Kazakhstan gambling law to cut tax collection, boost black market

Kazakhstan, Almaty
Kazakhstan, Almaty

In early July, the Mazhilis of the Parliament of Kazakhstan made amendments to the current gambling law. The new legislation was signed by the President of the Republic of Kazakhstan Kassym-Zhomart Tokayev.

The changes will affect the conduct of offline business and may significantly reduce the revenues to the state budget from bookmakers. According to the new rules, betting points can now be placed exclusively in gambling zones. And, this will mean a reduction in the number of points themselves, together with fewer jobs and payments to the state treasury.

Moreover, the developers of the law require that the office of the betting company is also located in the gambling zone. These additional requirements bring difficult technical challenges, primarily because the bookmaker’s servers must be moved to a dedicated area.

“The relocation of betting points to gambling zones will change the market. This law will definitely affect the payment of taxes to the state budget and result in the reduction of sponsorship contracts,” said Maksat Kurmanov, CEO of 1xBet in Kazakhstan.

According to experts, last year the largest bookmakers paid about 18 billion tenge ($42.2 million)  to the treasury, and now this figure may be reduced by 90 percent.

“For the current year alone, 1xBet paid 2.5 billion tenge to the budget of Kazakhstan,” Kurmanov said.

1xBet believes that the current situation will lead to an unfair redistribution of the market since the main activity will unfold online. Thus, brands that have been cooperating for a long time and abiding by the laws of Kazakhstan will be on an equal footing with new operators, who do not need to invest in the development of offline points.

Going online also requires the creation of a financial operations centre for each bookmaker. Today, the state is not ready to allocate funds for such a project, and the costs may fall on the shoulders of bookmakers.

But these are not all the consequences of the new amendments to the gambling law.

The main danger may be the emergence of an offline black market for illegal bets. At the same time, legal bookmakers like 1xBet will primarily focus on online betting in Kazakhstan.

It is difficult to find positive aspects in such a decision from the Kazakh authorities. A decrease in the number of jobs, a reduction in tax payments from bookmakers and the potential emergence of a black market for betting are just a few of the risks that Kazakhstan may face in the near future. Now everything is in the hands of the country’s legislative bodies, which can revise this decision and allow the gambling market to develop further.

At the moment, two gambling zones have been created in Kazakhstan. Both are located outside large cities: one is located on the coast of the Kapchagay reservoir, the other is located in the Burabay district  of the Akmola region. 1XBet has put forward a proposal to expand these zones. So far, there are no agreements on this, but the law has already been adopted.

Kazakhstan’s potential has been and remains extremely high in many areas, including betting. Sports are an important part of the lives of millions of the country’s inhabitants, and therefore betting here is a widespread leisure option that allows people to not only earn money but also to support their teams. For over 20 years, betting has been an official activity in Kazakhstan. A betting culture has developed in the country, a distinctive feature of which is the well-thought-out forecasts by the players. Kazakhstani bettors are really well versed in sports, and therefore it is doubly honourable for a bookmaker to gain a foothold in the local market and become its leader.

In recent years, lotteries, which are often disguised as halls with slot machines, have provided powerful competition to professional betting in Kazakhstan. Often, unfortunately, the competition on their part is conducted not entirely in good faith, which leads to a deterioration in the general attitude of the population to the gaming sphere. 

1xBet Kazakhstan CEO Maksat Kurmanov
1xBet Kazakhstan CEO Maksat Kurmanov

If betting is pushed only into strictly designated areas, it will only worsen the situation. Yes, online betting is becoming more and more popular among the population of the country, but still many still prefer live in-person communication and are not ready to go online so soon. But we hope that nevertheless common sense will prevail and we will all come together to a solution that will allow the gaming industry in Kazakhstan to flourish.