Free gambling - a trump or trap to Georgia?
26 December, 2013
In this region gambling remains unrestricted only in Georgia, creating the risk that it will grow into a gambling haunt region-wide. But some analysts believe that this is an opportunity to channel big money into the state coffer if gambling is regulated properly.Gambling is banned in Azerbaijan, Turkey, and Russia – but not Armenia. Armenia, though, has introduced restrictions on gambling: casinos and gambling entities will be allowed to operate in four resort cities only starting next year. But gambling houses
can be opened anywhere as long as at least USD 100 million is invested in the project.
But Georgian economic analysts expect that these restrictions will inhibit gambling in Armenia. More gamblers will come to Georgia from Armenia, and from other neighboring countries where gambling is banned - Ukraine, Uzbekistan, Kirgizstan, Tajikistan, and Israel. For tourists from these countries gambling in Georgia is a big attraction.
NGOs and some MPs have tried this year to restrict and even ban gambling, but without success. They claimed gambling is harmful to Georgian society, especially to young people who are more vulnerable to temptation. They started with a bill prohibiting commercials for gambling businesses, and planned to go on a ban ultimately. However, the bill failed during the second parliamentary hearing this past spring.
Economic analysts and some of the majority MPs opposed the idea, since it might cause gambling-related businesses, such as advertising companies, to go bankrupt. Hotels running gambling businesses might face serious losses. Ultimately the Georgian economy could lose some GEL 500 million. The state budget might lose GEL 140 million paid by gambling businesses to the state. So, Parliament opted for regulation, with officials and analysts claiming that they could reduce the harm.
“People will never stop gambling,” Ditrikh Muller, a co-founder of Georgian Investment Group, said. ”If we ban it, it will go underground or move online as it did in all countries where it is banned. Why cannot the state use this chance? The legal business will be better regulated at any rate than if it is illegal.”
He believes gambling can be a trump card to Georgia to attract tourists from places such as Armenia where gambling is either banned or restricted. Armenian tourists used to come to Georgia for gambling opportunities even before the restrictions, since stakes are bigger here, because there are more gamblers betting their money. Moreover, for political reasons Turkish and Azeri gamblers never go to Armenia due to political reasons – they come to Georgia … as will Russians, the best hope for Georgian gambling.
According to statistics Russians spend at least twice the world average on gambling: USD 170 is spent per capita in Russia on gambling, whereas the world average is USD 82. Russian gamblers now go to Belarus and Cyprus, where gambling is legal.
To spare young people from temptation some MPs are considering moving gambling houses from big cities to special zones30-50 kilometers away. “Or, to spare our citizens from temptation, we can copy the Monaco sample that enjoys huge profits from gambling,but prohibits gambling by its citizens,” Muller said.