Gambling Related Legislative Changes Spark Discussion at Committee Hearing
By Natalia Kochiashvili
Wednesday, December 15
The Georgian government is raising the minimum age for gambling in the country to 25, as well as banning public officials and the socially vulnerable from gambling. Also, a list of addicts and prohibited persons will be created. The draft law stipulates that a person requests the entry of his/her data in the list of dependents on the basis of his/her application, and his/her family member will be entitled to request the entry of the person's data in the court. The circle of prohibited persons will be defined and participation in gambling and winning games will be prohibited for persons employed in state budget organizations, persons employed in regulatory bodies and also family members registered in a single database of socially vulnerable.
Changes prohibit transfer of money by a player to another player's gaming accounts. In this direction, the gambling organizers shall be binding, players should undergo every year the re-verification exercise to determine the organizer and gambling arrangement in place for recording information on admitted individuals.
In total, this restriction applies to up to 1 million citizens. The tax base for online gaming operators is completely changing - expanding by 65% -70% compared to the existing one.
The draft law will be discussed not by a normal, but by an accelerated process, and it should enter into force in January 2022. The initiators of the changes are the majority MPs Davit Songhulashvili, Levan Mgaloblishvili, Gela Samkharauli, Gocha Enukidze, Bezhan Tsakadze, Elguja Gotsiridze and Dachi Beraia. According to them, the agenda includes the introduction of the necessary regulations by the state and the implementation of measures to ensure the protection of public interests and improve the social background.
The explanatory card’s economic calculations indicate that after 1 million citizens are banned from gambling, tax revenues from gambling operators will be reduced by about GEL50 million, which in turn will be compensated by an increase in tax burden due to changes in the tax code - according to Revenue Service, if the current legislation is maintained, the estimated revenue of the 2022 budget in the system of electronic gambling system is GEL175 million in profit tax.
In case of adoption of the bill, the estimated budget revenues for 2022 from the system-electronic form of gambling will be GEL127 million in profit tax, and GEL98 million in withdrawal tax. Accordingly, if the proposed changes are implemented, the estimated budget revenue for the 2022 budget from this area will total GEL225 million, which will be reduced by about GEL50 million, taking into account the restrictions in the law.
Based on the above, the estimated budget revenues for 2022 in the system-electronic form of gambling are estimated at about GEL175 million. For comparison, the total amount paid in budget in previous years were: 2018 - GEL393 million, in 2019 - GEL420 million, in 2020 - GEL241 million.
Giorgi Katamadze, Gambling Association board member said at the committee hearing that the regulation would lead to an outflow of users to foreign unregulated websites, resulting in $ 200 million annually leaving the Georgian economy. He remarked that according to the NBG, GEL120 million is already going to these 33 websites available from Georgia today, none of them are registered in the country.
The Ministry of Finance has a plan to ban Georgian commercial banks and transfer operators from transferring funds to accounts that are affiliated with foreign gambling systems in order to prevent the transfer of games to foreign sites. However, gambling operators believe that this regulation will not stop the outflow of users to foreign systems.
These regulations also provide for a complete ban on advertising (other than sponsorships). Gambling Business Association announced the abolition of sponsorship of Georgian sports. According to the statement, the bill, which has already been initiated in the parliament, will put severe pressure on companies employed in the gambling business sector, which will automatically lead to the need for cost optimization and make it impossible to invest in the development of Georgian sports.
At a parliamentary committee hearing, TV executives also made critical remarks about the legislative package, saying it would lead to a complete decline in the TV industry. Representatives of opposition minded channels Mtavair Arkhi, TV Pirveli and Kavkasia TV argued that this law will lead to reduced funds in televisions, since betting companies are biggest sponsors. Gvaramia of Mtavari Arkhi suggested taking a 1-year transitional measure and enacting it in September, otherwise this regulation would withdraw 20% of his channel’s budget. According to the explanatory card of the legislative package, the advertising sector has already generated GEL29.5 million from gambling this year. Consequently, these funds will be reduced, including the televisions.
