ARMENIA EXPERTS

Gambling business in Armenia. Interview with Aram Orbelyan.

Armenia is a relatively favorable country for gambling industry. Unlike Ukraine, where gambling is still banned, Armenia has been supported legal gambling since its independence in 1991, thought the rules were getting tougher and tougher for gambling operators since then.

There are about a dozen casinos in Armenia, all operation in special areas. Online gambling is legal as well, though licensing conditions are far from being simple. However, in 2018 after a velvet revolution in Armenia a lot is changing in the country. A good reason for E-Play to get the up to date information from the local expert Aram Orbelyan, Senior Partner at Concern Dialog Law Firm who served as Deputy Minister of Justice of Armenia from 2011–2014.

E-PLAY: What does gambling industry look like in Armenia these days? How many legal operators are there on the market?

Aram Orbelyan: The participants of industry are Licensees for Organising Games of Chance, Online Gambling, as well as Casinos. Pursuant to the official reports published by the Ministry of Finance of Armenia, as to 31.07.2018, 5 entities hold licenses for Organising Games of Chance, 3 entities hold licenses for Online Gambling and 8 entities hold licenses for organising Casinos in Armenia.
The governing bodies of the industry are the Ministry of Finance which mainly is authorised to issue the licenses and the State Revenue Committee which supervises the activities of licensees.

E-PLAY: Can you please provide some statistical data related to market size, revenues and taxes related to gambling.

AO: There is no official or non-official reliable consolidated data on the volume of the market. There is no legislative requirement to publish financial data as such. The RA Legislation was amended several years ago and the licensees were excluded from paying taxes based on their turnover or income and instead were requested to pay lump sum annual state fees. Therefore, the said state fees are the main obligation of the rights holders toward the state. During 2017, overall 8,950,760,779 AMD State fee has been paid by the licensees in the sector, including 4,950,000,779 AMD for Casinos, 2,500,750,000 AMD for Games of Chance, 1,500,010,000 AMD for Online Gambling.

E-PLAY: Armenian gambling law was amended lately. How will these changes affect the business in the country with regard to increased license costs and fines?

AO: These amendments were mainly directed to the taxation issues. Besides, the issue of responsible gambling was partly considered, which is discussed briefly below.
Regarding the taxation, what basically was done, was that the obligation entities in Online Gambling, to pay taxes based on revenue, or turnover was replaced by the obligation to pay high fixed state fees. One may presume that this was done to eliminate the obstacles related to the calculation of the bases of taxation. In light of this, the solution seems very reasonable. Yet, the potential monopolisation of the market must be considered. That is to say that, the annual state fee in the amount of 1,000,000 USD leaves the door open for large players only.
At the same time according to some non-official sources, some of the casinos would have a monthly turnover of 15 mln USD with very high income rate and fixed 1 mln USD annual tax seems to be not sufficient.
These amendments ultimate adverse impact of these changes on the market is going to be the obstacle for independent startups and small participants to access the market and respectively, the limited scope of smart investment in the sector.

E-PLAY: What about illegal gambling? How big is this shadow industry?

AO: It may be difficult to give a precise evaluation of the extent of the shadow in the industry. However, it is safe to say that illegal gambling in Armenia is not very common. There, of course, are objective limitations to this. For example, combating illegal online gambling portals will require extensive measures and achieving tangible results will very difficult, if not impossible. Yet, the underground casinos are not very widespread. This may well be due to strict law enforcement activities of the Government.

E-PLAY: What online casino systems and services are popular in Armenia? Is there any effective way to control them?

AO: As discussed, there are only a few entities who hold licenses for organising online games of chance. Most active operators are VivaroBet and Adjarabet.
The monitoring of licenses is conducted mainly through in place and documentary audits. These audits also check the compliance of Licensees with Anti- Money Laundering legislation.
The licensees are requested to submit monthly reports on their financial flows. Further, the submission of independent audit reports on their financial reports to the SRC and publication of those is a mandatory obligation of the licensees. The documentary audits by SRC are conducted based on these reports.

E-PLAY: What are the prospects of gambling in Armenia in the future? Are there any draft laws or propositions to change the rules? What would you propose to change?

AO: Going back to the applicable state fees and their potential impact on the market, the extent of the fees may be reconsidered or alternative charging mechanisms may be proposed in order to facilitate the entry of the new participants and create incentives for potential investment. Policy discussions regarding changing of the general approach and adopting a revenue-based mechanism currently exist, however, these have not yet taken the form of Draft Law and has not officially been considered by the Parliament or any other state bodies.
Furthermore, there are a couple of Draft Laws which are yet to be discussed by the Parliament.
Particularly, there is a draft law, proposed by two Members of Parliament, which would require blocking the Official online gambling websites licensed in Armenia in Cafes, Restaurants, Malls and Internet Cafes and other public places.
Another draft law proposed by a Member of Parliament tackles the issue of Advertisement of online gambling. For a while, this issue has bothered the policymakers and it has been finally brought to the attention of Parliament, that advertisement of online gambling should also be restricted.

E-PLAY: How are the issues of responsible gaming controlled in Armenia? What are the restrictions when it comes to advertising or gamblers age?

AO: The Control of Responsible gambling is conducted through a number of ways, including the ban of access for persons under 21 and wager registry were gamblers are registered.
Firstly, The operators of casinos shall prohibit entry of entities over 21 to the casinos and operators of online casinos shall carry out identification of clients in order not to grant access to entities under 21.
Besides, the recent amendments to the law have brought regulations regarding the wagers’ registry. Particularly, details of any clients who carry out transactions over One Million AMD shall be included in wagers’ registry.
With respect to restriction of advertising, the advertisement of gambling and casinos is limited to cases. Particularly ads about Casinos and Gambling may appear on the buildings of casinos, in at least four-star hotels, and the entry points on the border of Armenia. Interestingly, when the legislator regulated the matters regarding online gambling, it was reasonable to expect that these restrictions would also be applicable to Online gambling and casinos. Yet, this matter has been omitted and the restrictions of advertisement are not applicable to online gambling and casinos.

The interview was conducted by Andrey Nabukhotny

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