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Lavrenty Gubin: "It is not clear why the example of Georgia was not taken as tracing paper"

According to the forecasts of Ukrainian lawmakers, 7.5 billion hryvnas from the sale of licenses for gambling will go to the budget this year. But in addition to paying for licenses, Ukrainian gambling operators will also bring taxes to the budget. True, which ones are still unknown. The amendments to the current tax code have not yet been adopted. But, for example, in Georgia, gambling operators do not think about taxes at all - they pay only for licenses, tables and gambling machines. What Ukraine can learn from the Georgian experience of the gambling business - Lavrenty Gubin, an expert and author of the telegram channel @GamingInsider, told Gamingpost.net especially.
  • Gambling legalization
  • 2021-02-24 12:17:50
  • 491
Lavrenty Gubin: "It is not clear why the example of Georgia was not taken as tracing paper"

How attractive is the Ukrainian gambling market in the world?

Ukraine is interesting, of course, as a large country. A certain part of the population is fond of this kind of leisure, and they will play. The country is also attractive in terms of tourism. And Kyiv, and other cities, Kharkiv, Lviv are famous for their tourist attraction. If all this is combined with good casinos, it will only decorate the overall picture and add a touch. Don't think now that casinos alone will save Ukraine from the economic crisis. It's just one of the touches, but a quality, nice touch. And like any large country, Ukraine has a certain potential in this area - to take this place. Maybe now in Ukraine, they have forgotten what the gambling industry gives. But, for example, Georgia feels great, both Batumi and Tbilisi, how the flows of tourists are attracted precisely by the presence of good legal casinos, which constantly arrange some kind of events. People begin to receive good salaries, around some kind of additional life, entertainment and so on. This is a whole cool industry and it's good that it is being born. The main thing is that it does not happen, as we like to fold everything. Let’s do it the way you thought it up. I think this is best, at least somehow, but do it, and then we'll see.

Will foreign operators of the gambling market come to Ukraine soon?

Since the possibility of opening gambling facilities in a land-based format in Ukraine is limited by the number of hotels of the corresponding category, they are almost all occupied, and there is no one to come. Online is another story. In certain areas in Ukraine, there were already leaders in sports betting and poker. Therefore, they already have their bases on which they will work. And, probably, at first, large companies will look closely. Because large companies with serious investments, whose shares are traded on the stock exchange, with fully transparent reporting cannot now afford to consider investments in the Ukrainian market. After all, the legislative base is not fully formalized here, the tax burden is not fully understood, while many certification issues remain suspended. There are too many questions so far for a large company that has transparent reporting and reports to investors to look into the Ukrainian market.

Should Ukraine follow the example of Georgia?

Of course, one can take an example from Georgia. And I hope that in the future Georgia will remain such an example of transparency in the regulation of this industry, the possibility of competitive work, open, transparent, honesty. This is an absolute example. It’s even a little incomprehensible to me why they didn’t take Georgia as tracing paper. This could work very well in Ukraine. If I would add some more points of social responsibility. This is where Georgia has problems. But they will now be decided, as far as I know. The openness and the ability to open casinos and online casinos quite easily have led to a certain imbalance. The local population has become overly active in gambling, especially online. And here additional regulations and the development of this situation are required. But overall, Georgia is a wonderful example.

How does the gambling business work in Georgia?

Everything is very simple in Georgia - there is a fixed amount of a license annual fee that you pay in advance every year. There is a quarterly tax on a unit of play equipment if we are talking about ground facilities. And now the possibility of connecting online casinos to the central system and taking certain money from their turnover is being considered, but so far there are just licensing fees. It turns out that online is in quite favorable conditions in Georgia at the moment, but this is not for long. This situation will change soon. Casinos pay for a license, pay for each table and slot machine a quarterly amount. And no more taxes. In addition to salaries, and if there is real estate, then the real estate tax. But even income tax is not taken until you pay off your investment in the project. And then, the income tax is small. Another question, if you take money out of business, receive dividends, then you pay 15 percent. But if the money stays in business, you can reinvest and buy new equipment - then this money is not subject to any tax. Unlike what is planned in Ukraine.

How can you compare the gambling legislation of Ukraine and Georgia?

In Ukraine, it is planned to take tax from the game turnover, from the game profit, let's say. The money that remains from the participants in the game - this difference is also going to be taxed. That is, it turns out a triple taxation system. It can be on paper. And to those who conceived this system, it seems that it can somehow work, that there is still a place for such taxation in this area. But from my 15 years of experience in this field, I can say that there is no such place there. And what the industry will do remains a mystery. There are bad days in the casino and even bad months. The flow of customers is not so large, someone turned out to be successful and won a large amount or hit the jackpot. Plus you have to bear such tax burdens. We are silent about the fact that it is supposed to take taxes on winnings from people above a certain amount. Compared to Georgia, there are simply a lot more taxes. Just an order of magnitude more taxes.

In your opinion, should the taxes for the gambling business in Ukraine be changed following the Georgian example?

