George Mamulaishvili, Head of Administration of the Georgian Gambling Association discusses Georgia's efforts to build a solid legislative framework for the gaming industry - while mistakes have been made in the past, he believes the country stands a strong chance of becoming a regional hub.

Georgia's Ministry of Finance recently met with gambling industry representatives to discuss sector requirements in relation to their EU bid. Can you tell us more about how this will strengthen regulation around the gaming industry?

I can say that it was the most productive and constructive conversation in recent times. The Ministry of Finance also sees the problems caused by the changes and has a great desire to prevent illegal operators from operating in the Georgian market. As for the changes, I can say that at this stage there is no talk of implementing big changes. There will be a separation of licenses for the online industry and of course the refinement of the money laundering law in line with Moneyval requirements. This will not cause any additional inconvenience in the sector and it is perfectly acceptable for the sector if the defined frameworks see changes to the terms of the license and the price. Georgian operators are always happy to accept any reasonable changes that will contribute to the improvement of the business environment.

Prime Minister Irakli Garibashvili suggested increasing fees for online gambling businesses - which were mostly foreign-owned - as well as banning ads, and increasing the lower age limit for gamblers to 25 years last year. According to Garibashvili, about $527 million "flows out of the country annually" due to online casinos. What are your thoughts on this?

Legislative changes which happened at the end of the last year were the biggest mistake in the gambling industry. Today we can clearly see what Georgia got after the changes. In particular, many illegal operators and illegal advertisements appeared. The Georgian advertising market lost 150 million USD. Georgian sports suffered and lost 10 million on sponsorship agreements. As for the outflow of funds, unfortunately the Prime Minister did not have the correct information and according to information from the National Bank, Georgia lost 45 million USD. However, today this number can be said to have doubled. Precisely because of the wrong regulations.

Today, many of our opponents from the nongovernmental sector agree with me. Several studies have been conducted that have revealed serious problems with the growth of illegal gaming. World practice has shown us that the more restrictions you impose, the more illegal involvement you get.

Let's take the examples of Ukraine, Azerbaijan and Kenya. As a result of the legislative changes, Georgia suffered a negative effect, which I predicted more than once during the discussion of this draft law. But, unfortunately, due to a purely political decision, the external argument was not considered. It can be said that this is one of the most classic examples of how a sector, state, society can be affected by the adoption of the wrong legislation.

he CIS region has seen rapid change over the last few years, what does the current situation look like for the region - and what can we expect to see in the long-term - for the CIS region as a whole and for Georgia?

In our region the gambling industry is the best developed in Georgia. Until 2021, we were the strongest in terms of legislation. Although recent changes have revealed many gaps, there are also positive aspects that will contribute to the development of business in Georgia in the future. This includes the Anti-Money Laundering and the Anti-Terrorism Act, User verification and identification law, and consideration of user interests by operators and state control that contributes to business hardship.

I think this is one of the most important factors. And of course, the lack of corruption and crime in the country helps gambling. The development of gambling is directly related to the development of tourism, today the budgets of 8 large municipalities are filled from gambling fees. I think that despite many negative changes, Georgia has a great chance to become a regional hub, even for the companies providing free games, because quite a lot of benefits have been established for representatives of the IT field, which has led to the migration of specialists to Georgia.

As for the region, unfortunately there are many problems everywhere and a lot of work will be done to legalise and regulate the industry. Ukraine had a great chance to become one of the largest countries in the gambling industry, but unfortunately today it is impossible, firstly because of the ongoing war and secondly because of the inflexibility of the existing legislation, high corruption and high crime.

Many states have talked about legalisation only to see that restrictions have not yielded results. Gambling was, is, and always will be. It is better for governments to think about proper regulations and thereby bring about benefits not only to the state but also to society.

In addition, I would like to talk about the Balkans, gambling is developing well in the Balans. There are certainly problems in terms of social responsibility and AML, but the operators are willing to develop and the state is willing to support local operators - this is the right approach.

The Georgian authorities made the same mistake as Romania, which wants to initiate a new law on gambling and impose a tax on winnings. The imposition of taxes will result in local players simply moving to other markets, despite its desire to prevent the entry of illegal operators, will not be able to regulate the market based on rapid technological development in the IT field. There are many ways to avoid a ban. The best way to combat the illegal market is to develop local operators - and this requires adoption of the right legislation and the implementation of a system to administer this legislation. Of course, we should not forget that administration has its price and it should not be expensive, either financially or socially.

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