Armenia’s gambling sector has been ruptured by the National Assembly’s approval of a new Tax Code, which will introduce a 10% turnover tax and double the licence fees. The Tax Code was authorised without any consultation with industry stakeholders and rushed through the legislative process, placing significant new burdens on Armenia’s growing gambling industry and the wider tech sector.
Vahagn Tangamyan, Head of the B2C Legal Support Department at Totogaming, shares with SBC the industry’s frustrations over the unaccounted application of the Tax Code, highlighting the lack of consideration for its broader economic consequences as stakeholders explore potential avenues for appeal.
SBC: How surprised were you at the decision and how this judgement came about following long deliberations in 2024?
Vahagn Tangamyan (Totogaming): It should be mentioned that the initial version of the Legislative initiative referred to a 10% tax on turnover rather than the state fee that is included in the current draft. We only became familiar with this new content two days before its adoption, leaving us with no time to react.
When we first reviewed the initial draft of the law, no discussion was organised, as it was not a content-based draft for discussion. It was contradictory, and we were convinced that it would not progress further. Moreover, we were surprised that it was discussed, entered the professional committee, and even received a positive opinion. At that point, the company, of course, responded and attempted to explain to all relevant authorities how absurd the initial version of the draft was.
SBC: Has the government consulted Armenian operators on implementing a 10% tax on turnover – what is the direct impact on costs?
VT: The draft was not discussed with us from the beginning; everything progressed on an emotional basis, emphasising the fact that this concerns the gambling sector, meaning turnover should be taxed. The focus was placed on the negative aspects of the industry, while discussions with industry experts were initially absent. These discussions only began once the legislative draft had already been approved by the committee.
SBC: How will this significant tax burden impact Armenia’s established gambling industry and wider tech sector?
VT: This change will have a significant impact on the gaming industry. The restrictions imposed since 2019 have already affected the sector, as confirmed by official data, which shows that the influence of foreign, unlicensed bookmakers in Armenia is increasing. The same will happen with this amendment – licensed operators will no longer be competitive against unlicensed ones. Moreover, user rights will not be protected in case of increased activity by unlicensed operators.
SBC: Is there any room to appeal, review, or prolong the tax application effective from 1 July?
VT: There is always an option to appeal. At the same time, statements made by government bodies make it clear that the emphasis is on establishing a regulatory authority. Taking this opportunity, I would like to clarify that the creation of this body is in no way dependent on bookmakers; it is entirely within the jurisdiction of state institutions. We have no influence over this process, not to mention the ability to hinder it. Everything must be done to ensure that this institution is introduced as soon as possible to halt the increase in state fees and, most importantly, to strengthen trust in the sector. The current situation feels more like punitive measures against the industry, as the fee increase is directly linked to the introduction of the regulatory authority – a process that does not depend on us.
SBC: In reflection, should the Armenia industry and stakeholders have done more to mitigate gambling harm impacts highlighted by Civil Contact Ministers?
VT: Before taking any action, it is essential to understand the cause-and-effect relationships and identify the real problems. In Armenia, the focus is currently on addressing the consequences rather than the root causes. The company has never sought to attract customers who engage in problematic gaming behavior, yet Armenia is not trying to understand the causes of such behavior. For years, the company has advocated for the introduction of responsible gaming tools, and we have already been working in this direction without any legislative requirements.
SBC: Final remarks on Armenia’s Tax Code proceedings for western audiences?
VT: There is very little knowledge about the industry, which is why the total number of bets and turnover figures are being widely discussed, and that is exactly why there was an attempt to tax industry turnover. In reality, many decision-makers are unaware of how turnover is structured in this sector, which is a crucial factor.
Another major issue is the misconception that if 811million AMD entered the industry, then by restricting it, this amount would be spent in other sectors, leading to 7.5% economic growth. This is a false assumption, as the absence of betting does not mean that users will, for example, go to a beauty salon more frequently to get a haircut. The demand for such services remains the same, but the financial flow will instead move abroad, fueling the gray market.
Moreover, even the current fees make the Armenian license one of the most expensive in Europe. There are only a few European countries where operators pay both a licensing fee and a state fee on turnover. In total, this makes the Armenian license disproportionately expensive compared to Europe, where operators have better protections and do not face the influence of unlicensed competitors.
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