23 Feb, 2022
New regulations for gambling in Georgia will come into effect on March 1. George Mamulaishvili, the head of the "Georgian Gambling Association", spoke to "Comersante" about how the gaming business meets the regulations, how much this affects the activities of the sector and what expectations the sector has after the implementation of the regulations. According to him, the sector will lose approximately 20-25% of its revenues as a result of the implementation of the regulations.
"After the implementation of the regulations, the gaming business will probably lose 20-25% of its revenues, due to the fact that according to the mentioned legislation, we are prohibited from placing advertisements on foreign sites, foreign gaming companies are given the opportunity to advertise, therefore, various operators enter Georgia and attract games through aggressive marketing. The category of people who are not allowed to play.
This is already felt in the sector and we have many examples of this, there are many cases of clone sites, new offers that allow the user to avoid the regulations set by the government," said George Mamulaishvili.
According to him, there are already cases of renting out accounts, i.e. personal accounts, and so-called Mazavshikis are on hand, just as it happened in Georgia 20-25 years ago, and the country was involved in uncontrolled gambling. Mamulaishvili also noted that today Georgia is following exactly the path that many countries, including Georgia's neighboring countries, followed years ago, and the result was worse than positive.
"There are many other examples, including our neighboring countries, where the ban took place, although the ban had much more negative results than positive ones, today Georgia is also following the same path.
Today we already see that foreign sites are actively operating on the market, there are online technologies that avoid any restrictions, with the same vpn I can connect to any site that may be restricted at the level of the provider, and there are also many payment methods, for example online services, Electronic wallet, foreign banks where I can register online and receive a plastic card by mail and carry out transactions with this plastic card. In addition, there is cryptocurrency, which cannot be controlled by the jurisdiction of any country, and these methods have been demonstrated by states such as the USA, China, Turkey, occupying Russia, these countries have not managed to block it, and Georgia will not be able to.
There are many clear examples of what happened after the restrictions in one or another country, for example, when taxes were increased in Kenya, the white market became a completely black market, today in Georgia the white market is slowly turning into a gray market, and this was caused by the ill-considered and wrong regulations that "Today, the government of Georgia appointed us," said George Mamulaishvili.
Mamulaishvili noted that since 2005, Georgia has been able to overcome the bad border that Georgia has had for years and has improved gambling legislation, its control mechanisms and methods. However, according to him, today the work of years has come down.
As for the sponsorship of sports games, Mamulaishvili says that sponsoring the championships was not profitable for them and they did it for their image, and due to the fact that the government increased their taxes, the companies had no money left for sponsorship.
According to the new legislation, together with the revenue service, a unified database of users should be created, where the data of all people who are prohibited from participating in gambling games will be placed. Giorgi Mamulaishvili answered that the database has already been created, but he does not have an answer on whether the site will be launched before March 1. According to him, unlike the Georgian government, the Revenue Service actively cooperates with the gaming business.
"This database has been created, now active consultations are going on with the Revenue Service, but to be honest, how will it go until March, I don't know, the Revenue Service is optimistic about this, but once we go into the testing mode, the flaws will appear later, however, the Revenue Service is working very closely with us and this Cooperation is absolutely different from the cooperation of the Georgian government. We appealed to the authorities and asked them to temporarily postpone the implementation of the regulations, however, the government did not hold a meeting with us again and this postponement did not happen", said George Mamulaishvili.
When asked by "Comersante" whether the companies involved in the gaming business will have to reduce their employees after the implementation of the regulations, Giorgi Mamulaishvili says that the companies should decide this issue individually, although according to the initial forecast, the companies will have to optimize their employees by 20-25%.
"Regarding layoffs, this is confidential information for all companies and it is up to them to decide whether to keep employees or not, but the initial forecast is that at least 35% of the workforce in the gaming business and related businesses will be cut, which means that between 3,500 and 5,000 People will remain unemployed.
The same IT field, the advertising field, the same media that the gaming business financed, this is quite a big expense, the gaming businesses hired additional people, of course everyone will have to optimize, the optimization will definitely be in the gaming business as well, but at what level it will be, I can't say. The initial forecast that we made based on the current situation is this, time will tell what decision the business will make," George Mamulaishvili said.
On December 22, 2021, the Parliament of Georgia, with 82 votes against 1, supported the tightening of gambling business regulations in the third reading. According to the legislation, gambling advertising will be banned from March 1, 2022, and approximately 1 million people will be banned from gambling, including people under the age of 25, vulnerable people, civil servants, and people who self-apply to the Revenue Service to limit such behavior.
