During the economic recession, a result of the pandemic and its consequences, an overwhelming majority of business sectors announced heavy financial losses. Among those spheres that could adapt to a new reality is the gambling industry, which is known for its adaptability and business flexibility. In Georgia, the last months of 2020 have demonstrated that the industry provides a pivotal role in the Georgian economy.
An overview of Georgia’s gambling market
The gambling industry of Georgia has been financially reliable for many years now, offering more possibilities than you may have previously imagined. Its strengths lay in the fact that the government of Georgia views it as a legitimate and lucrative economic instrument at their disposal. The government also values it as a way to expand the tourism sector of the country by drawing greater attention from international visitors and investment.
The gambling activities in Georgia are regulated by the nation’s Revenue Service. This body’s responsibilities include, the issuance of licenses, taxation policy development, creation of a congenial environment for industry growth, and control over following business management rules by industry representatives.
Performing its duties, The Revenue Service is guided by the principles of fairness and transparency, paying close attention to protecting consumer rights, including the elimination of problem gambling among vulnerable segments of the population.
The Revenue Service activities are grounded in such legislative acts, as “Organizing lotteries, gambling and profit-generating games” as well as issuing “licenses and permits” (both of which were introduced in 2005).
In addition to this, there are some other crucial regulations, e.g. The Tax Code of Georgia and a range of orders from the Ministry of Finance.
The above laws and regulations determine all forms of legal gambling within the territory of Georgia. Consequently, operators can be issued licenses to conduct a gaming business in the following areas:
- Land-based casinos
- Slot machines
- Board games
- Bookmaker business
- Online casino
- Online betting
- Slot machines salons
Getting a gaming license
One of the key benefits of obtaining a gambling license in Georgia is that it has a relatively simple and straightforward procedure. The license application can be submitted online on the website of The Revenue Service and is completely free of charge. All operators need to do is to provide scans of some necessary documents (the documents required depends on the type of gambling activity license).
It takes the governing body around 20 days to approve a regular application. However, if the process needs to be expedited, operators can pay extra for a quicker application.
The faster turnaround rates are as follows:
- 10 days — GEL 400 ($365)
- 5 days — GEL 800 ($330)
- Next day — GEL 2,000 ($850)
The gambling license itself is issued for all types of gambling. Upon approval, it is then considered valid for 5 years. Please note that only companies registered in Georgia can apply for a gambling license. However, regardless of nationality, company owners can be Georgian or foreign citizens.
Another significant advantage of running a gambling business in Georgia is that an operator doesn’t need a specific license to start online casino activities. This is because the license for land-based casinos covers online gambling too.
Gambling taxes in Georgia
Gambling activities in Georgia are subject to annual and quarterly fees. While the annual fee is fixed and must be paid regularly in equal installments, the quarterly cost depends on a form of gambling and the region where a casino is located. The most favorable conditions in terms of taxation are reserved for resort areas which have preferential tax systems in place. For example, in regions such as Gudauri, Kazbegi, Sighnaghi, operators do not need to pay any tax at all; regardless of the specifics of their business.
According to the law “On gambling levy” from 29.12.2006 № 4250, the quarterly amounts of levy in gambling business comprises of these amounts:
- a) From each casino table — quarterly from GEL 15,000 to GEL 30 000 inclusive (24.04.2012 № 6056).
- b) From each gambling machine — quarterly from GEL 1500 to GEL 3000 inclusive (12.10.2010 № 3661).
- c) From each incentive prize drawing — 10% of the prize fund.
- d) For a system-electronic game — quarterly from GEL 30,000 to GEL 60000 inclusive (09.12.2011 № 5453).
- e) For lottery activities — not more than 20% of revenues from sales of lottery tickets.
- f) From each cashier for games and system-electronic concepts outside of the object stipulated by the license for the organization of gambling projects and profit-generating games — quarterly from GEL 1000 to GEL 15,000 inclusive (09.12.2011 № 5453).
- g) From each table in a club — quarterly from GEL 3000 to GEL 10,000 inclusive.
