The economic framework embedded in liberal democracy, creates the favorable conditions for the gambling industry. This framework diminishes the state’s regulatory authority over economic activities, shifting the responsibility for outcomes to citizens themselves. In this model, the state prioritizes fostering profitable businesses by creating investment-friendly conditions, establishing pertinent legal frameworks, and nurturing an environment conducive to corporate growth. However, this approach does not adequately prevent adverse side effects impacting citizens’ social welfare, including their mental or physical health. This challenge is particularly conspicuous in economically developing countries like Georgia, where the gaming industry serves as a primary contributor to the state budget.

Why is this issue particularly relevant in Georgia?

In addition to the proliferation of gambling venues in Georgia, there is a growing trend of increased involvement in gambling, especially among youth. Despite this surge, efforts to proactively prevent and subsequently address the issue have been limited. Thus, it becomes crucial to understand what citizens should demand from the state.

What are we particularly demanding from the government?

The government should assume responsibility for mitigating risks associated with gambling, incorporating it into the state's policy framework to address the issue comprehensively. However, solely addressing the matter at the central level without accounting for local nuances would be inadequate. The role and responsibility of local government must be considered. Local authorities should analyze regional developmental trends and establish the foundation for progressive, welfare-oriented local development policies.

Gaming business in Georgia

In Georgia, gaming business emerged in the aftermath of the collapse of the Soviet Union. The transition to a market economy, stimulated the growth of new industries in the region, including gambling. The adopting a liberal policy towards the gaming business exemplifies a departure from the past economic system, advocating for distinct and essentially new models of governance and production. Notably, Georgia stood out as one of the first post-socialist states that started to deregulate gaming businesses.

A nationwide policy to regulate the gaming industry actually facilitated the establishment of gaming facilities throughout the country. In 2005, following the Rose Revolution, a revamped tax system was introduced, with facilities being taxed based on their geographical location. Some businesses were eligible for tax exemptions in specific territorial units.

The majority of gambling establishments in Georgia are strategically concentrated in tourist and coastal regions. According to data from the National Bureau of Statistics, the country currently boasts 1030 registered gaming businesses, with a substantial number situated in key locations such as Tbilisi (83), Adjara (40), and Samtskhe-Javakheti (11). These statistics underscore the correlation between the gaming industry and tourism. The prevalence of gambling facilities in coastal areas contributes to the phenomenon known as "gaming tourism." Given the strict regulations or outright prohibition of gambling in neighboring countries, visitors are drawn to Georgia to indulge in gaming activities.

The impact of gaming business on economy

Gaming industry is lucrative both for the state and an investor.

• In 2022, the revenue of the gaming business in Georgia exceeded 50 billion GEL, surpassing 4.709 billion GEL compared to 2021 and 20.556 billion GEL compared to 2020.
• In 2022, the aggregate turnover of Georgia's overall business sector reached 181.8 billion GEL, with the gaming business contributing significantly, accounting for 29% of this total.
• In 2022, the gaming business turnover was outpaced only by the wholesale and retail trade sectors (38%) in Georgia.

Recent studies have highlighted various factors contributing to the conducive environment for the growth of the gambling business in Georgia, including:

(1) Flexible legal framework;

(2) Strict regulation of the sector in neighboring countries;

(3) Rising industry of tourism;

(4) Liberal visa regulations with neighboring and other countries where gambling is restricted or prohibited.

Social risks

The figures presented above offer insights into one facet of the entertainment industry's growth, emphasizing its economic dimensions. However, a comprehensive discussion on the state's role in maintaining a balanced gaming business policy is important. This involves the necessity of effective regulation, based on the thorough exploration of the economic benefits vs social risks from the industry.

In addition to its economic advantages, gambling is accompanied by substantial social costs. The World Health Organization has identified a range of risks associated with gambling, including mental and physical health concerns, depression, suicide, family discord, financial troubles, delays in career and education, criminal tendencies, and heightened alcohol and drug usage, among other issues. Despite these recognized risks, the prevalence of gambling, and consequently its detrimental effects on individuals, continues to escalate worldwide, including in Georgia. As of November 2023, data from the Revenue Service indicates that 10,793 individuals have been officially registered as being addicted to gambling in Georgia.

Why local context is important?

The limited scope of research and the lack of information present challenges in fully understanding the factors contributing to the growth of gambling addiction in Georgia. We lack insights into which segments of the population are more vulnerable or what’s the level of attachment to the entertainment industry in the regions. However, an assumption can be made that the absence of economic, socialization, and cultural integration opportunities may be associated with the heightened addition to the gambling, among other factors. Our observations of the gaming business environment in Samtskhe-Javakheti reinforce the point.

As highlighted in our earlier articles, there is a notable prevalence of gaming addiction among citizens in this region. Local media reports suggest that the root cases are complex, sharing common ground with challenges faced by ethnic minorities in terms of political, civil, or cultural integration within the broader society. The problem is exacerbated by the demanding social and economic conditions prevalent in the country, further intensified by a lack of diverse local entertainment and recreational alternatives. These factors collectively contribute to the heightened vulnerability of individuals in this area to gaming addiction.

This article is produced under project “Increasing Public Resilience in Ethnic Minority Regions through Access to Information and Analysis,” funded by a grant from the Institute of War and Peace Reporting (IWPR) with the support of the UK Government. The opinions, findings and conclusions stated herein are those of the authors and do not necessarily reflect those of IWPR or the UK Government.