The ruling Georgian Dream party inaugurated its long-promised “positive agenda” with negative, restrictive policies. The announced labor activation plans are yet to be fleshed out, but authorities were quick to unveil steps for tightening gambling laws. The set of propositions triggered discussions among Georgian political and civil society circles, with reactions ranging from welcoming to skeptical, or critical.
The proposals will see a near-complete ban on gambling advertisement with the exception of certain sponsorship contracts, mainly in sports; 10% profit tax will be slapped on gross gaming revenue (GGR) and a 2% income tax on winnings. The government expects to collect 65-70% of taxes in addition from the industry as a result.
The legal age for gambling will also be raised from 18-21 to 25 years. Certain groups such as welfare-dependent individuals, public servants, as well as those blacklisted by courts or having applied for self-exclusion mechanisms will be restricted from gambling, and government promises to impose enhanced identification and transaction procedures for stricter access control. In the second stage, a complete online gambling ban is expected.
The government’s decision was surprising to some due to perceived all talk no action records of the ruling party when it came to public-oriented policies. It was also less expected since the recent campaign rhetoric of Prime Minister Garibashvili promised more casinos, not less of them. But the new laws perfectly blend in with the newer didactic approach of the Georgian Dream pledging to combat diverse addiction problems.
First there was a problem
The idea, just as many others that risk populism accusations once brought up, did not come out of the blue. Problem gambling, defined as gambling that is disruptive or damaging to persons or their families or interferes with the daily life of an individual, has remained in Georgia’s public eye over the past years.
Most concerns have been directed at addiction among young people and low-income communities, and its potential to trigger suicides. It was a year ago when a man took 9 hostages in one of Tbilisi’s microfinance companies demanding the adoption of a gambling ban, along with lowering of loan interest rates and medication prices and limiting the profits of pharmacy networks.
According to the 2019 study of the European School Survey Project on Alcohol and Other Drugs (ESPAD), Georgian students had the highest proportion of problem gamblers (12%) among 35 surveyed European countries. In 2020, United Nations Children’s Fund (UNICEF), noting that gambling prevalence globally is 2 to 4 times higher among adolescents than among adults, recommended Georgia to do more for prevention, listing steps such as awareness-raising, education activities, and public health policies.
Social Justice Center, a Georgian CSO, criticized last year the government’s lack of problem gambling-specific services, saying that state resources for awareness-raising in this regard “look inadequate against the current background of [massive] gambling advertisement.” The CSO recommended restrictions on gambling ads, along with better controls on access, particularly in online gambling, and called on the parliament to form a research group to consider the viability of further regulations. There were also calls for better controls against money laundering through gambling.
In a 2014 survey commissioned by Transparency International Georgia, a corruption watchdog, 63% of respondents sided with a full gambling ban, while a further 29% were in favor of restrictions. The industry has expanded since: the official statistics show a total turnover of gambling business amounted to GEL 32.9 billion (USD 10.63 billion) in 2020, a stark rise from GEL 13.8 billion (GEL 4.46 billion) in 2018. But despite the expanding gambling industry and nearly overwhelming advertising, be it social or traditional media, streets, sports, or websites, research and data about the damage the business does to individual lives has so far remained poor.
The issue has repeatedly landed on the political agenda: for example, opposition For People party leader Anna Dolidze has called for specific restrictions on gambling, starting a petition in 2019 demanding, among others, advertisement ban and rise of age restrictions in gambling.
The Parliament also saw specific regulation bills, including advertising bans, over the past years, but there was little talk about a full ban on online gambling: overexposure of children and adolescents to gambling ads, particularly on the internet, was the primary concern. Up until now, the ruling party has abstained from making any major moves.
Insincere, counterproductive, or none
“Let’s not rule out that this is [just] another statement,” Dolidze cautioned during her Facebook live in response to the Prime Minister’s initiative, recalling that – despite much talk – PM Garibashvili did not take any steps on burning issues such as high medication prices or loans for retirees.
But other stakeholders have opposite fears: what if this is not merely a statement.
Business circles and part of political parties believe the announced measures – if implemented – will turn out counterproductive. The representatives of the Georgian gambling industry claim the restrictions will push the country back to the more dangerous, unregulated reality of the 90s, and have even warned to strike back by withdrawing vital sponsorships from sports. They also caution the changes will also strike a blow to related branches of the economy.
Right-libertarian fringe Girchi – More Freedom party, known for fierce opposition to any regulations, protested the announced laws, arguing the ban will only bring gambling to the underground to be controlled by criminals. “[The ban] would only mean that these people will switch and start gambling on foreign websites,” said party leader Zurab Japaridze, noting that the only consequence would be money flowing abroad.
A headache for media outlets?
Another fear is that the advertising ban will throw media, particularly TV channels heavily dependent on gambling ads, into financial hardship, threatening the vital presence of critical outlets. The opposition Lelo For Georgia party says it was partly due to the new restrictions that the party decided to introduce a bill envisaging tax cuts for Georgian media outlets.
Ban on gambling ads would be “right and coherent in different circumstances,” said Lelo’s Saba Buadze in a briefing. “But we see here that the authorities have a very clear political objective to create a discomfort for media.” Representatives from Formula TV and Mtavari Arkhi, government-critical TV Channels, told RFE/RL Georgia that the revenues from ads and sponsorships from the gambling industry cover 20-25% of commercial incomes of the respective channels.
Though admitting that TV channels losing income is a real danger, Dolidze looks here still more optimistic: citing owners of various businesses, she claims the online gambling industry has monopolized the ad market through paying “twice and three times” more, and other branches will eventually fill the void produced by the ban.
Online gambling is known to be a good source of income for the state, but also for heightened risks of uncontrolled access for underage players. The laws vary worldwide, with many European countries having some sort of restrictions, but rare exceptions of fully outlawed online gambling. Germany, for example, has only recently allowed online gambling countrywide, apparently to counter the black market, but the changes met criticism over the potential spike of problem gambling. Authorities will still apply various restrictions such as money limits or blacklists.
With no specific deadlines, some expect the government not to follow through with the full ban. But despite GD’s poor commitment reputation, the ruling party still has a history of pushing some partly unpopular policies, such as regulations on the tobacco industry and broad smoking bans in certain venues. These curbs, while still a matter of discussion, now are seen noting as apocalyptic as in their birth phase.