information receiving, it systematization, processing and transmission of the Financial Monitoring Service of Georgia by the organizers of lotteries, gambling and other profitable games” and “On order and conditions of information receiving, its systematization, procession and transmission of the Financial Monitoring Service of Georgia by the casinos”” from 28.07.2004 №94.

All necessary documents can be received through the Internet, without visiting Tax Inspectorate. Licenses provide terms one or five years:

1. License for one year – two lotteries;
2. License for five years – for casino, hall with slot machines, bookmaker office and bingo hall.

Taxation of gambling business in Georgia

Taxes are levied according to one very flexible scheme. Rate depends on the direction of gambling industry, on a district of the country and different additional factors (for example, buildings of hotels near casino). There are two basic types of gambling tax:

• Annual – fixed sum that is regularly paid by equal parts;
• Quarterly – sum, which charges on a quarterly basis for a gambling object.

Taxation on gambling object

Bill, introduced on December 2016, determines following sizes of taxes on gambling objects since 1^st January 2017:

• Tax on gambling table – from GEL 20 thousand (USD 7,6 thousand) to GEL 40 thousand (USD 15,2 thousand);
• On slot machine – GEL 2-4 thousand (USD 760-1500);
• System-electronic games (online casino) – GEL 100-200 thousand (USD 38,1-76,3 thousand);
• Online bets – to 10%.

Tax in Tbilisi is higher, than in other cities. Annual fee for a casino license in the capital – GEL 5 million (USD 1,9). License on slot machines consists GEL 1 million (USD 0,37).

Preferential taxation

Some regions of Georgia release casinos from annual fee for license, charging only quarter royalties from gambling objects. Besides, building of a hotel influences on tax – if operator creates complex on 8-100 rooms near a venue, then it will be free of annual payment.

Additional taxes for organizer of casino

But besides payment for license, authority takes from casino some more taxes. In such a way, the list looks in such a way:

1. Tax on income of individuals – 20%;
2. Tax on property – to 1%;
3. Tax on corporation`s earning – 15%;
4. Tax for responsibility in tournaments – 20%;
5. Pay for license;
6. Pay for gambling object.

Modern gambling business in Georgia

After Mikheil Saakashvili left his presidential post, Georgia began to upgrade the industry. Georgian gambling was helped by development of tourism. Already in 2012 more than 4 million tourists visited the country – the number of people live in the state itself.

Second factor of successful development is absence of legal gambling in neighboring countries, it is forbidden there. That is why, country always gets constant stream of revenue from casino.

In February 2016 Georgia adopted third Gambling Code. This was one of the largest Georgian Gambling news, and one of the greatest event among CIS countries. August 2016 was marked by forum Casino Forum Batumi. These remarkable events allow improving gambling industry in Georgia.

While these events representatives of gambling business discussed questions, connected with:

• Industry development in the country;
• Increase of revenue from casino;
• New directions in gambling business (for example, bitcoin-gambling).

Revenue of gambling business in Georgia

Georgia gambling task is to bring profit, and this industry implements it successfully. Gambling business brings about 70% of all earnings from entertaining sphere, which includes three more directions:

• Culture (museums, cinemas and theaters);
• Active tourism (sport and thematic parks);
• Cooking and wine tourism.

Gambling industry in 2015 earn GEL 2,25 milliard (USD 884 million). Increase of the field looks in such a way:

• 2009 – profit GEL 74,3 million (USD 30 million);
• 2010 – GEL 112,7 million (USD 42 million);
• 2011 – GEL 366,3 million (USD 138 million);
• 2012 – GEL 996 million (USD 375 million);
• 2013 – GEL 1,2 milliard (USD 452 million);
• 2014 – GEL 2,03 milliard (USD 764 million);
• 2015 – GEL 2,25 milliard (USD 844 million).

