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Kazakhstan and Uzbekistan: So close yet so different

Global gambling advisory 4H Agency provides a comprehensive analysis of the current dynamics and regulatory factors influencing the composition of gambling in each CIS nation. The series opens with an investigation of Kazakhstan and Uzbekistan's divergent approaches to regulating their nascent gambling markets...

This article will provide an overview of the current state of gambling rules in Kazakhstan and Uzbekistan, both of which are members of the Commonwealth of Independent States. Each section devoted to a specific country will be broken into three parts: (1) an overview of the market, (2) an overview of high-level rules, and (3) 4H Agency's assessment of the market's current situation.



KAZAKHSTAN


1. Market Overview in General

Central Asia is the location of the Republic of Kazakhstan. Kazakhstan's capital is Astana. Russia, China, Kyrgyzstan, Uzbekistan, and Turkmenistan are its neighbours.


Beginning in the nineteenth century, Kazakhstan was initially influenced by the Russian Empire. Later, in 1936, it was reconstituted as the Kazakh Soviet Socialist Republic (KSSR) and became one of the republics of the Soviet Union. In 1991, the Republic of Kazakhstan reclaimed its independence.


In total, Nursultan Nazarbayev served as the country's first president for a total of 29 years, from 1999 to 2019. Nazarbayev established a somewhat autocratic rule in Kazakhstan in an effort to expand the economy primarily through the oil industry. In 2019, President Kassym-Jomart Tokayev became Nazarbayev's successor, and in 2022, he also succeeded Nazarbayev as the chairman of Kazakhstan's security council.


According to the World Bank, the following information about Kazakhstan can help the reader learn more about the country's economic and social status:


  • GDP (2021) — USD 197.1 billion (Kazakhstan is 54th in GDP rating by World Bank and is placed between Ukraine and Hungary)

  • GDP per capita (2021) — USD 10,387.9

  • Population — 19 million

  • Internet penetration — 85.9%


2. High-Level Regulations Overview

The gambling and betting sector in Kazakhstan is governed primarily by two legal acts: Law No. 219 on Gambling Business from January 12, 2007 and Law No. 495-V on Lotteries and Lottery Activity from April 2016, respectively. The Ministry of Culture and Sport regulates the sector.


The following gaming verticals are regulated in Kazakhstan:


  • Land-based casinos;

  • Slot machine halls;

  • Land-based betting;

  • Online betting;

  • Land-based totalisators;

  • Online totalisators;

  • Lotteries (however, they are considered to be non-gambling activities).

The permits are awarded for a ten-year period. The cost of licences is shown in the regulation using the MCI indicator. MCI stands for monthly calculation index and equals 3,063 KZT or EUR 6.6 as of the day this article was written. For instance, the cost of a casino licence is 3,845 MCIs, which is equivalent to 3,845 times KZT 3,063, or KZT 11,777,235.


For the sake of our readers, we shall convert the prices to euros:


  • The cost of a licence for casinos and slot machines is EUR 25,380. In addition, the annual licencing charge is €25,380

  • Betting and totalisators: the cost of a licence is 4,225 euros. The annual licence price is similarly 4,225 euros.

Gambling tax. It should be underlined that Kazakhstan does not impose a traditional tax on gaming activities. Depending on the vertical, operators are paid for the substantial components of the operator's infrastructure. For example, the online gambling industry is subject to electronic cash register tax (details can be found below). Please read below for details regarding the tax amount applicable to the infrastructure part of the operator:


  • Gaming tables – EUR 10,960;

  • Gaming machines – EUR 400;

  • Cash totalizator – EUR 1,980;

  • Electronic cash to totalisator (online totalizator) – EUR 26,400;

  • Cash bookmaker – EUR 1,980;

  • Electronic cash register in a betting office (online betting) – EUR 19,800.


Market size. According to our own method for calculating the size of the gaming market, the Republic of Kazakhstan's gambling market was expected to be worth 1.26 billion euros by the end of 2021. Even if online casino activities are outlawed on the market, there is no adequate monitoring system or strategy for prohibiting offshore operations. In addition, there are no blacklists of unauthorised operators in Kazakhstan. Thus, access to the websites of major foreign operators is rather simple.


Among the legal operators of sports betting are 1xBet, Tennisi.kz, Parimatch, Fonbet, Pin Up, and Olimpbet.


