Lottery regulation under the Law of Georgia on Lotteries, Gambling and Other Profitable Games begins with its conceptual apparatus: what a lottery is, which games fall under these regulations and which do not. On this page we explain the legal concept of a lottery, its types, the regime of the prize fund and the consent procedure for organizing a game. Legal.ge assists both organizers and players in applying these rules correctly.
What a lottery is: the concept and the necessity of chance
Under the third article of the law, a lottery is defined as a voluntary group or mass game during which the lottery organizer plays out a prize fund in compliance with publicly published, established rules and conditions. The core element of the concept is chance: the occurrence of a win on any lottery ticket does not depend on the will or action of the lottery organizer or any other subject, constitutes chance and cannot be specially arranged. This means that a pre-arranged result no longer leaves the game a lottery in the legal sense.
The types of lottery: draw-based and instant
A draw-based lottery is a lottery whose conduct is divided into draws — separate full cycles, from the production and sale of the ticket to the drawing of the prize fund inclusive. The holder of a lottery ticket determines whether the ticket has won only after the draw has been conducted. An instant lottery is a lottery whose result is determined on the spot — by checking the ticket or by conducting the draw directly on the ticket.
The practical difference is significant: in a draw-based lottery the player learns the result later, after the draw; in an instant lottery — at the point of purchase. A different set of documentation follows from this as well, which we examine below.
The ticket, the prize fund and the draw
The lottery or profitable-game ticket is a broad concept: a card prepared for sale or distribution, a document confirming participation in the game, an item, a personal identification code (number) or another carrier of information that complies with the law and with the conditions of organization (regulations) of the specific game and, in the event of a win, confirms the fact of the win.
The prize fund is an amount that, before commencement, is recognized as a firm obligation in favor of the holder of a winning ticket and is intended for transfer to that person. A win may be represented in monetary form, in kind or in another form. It is prohibited to load the prize fund with any other obligations except the obligation owed to the participants of the draw; the prize fund may be used neither wholly nor partly in financial, commercial, industrial or other turnover (the only exception being the benefit derived from placing the fund in a banking institution). The holder of an in-kind win has the right to receive the item or its corresponding amount, if this is established by the regulations.
The volume of a lottery is the product of the number of tickets allocated for a specific draw and the retail price of the tickets — this indicator is the basis for planning the prize fund.
Which games are not a lottery
The fourth article draws the boundary of exclusion: lotteries, gambling and/or profitable games, and their systematic-electronic form, do not include games that are conducted using machines, devices, equipment, the internet, the telephone, specially equipped electronic means and other means, and in which no element of chance is provided. Their purpose is the testing or demonstration of the participants' special knowledge, intellect, dexterity or other special ability. Accordingly, intellectual competitions, in which the result depends only on knowledge, do not fall under the licensing regime of lotteries.
The conceptual apparatus also covers the incentive game: a game during which the organizer plays out a prize fund according to publicly published rules, for the purpose of the fast and effective sale of a specific type of product (service), and also in cases determined by the Government. Its ticket is issued free of charge, and it is impermissible to charge any fee in any form for participation.
The lottery organizer and the distribution chain
The lottery organizer is the person who has won the tender organized by the Ministry of Finance of Georgia — the holder of the exclusive right to organize and conduct lotteries, who carries out the activity in accordance with the conditions provided for by the law and by contract. The ticket distribution chain involves the agent — a person who provides sales services to the organizer and supplies tickets for subsequent sale — and the retail seller, who sells tickets to players.
Consent to organize and the organizer's obligations
No later than 2 weeks before organizing the game, the organizer applies to the Revenue Service for consent and submits documents: for a draw-based lottery — the regulations (the general rules of the game, the start date, the limited deadline and place for paying out winnings, the ticket price, the procedure and deadline for reviewing claims, and the quantity and numbering of the tickets to be printed), the contract with the producer of the tickets, and a sample ticket; for an instant lottery — the same, plus the amount of the prize fund and a list of the prizes, their quantity and unit value.
The organizer notifies the Revenue Service in writing 3 days in advance of changes (a new director, a change of legal address, the printing of additional tickets); the rules of the game are public and delivered to players without hindrance; the prize fund is drawn by a commission consisting of no fewer than 3 independent members; information on the results of the draw is submitted to the Revenue Service within 5 working days; and an instant lottery may be organized for no more than 2 years. Legal.ge offers dedicated assistance at every one of these stages.