Regulation

CIS and Baltic states market focus: Kazakhstan

In the concluding part of this five-part series, EGR Compliance examines emerging gambling markets for operators in the CIS region and Baltic states, in partnership with law firm Dentons

As a nation, Kazakhstan occupies a huge proportion of Central Asia, over 2.7 million square kilometers, serving as an important bridging point between Europe to the East and Asia to the West.

Joining the CIS group of nations after the collapse of the Soviet Union in 1991, the nation of Kazakhstan is rich in resources which could potentially grow its economy and increase investments in this largely untouched and underpopulated state.

With its high internet penetration rate and geopolitically significant borders with Russia and China, the Kazakh market could become the next big hub for industries priced out of the increasing expensive western nations. However, as is true in gambling circles, someone, or some organisation will have to take a punt on the Kazakhstani nation for it to truly realise this.

Gambling regulation in Kazakhstan follows a similar model to that used in other neighbouring nations but could, with a few minor geopolitical shifts, become a very receptive model to online gambling operators. In the last of this five-part series, EGR Compliance, in partnership with Dentons, looks at the how the regulations work and what might open the door to operators.

Kazakhstan in numbers

Population: 18.7 million

GDP per capita: $11,637.60

Internet penetration: 79%

President: Kassym-Jomart Tokayev

Principal regulatory body: Ministry of Culture and Sport of the Republic of Kazakhstan

What types of licences are available to operators?

There are two types of licence:

1) licence for casino, slot machines, and poker (the “Casino licence”);

2) licence for betting shops and totalisators (the “Sports betting licence”).

Online gambling is possible only under a sports betting licence (in other words the only verticals available online are sports betting and totalisators).

Casinos and slot machine halls are allowed only in the designated zones:

-coast of Kapshagai reservoir of Almaty oblast and

-Burabai district of Akmola region.

Gambling tax

Gambling tax

Gambling tax is calculated on the basis of taxable items per month (payable per month):

  • each gaming table: €9,500
  • each slot machine: €350
  • each totalisator and sports betting counter: €1,770
  • each online totalisator counter: €23,600
  • each online sports betting counter: €17,700

Fee for using the licence:

The fee for using the licence is the same as the licence fee for the respective type of gambling and should be paid on the annual basis by four equal instalments.

How long do licences run for? What are the costs of applying?

Term

All types of licences are issued for 10 years.

Licence fee

Fee rates for gambling business varies depending on types of gambling business:

  • casino licence: €20,000
  • sports betting licence: €4,000

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Re-issuance fee: 10% of initial licence fee.

What restrictions are placed on operator marketing to players?

There are no specific restrictions on gambling business advertising.

Where are the big opportunities for operators looking to expand into the market?

Kazakhstan’s gambling industry is expecting certain changes in the legislation aimed at attracting investments and improving regulation of gambling.

As such, among other things, it is proposed to add up to three additional gambling zones.

What do operators need to be aware of if expanding into the market?
 

The trickiest part of entering this market is operating online.

First of all, online casinos are forbidden in Kazakhstan (in the same way that they are Russia).

In turn, online sports betting is only allowed provided that the interested online operator first establishes “a physical presence” in KZ (for example, locates its servers within Kazakhstan).

It is also highly recommended to carefully choose between various gambling verticals while considering a potential expansion into Kazakhstan. For instance, there have been several previous criminal cases when Kazakhstani authorities have considered live games as online casino games and started a criminal investigation on this basis.

Local expert view – What do you think of the market?

The Kazakhstani market will undoubtedly become more popular in the near future as soon as its neighbour Uzbekistan legalises sports betting (due to happen in 2021), and the synergy between two countries will create something of a gambling hub in central Asia which is geared towards the East.

 

Ilya Machavariani, associate, Dentons

Ilya Machavariani is a gambling and gaming lawyer for Europe, Russia and the CIS heading the Russian and CIS gambling practice group at Dentons. He has extensive experience advising on gambling issues and advises clients on operating in the Russian Federation and the CIS, on the full range of regulations relating to the activities of gambling operators, as well as drafting the necessary contracts and internal documents. He also handles licensing processes for gambling operators that are entering new markets throughout the world.

Ivan Kurochkin, associate, Dentons

Ivan Kurochkin being an associate at CIS gambling practice group at Dentons has broad experience on gambling issues, especially in regulatory matters. His work involves advising clients doing business in the Russian Federation on various activities of gambling operators (including bookmakers), focusing on issues related to compliance with gaming licence requirements, applicable AML requirements, and issues relating to advertising of gambling operators.

Picture credit: Istock/omersukrugoksu

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