The bill No. 2285-d was under study by the Verkhovna Rada for more than six months, 3600 amendments were made to the original text, and the final vote was postponed three times. On August 11, the president of Ukraine approved the law. On August 12, the full text was promulgated in the parliamentary publication, and on August 13, the regulations came into effect. This, of course, turned into one of the most popular gambling news of 2020.
First of all, it should be noted that there will be strict requirements for the location of gambling establishments. Thus, they must be at least 500 meters away from such institutions as kindergartens and schools. The casinos will be able to operate on the basis of five-star hotels. In the original version of the draft law, four- and five-star hotels were specified.
The principle of safe gambling is implemented through the introduction of a unified Register of Self-Restricted Persons. The system is available for clients who are at least 21 years olds. User identification is also required.
The legislator introduces administrative and criminal liability for operators for violations related to allowing certain persons to gamble. For the provision of services to a person under 21 years old or to someone who is listed as a player with limited access to gambling, the administration of the gambling establishment will pay a fine of UAH 2 million. Besides, operators will be obliged to carry out financial monitoring of the source of origin of the client’s funds if we are talking about an amount over UAH 30,000.
The players themselves will be given a special right. A citizen can independently limit his/her visits to gambling establishments by submitting an application to the state regulator. The legislator has provided for the minimum period of self-exclusion – 6 months – and the maximum – three years. It is prohibited to withdraw such a petition after approval.
Requirements for operators and the cost of Ukrainian gambling licenses
Firstly, we will start with general requirements which will be useful to know for all those who consider providing services of gambling in Europe. Thus, according to the regulations, the organizer of gambling can be only a legal entity – a resident of Ukraine – which was formed and conducts activities in Ukraine in the manner prescribed by law. The main activity of such an entity must be the organization and conduction of gambling activities.
The authorized capital of the company must be formed by cash in the amount of at least 30 000 000 hryvnias. At the same time, the entity must be able to provide official documents (or their copies) about the source of the authorized capital, certified in the prescribed manner. Besides, the applicant is obliged to establish a deposit account serving as a guarantee for the payment of winnings in the amount of 7 200 minimum wages.
Owners, a chief accountant, and directors of the company wishing to get the license must have an impeccable business reputation and not be citizens of a state that has been recognized as an aggressor in relation to Ukraine. Besides, if the applicant owns any share of a resident in the aggression nation, the license cannot be obtained as well.
Overall, organizers of gambling activities and their officials must meet the requirements indicated in the referred Law, as well as the qualification, organizational, financial, and other requirements stipulated in the relevant licensing conditions.
There is also information regarding those are who are not allowed to organize gambling activities in the territory of Ukraine. The list features:
- financial institutions, including banks;
- enterprises and institutions that are included in the Register of non-profit organizations;
- legal entities that are forbidden to organize and conduct gambling activities according to a court decision.
And now we will talk about more specific requirements concerning each of the sectors.
The law provides for special gambling zones. In Kyiv, they will be on the basis of five-star hotels with the number of rooms from 150, with an investment license – 200. In other localities, such hotels must have at least 100 rooms. If the casino is located outside the city, the complex must include, at a minimum, two buildings with a total area of 10 thousand square meters and a five-star hotel.
Gambling zones are approved by the Cabinet. There are also requirements for the area, the number of attractions, and the capacity of the casino, depending on the number of residents in the locality. The minimum area is 500 square meters, in the gambling zone, it should be over 10 000 square meters. In cities with a population of up to 500 thousand people, the operator must set five gaming tables, one of them with a roulette wheel, 20 slot machines, and employ 20 people. In localities where over 500 thousand people live, each indicator is multiplied by two.
| Type of a license | Validity period | Cost of a license in minimum wages | Cost of a license in hryvnias as of September 2020 |
| License for the organization and conduction of gambling activities in casinos | 5 years | 60 000 for Kyiv | 300 000 000 |
| 30 000 for other cities | 150 000 000 | ||
| License for a game table with a roulette wheel | 1 year | 175 | 875 000 |
| License for a game table without a roulette wheel | 1 year | 90 | 450 000 |
Bookmakers. They will also be located in special gambling zones, based on hotels. In Kyiv, the requirement is at least 50 rooms in the complex, outside the capital of Ukraine – 25. It is also possible to set up betting offices at the hippodromes. Its minimum area must be 50 square meters. The law requires the installation of an online monitoring system for each machine and gambling equipment, alarms, and other means of protecting information from interference. Customer identification is also required here.
