03 Dec, 2021
According to the Prime Minister of Georgia, Irakli Gharibashvili, it is planned to ban all kinds of advertising of gaming business in Georgia and raise the age of players. The regulations will apply to advertisements placed on television, outdoor and Georgian websites. "Toy Business Association" (GGA) responded to Gharibashvili's statement with a public statement.
According to Gharibashvili's decision, Georgian citizens under the age of 25 will be prohibited from participating in gambling. In addition, access to casinos will be limited to socially vulnerable persons and civil servants.
"All kinds of television advertising of the gaming business, as well as outdoor advertising and on Georgian websites, will be prohibited. Gaming business operators will only be allowed to sign a sponsorship agreement. Basically, sports can be affected by this admission", said Gharibashvili.
According to the Minister of Finance of Georgia, Lasha Khutsishvili, the mentioned project has already been prepared at the legislative level.
What is the position of the Gaming Business Association?
According to George Mamulaishvili, the head of the GGA administration, the gaming business association is in complete uncertainty, because the government establishes communication with the gaming industry only through the media and does not take into account the positions of the entities participating in the sector.
"It is categorically unacceptable to adopt such changes in an accelerated manner, because, in our opinion, preliminary consultations, calculations and modeling of what kind of economic effect these changes will cause are necessary.
In today's situation, if the government maintains a unilateral position, an unacceptable tone and does not start a constructive dialogue with business, we will be forced to optimize expenses and refuse a number of social or other projects, including sponsorship. With the announced changes, the sports part of the business loses its meaning, the business will be forced to consider the issue of disconnecting the sports product, the online totalizer", said George Mamulaishvili.
In response, the First Deputy Minister of Finance of Georgia, Giorgi Kakauridze, assures that the government will definitely hold consultations with businesses regarding the tightening of regulations for the gaming industry.
The head of the GGA administration called the Prime Minister's statement that "1.5 billion GEL flows into the accounts of foreign companies" as "incorrect". In connection with this, Mamulaishvili made a statement after the press conference while talking to BM.
"I can tell you that quite a lot of investments are coming to Georgia from exactly those foreign partners. Investing means that when a person puts money in, he should get that money back. Today, there are more inbound than outbound. "Investment is not an endowment or a grant, so that someone invests money and receives nothing for it," said Mamulaishvili.
List of problems that the government's decision will cause
According to the gaming business association, the hasty and unconstructive decision of the government will lead to a number of negative processes in the country.
1. The interests of those international companies that have made the largest investment in Georgia over the years are not taken into account - therefore, this will be a warning message to those companies that plan to invest in Georgia and, accordingly, to give a new push to the local economy. The expected changes in the tax legislation also contradict the guarantees defined by the Constitution of Georgia and violate the conditions established by the "investment protection" agreements signed with Great Britain and Sweden;
2. The government is planning to increase tax liabilities for the gaming sector - and this in the conditions when the current tax burden is 40%. With the announced legislative change (tax increase to 70%), further business activities will become impossible. This is especially significant if we take into account that the entities participating in the sector have a significant influence on the formation of the state and local budgets;
3. It is important that the announced changes will have a negative impact on many sectors of the Georgian economy. For example, we can cite sports, media, telecommunications, financial and IT sectors (for example, with the deterioration of the economic indicators of the media, the number of unemployed will increase both in the field of gaming business and in related industries, which is critical in the conditions that the unemployment rate in the country is 22%. We are talking about thousands of for employees and tens of thousands of people dependent on them;
4. Some of the changes developed by the government are unconstitutional. For example, we can cite the increase of the age limit to 25 years. In the conditions when the age of capacity in the country is 18 years, increasing the minimum age of players to 25 years is completely unjustified. Establishing an age limit for an adult citizen restricts his right to freely dispose of the funds in his possession, which is a direct violation of the right to property guaranteed by the Constitution of Georgia.
5. According to the world experience, the prohibition of gambling business is not a means of limiting the game or eliminating gambling addiction, since even under the conditions of the ban, the game continues on illegal websites or illegal so-called in the form of a "hand game". Moreover, prohibition is accompanied by a number of negative consequences, including an increase in crime. Under the conditions of the ban, the country's economy suffers due to unacceptable taxes and other negative effects caused by the ban, without solving the problems voiced by the Georgian government.
6. According to the Gaming Business Association, the announced changes will lead to a flow of users to foreign, unlicensed websites where the age limit is 18 years and, unlike local online gaming websites, high registration/verification standards do not apply. The mentioned actually excludes the control of the protection of the rights of the citizens of Georgia by the state. In addition, it is impossible to eliminate the mentioned risks even in the conditions of restricting access to foreign websites: in the 21st century, in the conditions of technological capabilities and the availability of foreign wallets, it is practically impossible to eliminate playing on unlicensed websites outside the country and, accordingly, the outflow of money. Today, there is no such technology in the world through which the so-called VPN blocking, which is a clear example of the US and China, which, despite unlimited resources, still failed to restrict access to virtual private networks for users.
Regarding the new regulations, the government will present the draft law to the parliament during the current month. According to the legal framework prepared by the Ministry of Finance on the restriction of gambling, persons under 25 years of age, civil servants and socially vulnerable citizens (a total of 1 million people) will be prohibited from playing.
