23 Sep, 2024
The Revenue Service of Georgia reported that the online gambling industry has experienced rapid growth in the first eight months of 2024. This applies to sports betting, online casinos, and deposits. Compared to the same period last year, average growth in sports betting was 35%, in the casino – 17%, and in deposits – 19%.
These growth trends are occurring despite tightening regulations. In 2023, the government decided to increase the tax rate on the sector. New rules increase the gambling business’ profit tax from 10% to 15%, and winnings are now taxed at 5% instead of 2%. The process of tightening regulation began back in 2022.
George Mamulaishvili, the head of the Georgian Gambling Association (GGA) noted that two years were required for the industry to adapt to the new conditions, improve business processes, and adjust its offerings. As a result, companies were able to overcome these challenges successfully.
There has always been a sense to me that the gambling business in Georgia is well-developed and that there is a lot of potential in it, especially in the online gaming sector. Despite restrictions and new regulations, local operators were able to change the dynamics of the market and direct it in a positive direction. Positive results were achieved through proper management, new technologies, and innovative approaches.
The products offered by local legal operators were able to attract consumers. Furthermore, legal businesses’ high level of trust also attracted and engaged customers.
Operators, however, were faced with many difficulties due to the new regulations: taxes increased, and advertising was partially banned. It took time for companies to rethink their strategies and change the way they worked with clients.
Results so far this year indicate a growth trend that will likely continue in the years to come. It is particularly relevant because foreign citizens will be exempt from the 5% income tax on winnings from the new year. Moreover, the profit tax on income received from foreign citizens will be lowered from 15% to 5%.
The operators will have the opportunity to enter international markets, obtain new licenses, and attract foreign competition as a result.
Many factors contributed to market growth, including foreign players migrating to the region and local operators entering new markets. As I mentioned above, the most important factor remains the professional work done by local companies.
It is encouraging to see that the country is developing and that local operators continue to have a positive reputation. A number of players who previously chose other markets have returned, which has contributed to growth as well.
In addition, some attribute the growth in sports betting to this year’s UEFA Euro 2024. It is true that the championship influenced the growth, but the upward trend was already apparent in Q1. As a result, we can say this is not a short-term effect; in the long term, the trend continues.
Clearly, gambling companies are not the only ones responsible for the success we see today, the companies who supply them with products and services are equally as important.
Government officials are aware of the industry’s growth, and there is hope that in the future it will adopt more business-friendly measures. A first step has already been taken – foreign citizens will be exempt from the 5% tax on winnings withdrawals, as well as there is a reduction in GGR tax to 5% for foreign players. It is clear from this that the government understands that excessive restrictions do not always lead to effective results.
The current figures would be even higher if not for the regulation changes of 2022. By preserving some advertising or reducing the tax burden, gambling companies could be able to contribute even more to the budget and develop more rapidly. As of now, the gambling industry and related businesses, such as IT, providers, and developers, make up 14% of the country’s budget.
In the end, the growth we see today confirms Georgia’s leadership in the region. This is why the government needs to recognize this and meet businesses halfway, which would have a far greater positive impact than imposing restrictions.
