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Anton Kuchukhidze: Legal gambling and international tourism

Only populists believe that legal gambling is a kind of activity existing separately from the rest of the economy. I have already written a lot about the creation of investment and employment opportunities. In this blog, I want to address the nature of gambling tourism.

There are several analytical definitions of gambling tourism. Let’s use the most general definition from the specialized information resource Casinopedia: “gambling tourism is a combination of the travel and gaming sectors, covering those players who visit different cities specifically for gambling purposes.” You may ask why am I writing about such obvious things, right? Unfortunately, during the 12 years of the black market operation, a lot of myths and biases against the legal gambling industry emerged, which are completely false. In developed countries, gambling and tourism are spheres considered within the framework of pragmatic and mutually reinforcing synergy.

There is another interesting global trend – a tourist flow motivates well-known global companies to invest billions of dollars in land-based casinos, regardless of allCOVID-19 restrictions. The most striking example in the last few weeks is, of course, Las Vegas. Genting Group of Malaysia opened one of the largest Resorts World Las Vegas hotels, having invested 4.3 billion US dollars in this project. Of course, the hotel also has a casino, so this project is a strong competitor to popular casinos in Bellagio or Caesars Palace. The mutually beneficial synergy is obvious to investors.

If we move from the global level to the local, the land-based gambling business in Ukraine is based on the compromise approach between the legislator and business: gambling establishments are tied to hotels and can be located only in hotels. That is, in this special law, the legislator has established not only a mechanism for unshadowing the economy through the legalization of gambling but also the hotel infrastructure development: a lot of hotels receive funds, at least in the form of rent, not to mention all the money invested by gambling operators in the premises. And although this approach can be called a compromise, in the future it is essential to consider the expansion of the list of facilities for land-based gambling establishments, subject to control and social protection of the population.

In Ukraine, legal land-based casinos opened only 2 months ago, but one can already see some tourism-related trends. Of course, we are not Las Vegas, but still, there is a complementarity of the gambling business and tourism. Most importantly, the myths set forth by the opposition proved to be unfounded: the Ukrainians did not rush to play in casinos. Various operators report their statistics, but on average, the trend is similar: for some operators, the ratio of foreigners and local players is 60 to 40, while for others it is 50 to 50. For example, in Georgia, this ratio is 75-80 to 20 in favour of foreign gambling tourists, which is not only because Turkey is located nearby, but also because foreigners do not have to pay tax on gambling winnings.

In Ukraine, some restrictions prevent foreigners from returning to casinos, for example, they have to pay a tax of 19.5% on gambling winnings. Tourists from the Middle East will readily head off to Georgia. That is why the adoption of the draft law 2713-д is more relevant than ever, not only for attracting investments from Western operators, but also for increasing the tourist flow to Ukrainian hotels and casinos.

Of course, the current situation looks intimidating for operators, but let’s not spread panic. The market has been operating for only 2 months, the State hears and understands the desire to amend the tax code, and there is the political will to carry out the initiated reform.

I am sure that all operational and technical aspects will be sorted out, step by step. The State itself is interested in tourism development and the foreign currency flow to the country and is waiting for this as much as operators do. The “state-society-business” triangle will benefit from the legalization of gambling.

Anton Kuchukhidze, Chairman of the Ukrainian Gambling Council, exclusively for the “Ukrainian News”


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