Sports and media funding is at risk.

The tightening of legislation in the field of gambling is increasing more and more: the government of Georgia, as well as the government of Armenia (and not only), changed the regulation, which caused a serious stir in the country. In the autumn of 2021, Prime Minister Irakli Gharibashvili proposed reforms in the gambling business, the result of which should be a complete ban on gambling.

On December 22, the Parliament of Georgia approved the tightening of legislation for gambling operators. The government's decision is supported by the opposition, local non-governmental organizations, and public figures. However, many companies, gaming business associations, media banking sphere, as well as unknown athletes.

What has changed in Georgian legislation?

The changes are quite extensive and have affected the finances, advertising, age and social status of the players. For betting companies, the tax rate of 7% on gross gaming revenue was maintained, but for online casino operators it increased to 10% with GGR. To withdraw funds, the player will continue to pay 2%.

The law actually prohibits gambling advertising – only the right to sponsor sports events (leagues, federations) and athletes is preserved, although the Gaming Business Association has issued a statement regarding the suspension of sponsorships.

An age and social limit has been introduced - it is forbidden to play for persons under 25 years of age, recipients of social assistance from the state and civil servants. For example, on April 1, the Code of Ethics of the Emergency Situations Management Service of the Ministry of Internal Affairs of Georgia will come into effect, which regulates the relationship between employees and the public. And one of the measures will be a complete ban on gambling.

According to the government's plan, up to a million citizens of Georgia over 18 years of age will be deprived of the opportunity to play. The main changes will come into force on March 1, 2022.

Market condition

Gambling is one of the main industries in Georgia: there are 6 operators, about 6.4 thousand gaming machines and about a hundred betting shops in the country. Last year, gambling brought 78.4 million GEL (about 25 million dollars) tax revenue to the budget of Georgia.

As for the market size, the data for 2021 has not yet been published. In 2020, the total GGR of operators reached 1.5 billion GEL (a little less than 500 million dollars), and in 2021, the head of the gaming business association of the country, Giorgi Mamulaishvili, predicts a 60-65% growth.

Gambling operators are the main advertisers in Georgia

It should be said separately about advertising. According to 4H Agency partner Ivan Kurochkin, its scale is really huge:

"I have visited Tbilisi and Georgia in general several times. Before the new regulation on advertising, all advertising sites there were occupied by gambling representatives. Billboards, buses, outdoor advertising - wherever you look, gambling is everywhere. This is a very cool example of what not to do. Why are restrictions introduced in Georgia? In order for operators not to simply buy these territories, it is clear that the market cannot cope.

Giorgi Mamulaishvili confirms that the media gets the most from gambling.

Most of the revenue came from local operators. In numbers, this is more than 450 million GEL per year (about 150 million dollars). Many TV channels and publishing houses will face serious financial difficulties after March 1.

Nino Jangirashvili, director of "Kavkasia" TV station, shares the same opinion. According to him, the draft law cannot be adopted in an accelerated mode, and according to a rough estimate, the advertising market will lose up to 30 million GEL, of which at least 20 million will come from TV channels.

The Association of Gambling Games of Georgia offered several options to leave advertising in a dosed form, but the government ignored these initiatives. Now, according to Giorgi Mamulaishvili, illegal operators can advertise their services, but licensees cannot.

How big is the gambling addiction problem?

Back in 2017, the authorities began to talk about the need to reform the industry to protect society from social catastrophe and at the same time meet the demands of the gaming business. In 2020, the government tightened its rhetoric: in particular, the former deputy of the ruling party, Davit Chichinadze, proposed a complete ban on gambling advertising in the country, and now the state has moved from words to action.

One in five inhabitants is really an excessive figure, such figures do not officially exist anywhere in the world. According to Giorgi Mamulaishvili, in fact, there are no accurate data on the problem of gambling addiction in Georgia.

