Georgia Gambling Tax Hikes Draft Sparks Industry Concerns

December 6, 2023
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Georgian land-based operators fear that an incoming tax hike for both them and online operators will disproportionately hurt their businesses. 
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Georgian land-based operators fear that an incoming tax hike for both them and online operators will disproportionately hurt their businesses.

Lawmakers in the country are currently working on plans to increase the gaming tax from January 1, 2024, following a request by Prime Minister Irakli Garibashvili a month ago. 

On November 4, Garibashvili announced government plans to increase gross gaming revenue (GGR) tax from 10 to 15 percent and a player winnings tax on withdrawals from 2 to 5 percent.

The current version of the tax code of Georgia applies these taxes only to online casinos and bookmakers. However, the draft law that has been submitted to parliament, and seen by Vixio GamblingCompliance, is much tougher than many in the gambling industry expected.

The current draft law, which is due to be voted on in parliament before the end of this year, effectively equates slot machine halls, both free-standing and as part of land-based casinos, with online operations. 

This means that land-based slot operators face a 15 percent GGR tax to be paid each month and their players will pay a 5 percent tax on winnings every time they withdraw cash.

A representative of a Georgian casino who wished to stay anonymous told Vixio that “this brings much pressure on Tbilisi casinos and will bring them to the edge".

“Two casinos just in Tbilisi have already indicated that they will not survive and this will be a loss in fixed taxes of around $8m and loss of the budgeted new taxes,” the source said. 

They claimed that around 90 percent of all players in land-based casinos in Tbilisi and other regions such as Batumi are visitors to the country.

“It has been proven in other countries that cash-out tax does not work. Players will not travel to a country where there is such a tax as they can fly at a similar time to another country such as Cyprus where they do not have to pay it,” they said.

Land-based slot operators in Georgia already pay high licence fees and fixed taxes for slot machines.

The cost of the licence for each slot hall in the capital city of Tbilisi is GEL1m (€342,000) per year, while each slot machine is taxed quarterly at a rate of GEL4,000 (€1,355).

As a result, some local casino representatives expect some businesses to be closed, while others will have to resort to aggressive savings, including reducing the number of employees and salaries.

Giorgi Mamulaishvili, the head of the Georgian Gambling Association (GGA), warned the new tax increase could lead to black market growth, a decrease in gambling tourism, a decrease in employment and the deterioration of the country’s attractiveness for foreign investors due too frequent regulatory changes.

In 2020, Georgia’s government started developing a central monitoring system to receive operational data from all online operators and slot halls by connecting to their platforms and each slot machine. 

The system has been in place for about two years now and government officials say the data justifies their decision. 

The government is expecting the closure of several land-based gambling facilities, but is confident that the lost income will be more than compensated for by the remaining operators working at an increased rate.

In total, the government plans to receive GEL700m of revenue from the entire Georgian gaming business, GEL400m more than it collected in the 2022 state budget.

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