Kyrgyz Gambling Sector: Changes in the Legislation

One month ago, the Kyrgyz parliament passed a draft law on a specialised administrative region in Issyk Kul. This document allows the registration of casinos, betting shops, land-based poker rooms, and lottery kiosks.

By July 2021, the authorities need to make all the necessary amendments and present the bill to a repeat vote. Initiatives of the government are actively supported by president Sadyr Japarov, deputies, and local residents.

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Why Are the Authorities Planning to Legalise Gambling?

Such a decision will bring economic benefits to the country. The explanatory note to the bill indicates that the budget of Kyrgyzstan is now losing huge amounts of money. Funds must be applied towards the construction of public facilities and payments to employees of government institutions.

The idea to start a casino in Kyrgyzstan is a great opportunity to replenish the state budget. Experts believe that, over the year, revenues will grow by at least 7.1 million dollars.

The main items of income that are listed in the explanatory note are:

• licence fees;
• taxes (on the income, the hired employees, and VAT);
• a patent fee.

Tourism is also going to develop thanks to the new changes. Kyrgyzstan is surrounded by countries where gambling is strictly prohibited (these are China, Kazakhstan, Uzbekistan, and Tajikistan). It is likely that residents of neighbouring territories will gladly visit Kyrgyzstan to enjoy good vacations.

Key Innovations of the Draft Law

The government proposes to open casinos in Issyk Kul. This region is home to the largest deep-water lake, which is surrounded by beautiful mountain landscapes.

Issyk Kul has a huge potential. Around the lake, there are several towns with a developed infrastructure and an airport, which is located near Tamchy.

The main features of the described zone:

How to Obtain a Local Casino Licence

A Kyrgyz gambling permit is issued for 5 years.

Basic steps that entrepreneurs should take include:

1. Registration of a local legal entity. Founders of the company can be both foreigners and local investors, regardless of the size of the authorised capital and reserve fund.
2. Recruitment of staff, 50% of which must be locals. All employees should be registered in accordance with the labour code of the country. At least 10% of the management team must be Kyrgyz residents. These are managers, heads of departments, and senior administrators.
3. Purchase or rental of the certified hardware and software. Sportsbooks, consoles, lottery terminals, and slot machines should be released no earlier than in 2016. The draft law provides for mandatory certification of equipment and software.
4. Implementation of the investment project. Entrepreneurs can independently open offline casinos in Tamchy or invest in a large entertainment complex. A package of documents on the construction of a new facility must be sent to the authorised body. It should include a business plan, data on the sources of income, and a land conveyance contract.

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Features of the Kyrgyz Fiscal Policy

There several kinds of taxes on conducting gambling activities in this country:

1. State tax for a licence: 1.5 million dollars for each of the 7 casinos. Further, companies will be able to issue sublicences for operators and bookmakers who will work under their brand.
2. Mandatory patent. An annual fee of 13.3 thousand dollars for land-based casinos and 1.8 thousand dollars for a betting shop and a sweepstake.
3. Value Added Tax. Each bookmaker’s office and offline casino in Kyrgyzstan must pay the state 12% of the losses of players. These are bets placed in slots, sweepstakes, and lotteries. VAT also applies to the sale of goods and services in casinos: alcohol and food, hotel rooms, and much more.
4. Tax per unit of equipment. A fee of 590 dollars for each video lottery terminal, game console, etc.
5. Contributions to the pension fund. Entrepreneurs must transfer to the public treasury 27.25% for each hired employee: 10% is deducted from the employee's salary and the remaining 17.25% — from the operator's finances.

The Main Things about Casinos in Kyrgyzstan

The legalisation of the sector will improve the country's economy thanks to tax receipts from this field and the related industries as well: tourism, hotel business, and aviation.

• According to the government, all types of gambling will be allowed.
• The draft law states that a special zone in Issyk Kul will be created. Its area will cover 1,200 hectares.
• For being able to legally work in this region, entrepreneurs need to register a legal entity, buy certified equipment and software, and develop a business plan. The granted licence is valid for 5 years.

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