Many populist statements were made by the government, such as "our youth are dying", "everyone is a drug addict", etc. etc. But there is not a single official statistic, not a single qualified study of how many drug dealers there are in Georgia. Such a statement requires a very detailed study. I can responsibly state that no one has done a similar study in Georgia. And what our opponents say is pure populism. If we look at the world statistics, the average number of dependents ranges from 0.6% to 0.8%, and I don't think this indicator is different in Georgia.

Market reaction

Some opponents of the restrictions, including the Human Rights Center, call raising the age limit to 25 unconstitutional, taking into account the liberties and responsibilities of adults. On December 14, the Georgian Gambling Association issued a statement saying that if the amendments are adopted, gambling businesses will refuse sponsorship contracts.

At the end of last year, the financial director of the Europebet bookmaker noted that due to the ban on advertising, the procedures for terminating advertising contracts with the media have already begun: "All contracts that expired on December 31 were simply not renewed."

Giorgi Katamadze, a member of the board of the Gambling Association, said during the discussion of the bill that the regulation will lead to the outflow of users to foreign unregulated sites, as a result of which the Georgian economy will lose 200 million dollars annually.

Representatives of the opposition channels "Main Channel" and "TV First" claim that this law will reduce the income of television, as the biggest sponsor is OAO. The Coalition for the Protection of Media Interests evaluates the Parliament's decision negatively.

What lies ahead for the Georgian gaming market?

Opponents of the new law emphasize that the first result of its adoption is the activation of the illegal sector. Economist Oto Abesadze notes that more than 10 foreign online gambling systems have already appeared on the market, with names that are copies of Georgian providers.

It has also become popular to sell accounts to those who will not be able to participate in the games under the new law. Giorgi Mamulaishvili predicted about this:

To be honest, nothing good is waiting for the market. Georgia had one of the highest standards of verification and identification in the world, every operator knew who was behind the registered person. And now, after the entry into force of the new legal framework, we will receive a gray list of clients. Behind one person there can be 5-10 people who are banned from playing.

Another result is that gambling and affiliated companies have started to optimize their staff and talk about more than 30,000 employees.

Sports in Georgia were financed by gambling operators in the amount of about 30 million GEL (about $10 million) per year. Many sports clubs have already started facing financial difficulties. In particular, Georgian football clubs and their academies had to reduce salaries by 40% in the best case, one of the clubs is already on the verge of bankruptcy. In fact, 90% of power sports hope to receive government support.

Sportsmen and gambling representatives say that due to increased tax pressure, many species have found themselves in a very difficult situation, which will kill the development prospects. Such famous athletes as Lasha Talakhadze and Levan Saginashvili say that many athletes will simply have to give up their professional career.

Due to the adoption of the new law, the budget will lose 50 million annually - this is both direct income from the totalizer and funds from a number of related areas.

Unfortunately, it was not possible to find any figures or predictions regarding the impact of the new law on gambling addiction in Georgia.

George Mamulaishvili's forecast

The biggest problem is that Georgia has not yet decided whether gambling is harmful or beneficial. On the one hand, the government says that gambling is harmful and imposes strict restrictions, and on the other hand, it announces the creation of a gambling zone. This is not clear to me.

There are time-tested examples, for example, the same Turkey and Azerbaijan. Gambling is banned in Turkey - does anyone believe that Turks don't gamble? Many Turks play in the Georgian market both online and in land-based casinos. It is the same in Azerbaijan.

Georgia well remembers the situation 20 years ago: there were illegal bets, underground gambling establishments, due to which many young people faced huge financial problems. Unfortunately, we are returning to this era.

Since 2005, Georgia has been building a sound system of gambling legislation. I was personally involved in finalizing many legislative changes. The legislation was actually adjusted to world standards, but on November 22, with one blow, our government decided to destroy it. The saddest thing about this story is that the social effect will be devastating. The government started a very bad experiment in terms of impacting the country's economy and society.

Source: https://legalbet.ru/best-posts/novie-ogranicheniya-na-reklamu-i-sponsorstvo-protest/