Noting the most current developments, Kazakhstan enacted tight revisions to its gaming laws two years ago:


  • Sporting events are the only ones on which betting operators can accept wagers.

  • The location of betting shops and totalisators is restricted to designated gambling zones (the same restrictions as for casinos and slot machine halls);

  • A new "center for accounting of bets" would be established, and all online betting operators and totalisators would be required to provide information regarding all their wagers. This innovation was inspired by a Russian venture called the Center for Taking Interactive Bets (TSUPIS). Nonetheless, it has not yet been introduced in Kazakhstan;

  • New mechanisms for blocking offshore gambling operators have been included in the relevant regulations.


In addition, people's deputies recognise the existence of excessive gambling and call for the implementation of responsible gambling measures designed to mitigate this issue. Another aspect of this issue is situations in which gamblers use borrowed monies. This fact could lead to a total ban on the use of credit cards while gambling. In addition to working on the execution of the set of regulations adopted two years ago, the Kazakh government is establishing the necessary technical and regulatory infrastructure for the implementation of a new "centre for accounting of bets."


3. 4H Agency's Opinion

Such restrictive changes do not result in market expansion and growth. According to our understanding, the basic intent underlying the approval of these modifications was to safeguard citizens from excessive gambling and increase the oversight of licenced operators. While we welcome the Kazakhstan regulator's efforts to enhance the business, it would be more beneficial for the market to work on less restrictive rules for the regulated market and a more targeted and stringent approach to unlawful operations. In any case, it is extremely fascinating to observe the government's efforts toward the expansion of the gaming sector.



UZBEKISTAN


1. Market Overview in General

Uzbekistan is Kazakhstan's neighbour and is likewise located in Central Asia. Other bordering nations include Tajikistan, Afghanistan, and Turkmenistan. Uzbekistan's capital is Tashkent. Islam predominates as the predominant religion. The majority of the population speaks Uzbek, while Russian and Tajik are also widely spoken. From 1924 to 1991, Uzbekistan was a part of the Soviet Union as the Uzbek Soviet Socialist Republic.


Shavkat Mirziyoyev, the current president of Uzbekistan, is renowned for reforms that have pushed the country toward a market economy, emphasised the value of civil rights, and improved relations with its neighbours. Uzbekistan is still regarded as a poor nation due to its relatively low GDP per capita.


For a better understanding of the backdrop, the World Bank provides the following summary of pertinent information regarding Uzbekistan.


  • GDP (2021) — USD 69.2 billion (Uzbekistan is 75th in GDP rating by World Bank and is placed between Côte d’Ivoire and Belarus)

  • GDP per capita (2021) — USD 1,980.9

  • Population — 35 million

  • Internet penetration — 71.1%


Uzbekistan, a neighbour of Kazakhstan, has a different strategy to regulating the gambling sector. There has been a total ban on gambling since 2007. However, officials attempted to legalise online and land-based sports betting towards the end of 2019. The president of the country, Shavkat Mirziyoyev, signed a decree regarding the growth of football. One of the requirements of this degree was to develop sports betting activities that would contribute to the funding of the sports industry.


2. High-Level Overview of Regulations

According to the order, the legalising procedure should have been completed by the beginning of 2021; however, there are no obvious results and the betting vertical remains illegal. The reasons for such a lengthy delay are unclear. One of these could be that the government agency responsible for the implementation has changed three times since 2019. The monitoring body at the time of publishing of this article is the Ministry of Sports of the Republic of Uzbekistan.


There is no fixed date for the legalisation of sports betting. As was evident from the discussion on legalisation, however, Uzbekistan intends to adopt laws based on the best practises of EU nations.


Major sports betting organisations in the territory of the Commonwealth of Independent States view the Uzbek market as quite promising. A large and active population of young people is one explanation (more than 30 million). There are already corporations that have stated a willingness to join Uzbekistan, and their number will only expand once the regulations are implemented and companies perceive a better road to access this market.


3. 4H Agency's Opinion

The government of Uzbekistan intends to remove impediments to legalisation and to continue the sports industry's modernization and enhancement. Uzbekistan looks ahead to European nations where it is usual practise for large sports betting organisations to sponsor sports teams and sportsmen and make considerable donations to the sector.

By fLEXI tEAM



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