Open Letter: The Ban on Advertising for Betting Companies Does Not Align with International Practices, Media Companies Say

The Prime Minister of the Republic of Armenia, Nikol Pashinyan

The Speaker of the National Assembly, Alen Simonyan

The Minister of Finance, Tigran Khachatryan

The Minister of Economy, Vahan Kerobyan

The Chairman of the National Commission on Television and Radio, Tigran Hakobyan

The Chairman of the Competition Protection Committee, Gegham Gevorgyan

During a live broadcast of the government session on July 29, 2021, it was declared that the government had approved the draft law on amendments and supplements to the “Law on Advertising,” which had been circulated since March 2021. This draft (hereinafter referred to as the “Draft”) proposes to effectively ban the advertising of lotteries (internet totalizator) and internet gambling through television, radio, the internet, and outdoor advertising.

This fact was reaffirmed by the decision no. 1478-A of the government on September 16, 2021, which also presented the legislative initiative to the National Assembly of Armenia.

We hereby express our disagreement with the Draft and its justification, finding that the proposed solutions will not contribute to the achievement of the stated goal, do not align with international best practices, and on the other hand, the proposed bans will have irreversible consequences on the advertising market, causing tremendous damage to all organizations operating in this sector.

The proposed advertising ban (virtually complete) does not correspond to international practices, and it is difficult to find countries that allow gaming activities but do not permit advertising. It would be more logical to completely ban gaming activities, which, however, is almost impossible to implement, considering the incapacity to prevent the activities of foreign (non-licensed in Armenia) gaming operators via the internet.

Moreover, the proposed amendments do not limit the cloak-and-dagger advertising of gaming operators’ trademarks with similar signs, which could serve as a basis for abuses.

The proposed advertising ban demonstrates discriminative treatment between organizations engaging in advertising activities in the Republic of Armenia and those registered outside the Republic of Armenia that disseminate advertising through the internet or other internet solutions. In particular, it is impossible to ban advertising through foreign websites or network (cable) television (IPTV, OTT, etc.), which results in foreign advertisers receiving a competitive advantage in the Republic of Armenia.

It should be noted that, to avoid financial issues, a number of organizations operating online may transfer their operations abroad by registering companies there, circumventing the ban on advertising in the gaming sector and offering services to foreign gaming operators, which is factually not prohibited and cannot even be technically banned by the Draft.

Furthermore, foreign operators will target the Armenian market, taking advantage of the emerging free advertising spaces and the advertisements of organizations registered outside the Armenian territory, leading to an outflow of Armenian players to gaming sites that are unlicensed in the Republic of Armenia and operate without oversight and without protecting players’ rights, which directly contradicts the purpose defined by the Draft.

Such trends may also result in the leakage of personal and banking information of Armenian citizens, which would be beyond the control of the state.

The justification states that advertising for online gambling was banned until January 1, 2020, and was permitted subsequent to the legal amendment, while the advertising of organizations engaged in online gambling in the Republic of Armenia had in fact spread before the mentioned date and the ban referred exclusively to casinos and gambling; there had not been any legal restrictions regarding online gambling, thus the rationale in the Draft’s justification is completely erroneous.

Almost all companies providing advertising services have long-term advertising contracts, and some have carried out financial planning or assumed business credit obligations based on revenues from the gaming sector. On average, the gaming sector accounts for the following proportions of advertising budgets:

• Television: 30-40%
• Radio: 40-50%
• Internet: 40-50%
• Outdoor advertising: 40-50%

It is evident from these figures that all organizations operating in these sectors will incur irreversible losses, as there are no other products in the Armenian market that can ensure similar advertising volume and be willing to pay the same amount. Furthermore, the advertising ban will lead to a significant reduction in the price of advertising services due to decreased demand.

Considering the severe economic consequences of the pandemic and the war, deprivation of advertising budgets from the gaming sector could currently lead to the reduction of hundreds of jobs in the media sector, and in some cases, a halt or bankruptcy of companies.

Adapting to such game rules and realizing new financial planning requires at least 3-5 years. It should be noted that the Draft is the third initiative to restrict gaming sector advertising in the last two years, completely eliminating predictability in the advertising field and violating investors’ rights. No analysis of the previous restrictions’ effectiveness has been provided in the Draft, which once again demonstrates that the problem cannot be solved through advertising restrictions.

By depriving Armenian media companies of this crucial financial source and not proposing any alternative, the Draft endangers the freedom of the press, radio, television, and other information means guaranteed by the Constitution of the Republic of Armenia.

Researching international practices shows that similar issues are regulated not through advertising bans but through industry regulations, particularly through “responsible gaming” mechanisms that allow for the identification, monitoring, and prevention of gambling addiction.

All media organizations signatory to this letter are ready to implement “responsible gaming” social advertisements and other awareness-raising measures/programs for this purpose.

Taking the above into account, we propose to re-evaluate the regulations of the Draft, refrain from the advertising ban, and take measures towards the implementation of “responsible gaming” mechanisms and social advertising in Armenia, which is recognized worldwide as the primary means of combating gambling addiction.

At the same time, we request to organize public hearings in the plenary session hall of the National Assembly with the participation of all interested parties and a committee meeting regarding the Draft, during which we are also ready to propose alternative solutions instead of the advertising ban.

Media companies signing the open letter include:

• Television companies and broadcasters: Armenia TV, ATV, Armnews, Shant TV, Erkir Media
• Radio companies and broadcasters: Russkoe radio, Radio Van, 105.5 radio, Radio Hay, Radio Aurora, Kiss FM, Pop radio, Radio Jan, Europa plus, Avtoradio, Yerevan FM, Shanson radio, Marshal radio
• Outdoor advertising companies: Nushikyan, V.art Outdoor effect, Bigboard, Armada, Adverland, Image style, Country style
• Websites and online advertisers: 1in.am, Asekose.am, Armlur.am, Lurer.com, Aravot.am, Hraparak.am, Lragir.am, Mediamax.am, Shabat.am, 168.am, Blognews.am, Tert.am, Armsport.am, IP Marketing, Media Stream, Media Systems, Digital Caramel