4H Agency, an international consulting company in the field of gambling, described in detail the current dynamics and regulatory factors affecting the structure of the gambling business in individual CIS countries.
This article provides an overview of the current state of gambling regulation in CIS countries such as Kazakhstan and Uzbekistan. The country sections are divided into three parts: (1) Market Overview, (2) Regulatory Overview, and (3) 4H’s view of the current state of the market.
KAZAKHSTAN
General overview of the market
Initially, in the 19th century, Kazakhstan was under the influence of the Russian Empire. In 1936, it was reorganized into the Kazakh Soviet Socialist Republic (KSSR) and made one of the republics of the Soviet Union. The Republic of Kazakhstan regained its independence in 1991. Nursultan Nazarbayev became the first president and held this position until 2019, for a total of 29 years.
Here is some basic information about Kazakhstan, according to the World Bank:
- GDP (2021) – 197.1 billion US dollars (Kazakhstan ranks 54th in the World Bank GDP ranking and is located between Ukraine and Hungary)
- GDP per capita (2021) – $10,387.9
- The population is 19 million.
- Internet penetration – 85.9%
Overview of rules and regulations
As for the regulation of the Kazakh gambling and betting industry, it is mainly regulated by two legislative acts. Law No. 219 of January 12, 2007 “On gambling business” and Law No. 495-V “On lotteries and lottery activities” of April 9, 2016 this year.
The following gambling verticals are regulated in Kazakhstan:
- Land-based casinos;
- slot machine halls;
- Ground rates;
- Online betting;
- Ground sweepstakes;
- Online sweepstakes;
- Lotteries (however, they are not considered gambling).
Licenses are issued for 10 years. The cost of licenses in regulation is shown using the MCI indicator. MCI stands for Monthly Calculated Index and is equivalent to 3,063 tenge or 6.6 euros as of the publication date of this article. For example, a casino license costs 3,845 MCI, which is equivalent to 11,777,235 tenge.
Gambling tax
It should be emphasized that traditional gambling taxes are not applied in Kazakhstan. Operators are charged for the main elements of the operator infrastructure in accordance with the field of activity. Below is information on the amounts of taxes applicable to elements of the operator’s infrastructure.
- Gaming tables – 10,960 euros;
- Slot machines – 400 euros;
- Cash tote – 1,980 euros;
- Electronic money for a totalizator (online totalizator) – 26,400 euros;
- Cash bookmaker – 1,980 euros;
- Electronic cash desk in a bookmaker’s office (online bets) – 19,800 euros.
In general, Kazakh gambling laws can be considered highly regulated. One of the reasons for this is the influence of Kazakhstan’s big neighbor, the Russian Federation, and this also applies to the gambling industry in general. For example, both countries strictly ban online casinos. Only a small percentage of zones are allocated for land-based casinos.
Market Size
According to the volume of the gambling market, the market of the Republic of Kazakhstan at the end of 2021 was estimated at 1.26 billion euros. Although there is a ban on the activities of online casinos, the market lacks proper control measures and approaches to banning offshore operations.
Among the legal bookmakers, the following operators can be distinguished: 1xBet, Tennisi.kz, Parimatch, Fonbet, Pin Up, Olimpbet.
A couple of years ago, Kazakhstan made restrictive amendments to its gambling laws:
- the types of events that bookmakers can accept bets on have been limited to sporting events;
- bookmakers and betting shops can only be located on the territory of specially designated gambling zones (the same restrictions as in casinos and slot machine halls);
- a new “betting center” will be created and all online betting operators and sweepstakes must provide it with information on all their bets. The inspiration for the development was the Russian initiative – Interactive Betting Center (TsUPIS). However, it has not yet been launched in Kazakhstan;
- new mechanisms for blocking offshore gambling operators have been introduced into the relevant regulations.
One aspect of this problem is that players use credit funds to play. This fact may lead to a complete ban on the use of credit cards while gambling. The government of Kazakhstan is also working on the implementation of a set of rules, and on the creation of the entire technical and regulatory infrastructure.
4H Agency Opinion
Such restrictive measures do not contribute to the growth and development of the market. The agency understands that the general approach to passing such amendments is to protect citizens from gambling and tighten control over licensed operators. The willingness of the Kazakh regulator to improve the industry is welcome. In any case, the company believes that it is very interesting to observe the active efforts of the authorities to develop the gambling industry.
UZBEKISTAN
General overview of the market
Shavkat Mirziyoyev is the current President of Uzbekistan. He is known for reforms that lead Uzbekistan to a market economy, emphasize the importance of civil rights, and help improve relations with neighboring countries.
Below is an overview of some of the details, according to the World Bank, about Uzbekistan to better understand the context:
- GDP (2021) – $69.2 billion (Uzbekistan is ranked 75th in the World Bank GDP ranking and ranks between Côte d’Ivoire and Belarus)
- GDP per capita (2021) – $1,980.9
- The population is 35 million.
- Internet penetration rate – 71.1%
Gambling has been completely banned in Uzbekistan since 2007. But in 2019, the state made an attempt to legalize sports betting. President Shavkat Mirziyoyev issued a decree on the development of football.
Overview of rules and regulations
Based on the decree, the legalization process was supposed to be completed at the beginning of 2021, but there are no visible results, and the betting vertical is still banned. The reason for this long delay is unknown. Perhaps this is due to the fact that since 2019 the national agency responsible for implementation has changed three times. Today, the governing body is the Ministry of Sports of the Republic of Uzbekistan.
There is no exact date when sports betting will be legalized. Based on the debate on legalization, Uzbekistan is seeking to develop rules based on the best practices of the EU countries.
The largest bookmakers in the CIS region consider the Uzbek market very promising. It was also influenced by a large percentage of active youth (over 30 million). At the moment, there are companies that have expressed their intention to enter the market of Uzbekistan. In the future, their number will only increase after the introduction of rules that will find a clearer way to open this market for their activities.
4H Agency Opinion
The Government of Uzbekistan is removing obstacles to legalisation and continues the path of improving and modernising the sports industry. It is customary in Uzbekistan to sponsor sports, often with the help of large betting companies. Such companies act as sponsors of sports teams and athletes and make a generous contribution to the development of the industry.
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