The rigorous gaming law introduced by Georgia in 2005, and its subsequent amendment the following year, effectively put an end to small-time casinos in the capital of Tbilisi.

The law ‘On Lotteries, Gambling and other Winning Games’ passed in March 2005, slapping an annual 5m Georgian lari (€2.68m) licensing fee on all casinos operating in Tbilisi. Additionally, casinos must pay a 7,000 GEL monthly table tax, a 25 percent tax on total employee salaries, 15 percent on casino wins and 12 percent on customer wins.

“The law wiped out all the shady five-table places and guaranteed the Government 10m lari a year,” Julian Duffel, manager of the Adjara Casino, told GamblingCompliance.

While some 18 casinos had operated before the law was introduced, now only the Adjara and Berekoni casinos continue to operate in Tbilisi. However, hotels under construction, such as the Raddisson and Kempinsky, have recently announced plans to open casinos.

Duffel, with 20 years in the business, claims the market is already spread thinly between the two existing casinos and that others could severely hurt Adjara’s business, should they enter the market. “It's hard to tell yet how this will affect business. But we're established and can afford to compete,” Duffel said. The Adjara may even choose to expand the current 50-gaming table casino to the second floor of its building in order to boost its competitiveness, he added.

But government officials see casino gambling instead as a means of boosting economic development away from the Georgian capital. The head of Georgia’s Gambling Business Regulation Division, Mamuka Maziashvili, says the government would prefer to move casino gambling away from Tbilisi, as indicated by recent legislative moves.

In a measure which contrasts with neighbouring Russia, which signed a bill in 2006 to allow gambling only in four designated zones in four remote regions, Georgia has amended legislation to help develop casinos in Batumi and other resort areas as part of a wider economic development plan.

For example, the Georgian parliament reduced the annual casino licence fee in areas such as Batumi to just 250,000 GEL. Presently, there are three casinos operating in the region; the Intourist, Victoria and Sputnik. Table taxes are established by city authorities at a rate between 15,000 and 29,999 GEL.

Batumi is undergoing a rapid transition from a crumbling port to an exclusive Black Sea summer time tourist destination. Although the August war with Russia reduced 2008's tourist numbers by 22 percent, Batumi is expecting to see more tourists next year as more hotels are being built to accommodate the demand. This may mean more casinos as well.

Lasha Tordia, Deputy Chair of the Parliamentary Budget and Finance Committee, welcomes anything that will contribute tax dollars to the Georgian government, including casinos. “We don't know if there are any plans to build more casinos, but hotel complexes are being built and if they want to open casinos, they can,” states Tordia.

The mountain resort of Borjomi, which made a recent bid to host the Winter Olympics, also benefits from the reduced licence fee, although nobody has yet announced plans to open any gaming establishments.

And in an effort to help redevelop the Soviet era spa of Tksaltubo in central Georgia, parliament is offering a restriction-free incentive for casino development. The same license-free motivator applies for the Lake Bazaleti resort in Dusheti, only 60 km from Tbilisi.

“It will be very good for the economy and provide jobs for Georgians,” Tordia says of the gaming development incentives. “I'm actively lobbying for this.”

Whether these regions will provide gaming venues for the public remains to be seen as the infrastructure has yet to be created. Furthermore, it is difficult to predict how the weakened global economy and investor confidence following the August war will play out in Georgia.

“The government has done what it can, now it is up to the private sector to develop businesses,” explains David Churadze, a leading specialist in the budgetary committee.

While the 2005 law has certainly curtailed the casino business in Tbilisi, it has not affected the capital’s slot machine parlour businesses, which have popped up all over the city. Some 470 slot clubs all pay an annual fee of 8,000 GEL and monthly machine tax of 250 GEL. 390 permits were issued between January and June 2008 alone, contributing over 3m GEL to the state budget.

But, like casinos, slot clubs may also be reduced in Tbilisi. Mamuka Maziashvili said more legislation was in the offing for a future parliamentary session, which would include cutting the number of slot clubs and addressing gambling addiction issues. “We need to synchronize our law to western standards,” he says.

Lasha Tordia, however, stated that a draft legislative project for machine parlours has yet to be put on the table, although the Budget and Finance Committee representative hinted that Tblisi may well see fewer slot clubs in the future. “There is a tendency to raise taxes and when fees go up, the numbers of establishments go down,” Tordia said.