In the gambling business, this is the best model. Because you have an absolutely unpredictable result. You don't know if they will win against you or not. Yes, math is on your side with a slight edge. But this is just a small advantage, it is not necessarily a guaranteed win. The casino can lose. When the casino loses, it means that the casino is at a loss. The casino assumes all these risks. And to tax the area where the casino takes all the risks - then you need, to be honest, to take some risks. That is, if you tax winnings or profits from a game where the casino has risks, then take risks with them then. Create a fund if the casino suddenly loses a million dollars in jackpot - the state will help pay them, for example. The state will not take on such risks, why, the state will not gamble, it was not created for this. Therefore, the ideal model proven in the world, in which the state does not collide in any way with what happens in the game process, is to take a fixed amount from each object or each unit.

Is a license to conduct a gambling business in Georgia cheaper than in Ukraine?

In Ukraine, a license is more expensive than in Georgia. But in general, these are commensurate sizes. Because, for example, in Tbilisi, a license for a casino costs 5 million lari - this is at the current exchange rate of 1.5 million dollars. In Kyiv - more than 2 million dollars. These are commensurate amounts, for investing which just at the entrance to the business you need to be sure that you will get a chance to earn them back. This is a lot of money that is paid in advance. Thus, the state assumes a certain responsibility for the fact that it will give the investor a chance to return this money. Otherwise, this is already the reputation of the state in terms of investment attractiveness.

How do Georgian operators pay for licenses during a pandemic?

Most of the casinos paid their license in early 2020 or late 2019 and were closed in mid-March 2020. And they remain closed. The license issue also remains open. Naturally, no one now takes any taxes for equipment, and already 2021 has come, no one says that someone has to pay something. It's clear that everything is on pause. And the further fate of license fees and taxes on equipment will be decided as the restrictions are lifted. While the casinos remain closed and the prospects that they will open shortly are small.

Does Georgia have bad experiences that you could warn Ukraine against?

You pay a high cost of the license in advance, but in Georgia, there is no limit on the number of operators. On the one hand, this is good, constant tone, constant competition. On the other hand, investors are not protected. And when you do a certain analysis of the market and a certain analysis of the competition, and during the next year two more operators suddenly appear on the market, then in the field of gambling this is a rather serious restructuring of the market. Because it is not unlimited, but, on the contrary, is rather limited. On the other hand, in Ukraine this issue was limited to hotels. What to warn about ... You know, I do not want to answer this question. It is always easy to criticize, much more difficult to do. Therefore, I want to praise Georgia, they have done much more than what they can be criticized for now. 90 percent I like how it is done here. And we all know about 10 percent, and we will improve the local market.

How is online gambling controlled in Georgia, and how can Ukraine solve this issue?

The issue of control over the online gambling business is a global issue. Until the end, not a single state has come to any universal solution. Because on the one hand, if you let go too much, then there are many social risks. On the other hand, if you regulate it, then everything goes into the shadows. Online this does not present any problem at all. Unlike offline, where, after all, working in white is much more convenient and comfortable. On-line, the state must create conditions such that it is more convenient to work legally than illegally. But at the same time, restrain some things so as not to cause potential damage. And in Georgia this problem has not yet been fully resolved. The online issue is currently being resolved. But at least we can say that the absence of excessive regulation, the absence of excessive taxes allowed the development of excellent representatives of online business in the field of casinos and gambling here. In recent years, Georgian companies have been bought by world operators such as GVC, Betsson and the deal amounts are fantastic - hundreds of millions of dollars. And these are local companies that have evolved from small startups here in Georgia. Therefore, it is very important to be attentive to this business. The first licensees in Ukraine have already paid almost a million dollars in advance. These amounts are much higher than those currently paid by online casinos in Georgia. Maybe it is worth allowing them to work at least for the money that they have already paid? Instead of thinking about how they can still be taxed.

In your opinion, taxation is the only problem of Ukrainian gambling legislation?

I think taxation is now the cornerstone. In general, some bureaucratic moments are not entirely clear, but, probably, on the spot, it is more obvious. Because Georgia is a small country, Tbilisi is a small city. It might be easier to put things in order here. Ukraine is a large country with a large number of geographical centers, large cities, there are probably some nuances that I do not know. Maybe bureaucracy is superfluous, or maybe it is not superfluous. But in general, of course, taxes are the key point now. This issue, as far as I know, is now being resolved. The initiators of the process are guided by different motives and they have different information, but you need to understand that in addition to the fact that the gambling business pays licenses, pays taxes already fixed for gambling equipment, pays people a good salary, pays high rental rates - a huge number of others are formed around it. businesses. The casino immediately stimulates the economy. So he can let the guys work quietly, spin this flywheel, and then see. If now everything is imposed exorbitant taxes - probably the adventurers will open up anyway. But how it will all work is another matter entirely.

Lavrenty Gubin, the author of the Telegram channel GamingInsider, spoke exclusively with Gamingpost.net.

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