Ganna Buiadzhy, Managing Partner at VigoLex: The Importance of Combating Gambling Addiction and the Competitiveness of the Georgian Gambling Market
What additions does the gambling legislation of Georgia need? How did local operators work during the COVID-19 pandemic? And will the launch of the Ukrainian gambling market negatively affect the competitiveness of Georgian casinos? Ganna Buiadzhy, Managing Partner of VigoLex, answered these and other questions in an interview with Georgia Gambling Conference 2021.
Ganna is an attorney, Honored Lawyer of Ukraine. Specialist in the field of civil law, private international law, public administration. She held high positions in the state structures of Ukraine. Now she works as a Managing Partner at VigoLex law firm that provides high-quality services in the areas of gambling, intellectual property, IT law and other spheres.
More information on how important it is to take measures to protect gamblers from gambling addiction in Georgia and whether local operators are ready to enter the gambling market of Ukraine is available in the interview below.
The interviewer: Georgia Gambling Conference (GGC)
The respondent: Ganna Buiadzhy (G.B.)
GGC: What legislative norms regarding the regulation of the gambling business in Georgia need amendments and additions?
G.B.: One of the fundamental principles on which any honest gambling business is built is responsible gaming and restricting access to gambling for people with gambling addiction.
As far as we know, gambling addiction is a very big problem in Georgia. According to statistics from one of the non-governmental organizations, every fifth person in Georgia suffers from gambling addiction. The 2005 law “On Organizing Lotteries, Games Of Chance And Other Prize Games” does not contain a word about gambling addicts and how the operators should help players fight this disease. Meanwhile, this is a form of psychological dependence recognized in healthcare.
Unlike Georgia, in Ukraine, the law stipulates such tool as the Register of Gambling Addicts that can help people with gambling addiction who can apply upon their own will or with the request of a close relative, or by a court decision.
There is no similar instrument in Georgia, although there were similar legislative initiatives in 2017. It would help a lot to solve such a social problem, although it would probably cause a little discontent. However, the more you postpone this problem, the worse it gets, so you need to act immediately.
GGC: What is the main factor that currently influences the development of the gambling industry in Georgia more than others?
G.B.: Today, the main factor affecting business in general and the gambling industry in particular is, of course the coronavirus. Last year, all offline casinos in Georgia were closed due to COVID-19. At the same time, operators paid taxes, license fees and quarterly fees.
According to Georgian law, quarterly fees are paid three months in advance, and license fees are paid one year in advance. Of course, this created discomfort for entrepreneurs in this area. However, since the beginning of March this year, offline casinos have finally been allowed to operate in Adjara, and, of course, this will have a positive effect on the sphere as a whole.
GGC: What functions shall be carried out by the system for monitoring operator activities?
G.B.: The generally accepted practice is that with the help of a system for monitoring the activities of operators, the state, represented by a specific body, evaluates, controls, analyzes the activities of the gambling market and thus further influences it with regulatory instruments.
A similar practice is used in Ukraine. According to the Ukrainian law “On State Regulation of Activities Concerning the Organization and Conduct of Gambling”, the online monitoring system is a specialized hardware and software complex that controls the compliance of operators with licensing conditions, ensures their equipment and software comply with technical standards, collects and analyzes information about accepted and paid out bets, protects it from loss, forgery, copying and any other unauthorized actions, conducts checks based on the collected data.
The only problem is that at the moment the system has not yet been launched, because the aforementioned law says that the gambling regulator has two years to create it, and the operators of the gambling market have another six months for its integration from the moment of its implementation. In addition, as the recent practice of issuing licenses shows, the authorities have problems with the ‘implementation of new products’, and therefore even after implementation there will be a certain period when the system will exist, but it will be impossible to integrate it at once due to the operators' lack of understanding of the rules, and in some cases, the lack of understanding of these rules by the regulator's executive personnel.
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GGC: Tell us about the instruments for combating gambling addiction that have been approved at the legislative level in Ukraine.
G.B.: There are always a lot of problems in the aspect of compliance with the principles of responsible gaming. Even now in Ukraine, where the gambling market has not yet been launched, online casino advertisements are published on all entertainment websites and billboards, which violates not only the principle of responsible gaming, but the Law of Ukraine “On Advertising” in general. However, despite this, the requirements for the licensee in terms of the responsible gaming are drawn up quite well. This is expressed in the mandatory publication on the operator's platform/website:
- rules of the game and warnings about responsible gaming;
- addresses of centers that help in combating gambling addiction;
- principles of responsible gaming;
- a chance to win;
- pathological signs of gambling addiction.
In addition, compliance with the principles of responsible gaming is reflected in the provisions of the Law “On Advertising”. For example, advertising should not create the impression that gambling can be an alternative to work.
There is another interesting tool in the form of the abovementioned Register of Gambling Addicts, which includes all people who have gambling addiction and who are subsequently not allowed to play offline or online thanks to identification and identity verification systems.
GGC: In 2020, Ukraine legalized the gambling business. Do you think the opening of a new gambling market could negatively affect the competitiveness of the gambling industry in Georgia?
G.B.: Not so long ago, about 5 years ago, Krasnaya Polyana gambling zone was created in Sochi. Many people expected an outflow of clients from Georgia to Russia. But this did not happen, because the majority of foreign clients of Georgian casinos are Turks.
Most Turks drive to Samson (a city on the Turkish-Georgian border) or other cities on the border. At the same time, Turkey does not have the same direct and fast connection with Sochi, therefore it is much easier for Turkish players to get to Georgia than to Russia. Such conditions are uncomfortable, which influences the choice of Georgian rather than Russian casinos. In addition, in Batumi, for example, the entire infrastructure and climate are tuned specifically to the Turks: management knows the Turkish language, some of the employees are Turks.
The situation is similar with Ukraine. There is a direct air connection between the states, but even this option is not the same as travelling by car. Especially when you suddenly want to go to a casino during your evening with friends.
In addition, Ukraine now has a very strong problem with coronavirus, which is of great importance at the time the market opens.
Although, of course the Ukrainian market will take over some of the clients, especially if it offers something new and non-standard. Then the clients will plan their trips and go on vacation to Ukraine.
GGC: Is there any interest in the development of Ukrainian gambling market from Georgian operators?
G.B.: Of course! The new market is always interesting. Moreover, in recent years, Ukrainians and Georgians have been very actively cooperating in many areas of business.
By the way, our company has several representatives of the Georgian gambling business who are going to open casinos in Ukraine (both online and later, possibly also offline). The only thing that really stops them so far is the incomprehensible situation with the tax burden on the gambling business. So far, the cost of the license and the tax rate are not very attractive for foreigners, but the parliament is considering amending the tax legislation towards its liberalization. If these changes are accepted, we expect new foreign clients, including from Georgia.
On April 15, at Georgia Gambling Conference 2021, Ganna will join a panel discussion on Georgia's gambling pandemic. Together with other experts, she will discuss issues related to responsible gaming and the operation of the monitoring system. The lawyer also is going to talk about the difficulties faced by industry representatives in Ukraine.
More information about the event program is available here >>>