Gambling enterprises must also pay these additional taxes:
- On the income of physical persons (salaries) - 20%
- On the property - up to 1%
- Corporate income tax - 15%
- Responsibility ta, charged during tournaments - 20%
Online casino operations in Georgia
As noted above, one notable condition for opening an online casino business is that operators need to run a “land-based gambling business”, as there’s no separate permit for online gaming.
This gives entrepreneurs many unique opportunities, especially in these economically unstable days. Many land-based companies have moved into the online landscape, noticing a significant surge in new players and revenues.
In Georgia, it is allowed to conduct the following online gambling activities:
- Online casino
For online casino management, a quarterly fee is set in the vicinity of GEL 30,000 - 60,000. This is in addition to the taxes levied on the gambling activities. For example, in Tbilisi, this fee is GEL 60,000, while in Batumi, GEL 30,000.
The increased number of gambling entertainment fans has forced the Georgian government to consider introducing new regulations on their marketing strategies. However, there’s no need to panic as the government has recently emphasized that the state body is not interested in hindering the “legal development of the gambling industry”.
IMPORTANT: Offshore companies are forbidden to offer online casino services in Georgia. You must register your company in Georgia, however, your own nationality does not matter.
What's new in the gambling legislation?
Given the importance of gambling in the Georgian economy, the government is actively monitoring the industry’s development, as well as introducing new gaming regulations when they are needed. Meanwhile, the purpose of regulations corresponds to goals such as developing a transparent and healthy gambling environment, as well as reducing gambling issues in vulnerable individuals.
The economic instability of 2020, caused by the pandemic, has forced many gambling enthusiasts to shift their focus from land-based operations to the fast-paced world of online gambling. In turn, the demand for online gaming entertainment has required officials to impose a variety of new regulations in Georgia’s gambling legislation.
One new regulation states that some of the companies will act as enterprises responsible for the control of the industry, this is known as The Selected Person. In other words, such companies will be authorized to take the reins of gaming activities performed by operators, to provide operators with an electronic control system, to check the quality of gaming mechanisms, and to assess whether the technical requirements of games meet legal requirements.
What’s more, gambling license holders must obtain a certificate, issued by those regulating bodies, for their games and systems. Additionally, operators will have to pay certain fees to the companies responsible for the issuance of certificates.
Among the requirements, there will be particular attention focused on the validity of the monitoring system that determines taxation based on GGR data. The same also goes for RTP compliance, which is considered a tremendously important game characteristic.
Additional regulations under the Law on Organizing Lotteries, Games of Chance, and Other Prize Games (known as the “Gambling Law”) concern both local and international operators as well as providers:
- According to Article 11.11 of the Gambling Law (which enters into force on January 1, 2021), all subsidiary or independent providers are required to incorporate a company in Georgia.
- In line with Article 7.3/1 of the Gambling Law, Revenue Service of Georgia is authorized to implement the electronic control system to monitor the compliance of the operators and providers with the terms of the issued permit by the Selected Person.
- As stated in Article 36/1.2 and 29.1 of the Gambling Law, all operators and providers are obliged to meet the regulations and requirements set by the Government of Georgia with respect to the electronic control system.
- Obtaining the authorization certificate issued by the Selected Person is a mandatory requirement established by the Laws of Georgia to obtain a respective permit.
- According to Articles 3.z3; 5.1 of the Gambling Law (which came into force on January 1, 2021), a Georgian resident company has to apply for a permit to provide games and/or other critical software/hardware.
- Conforming to Articles 12; 19; 191 of the Gambling Law (that enter into force on March 1, 2021) and Article 24/1.3 (which enters into force on January 1, 2021), companies, which are getting a license to organize games of chance and/or other prize games, are required to provide Revenue Service with the copy of the agreement between the permit seeker and the provider, as well as any changes made in this agreement within 2 days after the change.
- As reported by Article 24/1.4 of the Gambling Law, since January 1, 2021, all the operators and providers are obliged to pay the service fee to the Selected Person on time.
- The maximum limits of the service fee payable to the Selected Person is established by Decree N455 on 22 July 2020 by the Government of Georgia.
More often than not, legal intricacies are considered the main stumbling block to launching or growing an online casino project. However, experts in the legislative field, with no doubt, can help the way out of any complicated situations and find the most winning solution. Contact our legal officers and learn about the iGaming opportunities in Georgia.