Casinos of Georgia

As for 2016 Georgia owns dozen of casinos in Tbilisi, Batumi, Kazbegi and Kachreti:

• Shangri La;
• Casino Adjara;
• Casino Iveria;
• Iveria (Radisson Blu Batumi);
• Sheraton Batumi Casino;
• Intourist Palace Casino;
• Golden Palace Batumi Casino;
• Leo Grand Casino Batumi;
• Rooms Hotel Casino (Kazbegi);
• Ambassador Hotel Casino (Kacherti).

In following three years next nine casinos must open:

• Millennium Hotel Casino;
• Babillon Tower Casino;
• Hilton Hotel Casino;
• Sheraton Metekhi Palace;
• Casino Crowne Plaza Casino;
• Hotel Princess Casino;
• Rooms Hotel Casino;
• Swissotel Casino;
• Le Meridien Casino.

Basic stream of tourists comes from neighboring countries: Turkey, Russia, Azerbaijan and Armenia. Main players on the casino market:

• Casino Iveria;
• Shangri La Casino;
• Casino Adjara.

Poker in Georgia

Poker in Georgia develops successfully and wins more and more admires. Proof of it is regular organization of tournaments in the country.

First tournament World Poker Tour National Georgia was on Mai 2015. It was held by organizers Poker Club Management and Europe-bet.com. Final table was broadcasted in three countries and was watched by 30 000 viewers. On November 2015 happened second tournament National Georgia.

On March 2015 world tournament WSOP held WSOP Circuit in Tbilisi – first series of poker-matches in Eastern Europe. Managers WSOP collaborated with Adjarabet. This company – one of the oldest and most famous gambling institutions of Georgia. The series included 19 tours, seven of them played out golden rings. Granted prize fond consists USD 700 000. It is record for Georgia and whole the region.  All information on various kinds of poker, game rules and features of combination formation - everything in the same section

Lottery in Georgia

National lottery in Georgia, unlike other countries, suffer difficulties with financing. For latest years national company collected debts worth more than GEL 200 000 (USD 75 192). For 2015 national lottery received in general GEL 22 million (USD 8 million). Three years later its earnings were GEL 52 million (USD 19 million). Such a serious decrease of profit led country to the thought of lottery`s control.

In October 2016 authority announced a competition for those who wish to become the operator of the national lottery. In December 2016 tender won following companies:

• Camelot (Great Britain);
• Tatts (Australia);
• IGT (Great Britain);
• Intralot (Greece).

Sport bets

In Georgia situate many locations of bookmaker offices. Majority of them stay in Tbilisi. Tax Inspection gives license, the same license concerns all other kinds of gambling plays. License allows run activity offline and online.

Players don`t pay taxes for winning. Online bookmaker firms pay tax in amount 10% since 1^st January 2017. It is relatively loyal rate, that is why industry develops successfully, amount of land-based firms and online sites grow every year.

The largest bookmaker companies in Georgia are:

• Adjarabet (adjarabet.com);
• Fonbet (fonbet.com);
• Pari-Match (parimatch.com);
• VIVAROBET (vivarobet.ge).

Online gambling in Georgia

Feature of online Georgian gambling is that sand-based operators has “clones” on the Internet.

According to the data of AFDA, every year online sites of Georgian casinos are visited by 400 thousand men. In 2013 online business received revenue in amount USD 500 million. AFBA is union of young businessmen in Georgia. At this moment state gets from online casinos single payment of license only once for five years.

Today there are no individual permissions for running online casino – this does only operators of land-based venues. Also, this market is closed for foreign organizations. The law forbids foreign companied engages in gambling in Georgia.

Since January 2016 government of the country decided come to grips with the regulation of online gambling. Nowadays they carry out consultation with the market participants and analyze the situation with online gambling. Development of complete model of bill is planned in 2017.

Taxation of online gambling in Georgia

Taxes are paid quarterly, after analysis of sites` work. Amount of payout makes GEL 30-60 000 (USD 12-24 000). To this money adds taxes calculated in section “Taxation of gambling business”.

Conclusion

Gambling industry of Georgia is example of healthy approach to the business and its regulation. This field can bring quite serious money not only to organizers, but also to the country, if it sets reasonable rate of taxes and crates carefully elaborate legal framework. Future of gambling business in Georgia looks happy enough.