Before getting any kind of controversy ideas from the title, it needs to be clarified that the article is about the Republic in Georgia, stationed in Eastern Europe, not the United States Georgia, but the confusion is expected as many people have not heard about the country. Or maybe they have and deemed it as the US Georgia. Nevertheless, there is much to uncover about this country, which is tightly tucked away in the Caucasus mountains, acting as a gateway to Russian Europe and the Middle East.
The keyword is the Middle East, as Georgia is believed to be the Christian country that has the best relations with its Muslim neighbors. And those Muslim neighbors are exactly what contributes to the country’s ever-growing gambling market.
The population of Georgia isn’t too large, about 4 million to be exact. Therefore not much can be done with the local market. Because of such a massive hindrance, local gambling operators have been trying to appease to foreign customers, mostly coming from Turkey, Azerbaijan and Iran. But locals are also a large part of the nearly $500 million industry.
Multiple companies with a few favorites
The small country is able to host more than 92 gambling companies within its borders, most of which are local brands and not branches from foreigners. In fact, the best performing casinos in the country are Georgian. Which is hard to say about gambling hubs such as Malta and Macau. Despite the lack of an extensive market, the casinos were able to accumulate around $450 million just in 2014 in terms of revenue. A number that has done nothing but grows over the years, but a clear number is not yet known.
According to Forexnewsnow.com, There are about 32 casinos that are deemed “large” by the government out of the 92. All of them are Georgian as well, with notable names like Adjarabet and Crystal Bet. The primary product of these casinos is online slots, naturally, which are heavily consumed by the local populace compared to international customers. There are 2 gambling hubs in the country, the Capital Tbilisi, and the Sea Resort Batumi. The majority of customers are Georgians and Turks. Turks are a special market for offline casinos in Batumi, as both countries have a visa-free travel agreement, as well as cheap flights from one to another. Therefore Turks, who are more likely to have a larger budget when gambling, are more than welcome in Georgian land-based casinos. However, they all visit the ones based in Batumi exclusively.
Popularity & Issues
The greatest advantage that gambling operators have in the country is the popularity that they have garnered with the community. Although there are a few grumbles here and there, most of the country views these companies as more of an asset than a liability overall. One specific operator, Adjarabet is exceptionally popular with the young generation. Not necessarily for their product, but their job offerings. In Georgia, a job in a casino (mostly the back office) is high-paying compared to others, and companies have revolutionized local industries such as Marketing and Programming. Being able to field and train the best professionals in both fields. Even today, a job with one of the operators is considered prestigious.
Unfortunately, however, no matter the popularity, the financial damage locals have inflicted upon themselves by gambling too much, will eventually garner strict regulations for the operators. As of now, there are no regulations in terms of restricting users with below average wages or Net worth. Therefore, the country’s poor keep piling in the casinos and accumulating more and more debt, to a point where the ruling party had to promise to bail them out in order to garner support.
Soon enough this boon in revenue tax will turn into a thorn in the side of the government and some actions can already be seen. Measures for restricting under-age individuals to access the platforms are being taken with the help of two-factor authentication. A possible tax increase is in the discussion, as well as installing a “wealth line” which, if crossed, an individual becomes un-eligible to enter the casino.
Georgian casinos from an investor’s point of view
Two major Georgian casinos are already in the process of being sold to a large foreign corporation and it is likely to become a trend. And it’s already known what follows a massive buy-out right? An IPO. IPOs for companies in the gambling industry always spell a call for cash and further expansion abroad, however, the local brands don’t have much space to move around. In their local market, they are able to dominate, but should they try and access markets such as Malta or South-East Asia, they’re very likely to get stomped out by the large players. Therefore, many investors believe that companies will be able to field penny stocks for everybody to afford.
Private investors, many of whom are Georgian government officials, will see to it that the financial damage to the companies during the IPO is minimal, to consolidate their own positions, but fortunately, a new market is gleaming in the distance.
Customers to the North
As old animosities die down a little bit, and Georgia opens up to Russian customers, mainly in the Travel industry, so do the casinos. In fact, large amounts of vacancies have been spotted on Georgian recruitment websites for Russian speaking staff in Casinos. Implying that more resources will be directed towards attracting Russian tourists. And comparing Russians to Turks, Georgian casinos are likely to profit way more from their Northern neighbors, even if they’ve had a war or two (or three, maybe four).
Overall, things are looking up for Georgian casinos, even if they’re being bought by foreign companies. However, competition needs to be addressed. How large can this market grow to challenge Malta? It doesn’t really matter. Unless a miracle happens and Georgia is accepted in the EU, the local gambling operators have no chance of catering to European customers. Should the application happen, however, there is space for serious competition between the two entities.