| Type of a license | Validity period | Cost of a license in minimum wages | Cost of a license in hryvnias as of September 2020 |
| License for the organization and conduction of betting activities | 5 years | 30 000 | 150 000 000 |
| License for a betting shop | 5 years | 30 minimum wages must be paid every year | 150 000 hryvnias must be paid every year |
| License for the organization of betting activities on the hippodrome | 5 years | 1 | 5 000 |
Halls with slot machines. Within the same gambling zones, the capacity must be no less than 50 rooms in the capital and 25 in other cities. There is also an exception: is prohibited to set up halls with slot machines in localities with less than 10 thousand inhabitants. The area of the hall must be non-residential and exceed 300 square meters. There the operator will place a maximum of 250 slot machines, 50 each in one room. What happens in the hall should not be seen through the windows.
| Type of a license | Validity period | Cost of a license in minimum wages | Cost of a license in hryvnias as of September 2020 |
| License for the organization and conduction of gambling activities in the halls with slot machines | 5 years | 7 500 | 37 500 000 |
| License for a slot machines | 5 years | 6 | 30 000 |
Internet gambling. After legalization, gambling can also be carried out online. The operator is required to obtain an advisory license, provide services only from the site under a personal brand, accept bets, and pay out winnings through a registered payment system. The bank is obliged to refuse the transaction if the provider does not confirm the existence and validity of the gambling license. And the regulator may require the operator to stop or restrict the operation of his/her website if there is no permission for such activity.
| Type of a license | Validity period | Cost of a license in minimum wages | Cost of a license in hryvnias as of September 2020 |
| License for the organization and conduction of gambling activities on the Internet | 5 years | 6 500 | 32 500 000 |
| License for the organization and conduction of poker games on the Internet | 5 years | 5 000 | 25 000 000 |
A few words should be also told about the future of lotteries. Only three operators with at least three years of experience will be able to organize lotteries. The license will be issued for a period of 10 years and will cost 28 000 minimum wages. According to the regulations, it is forbidden to reproduce reels that simulate the operation of a slot machine in lottery equipment. Any lotteries that have the visual characteristics of casino games are prohibited as well. To play the lottery, a person must be at least 18 years.
Gambling and Lottery Regulatory Commission: formation procedure and its powers
Prior to the signing of the final text of the law, deputies, and experts in this field repeatedly drew attention to technical errors in the procedure for approving candidates for the Commission. Now the formation procedure is as follows:
- The Commission on Senior Corps of the Civil Service organizes and conducts a competition, during which it determines candidates for the position of chairman and six members of the regulatory body.
- The commission submits candidates for approval by the Cabinet.
- Then the Prime Minister submits the same candidates to the Cabinet.
- After that, the government approves the composition of the regulator within 10 days.
The same candidates must be submitted to the Cabinet of Ministers twice. Obviously, one link is superfluous here, but until the legislators decide on the exact procedure, the Commission cannot be created.
Section II of the Law specifies the powers and responsibilities of the regulator. They include a standard list for the issuance and revocation of licenses, dispute resolution, monitoring, control, and prosecution for violations of regulations.
The Commission approves the procedure and format for entities’ reporting, and also has the right to submit draft laws and by-laws that relate to Ukrainian gambling. According to the authors, the regulator is obliged to create favorable conditions for attracting investments in the sector, to ensure equal competitive conditions for participants, and cooperate with regulators of foreign countries to expand the domestic market.
The Commission, among other things, administers the operation of the state online monitoring system. This is a specialized hardware and software set that collects data on the work of a gambling operator offline and online in real time. The system receives information about accepted bets, paid winnings, and other operations that are included in the concept of gambling. As the legislator claims, the purpose of such measures is to protect information from illegal interference and ensure the principle of responsible gambling.
According to the provisions, the organizers of gambling activities are obliged to connect each unit of gambling equipment (land-based and virtual) to the state online monitoring system. The latter itself will be certified by a Ukrainian or foreign laboratory determined by the regulator. The connection to the system is free.
The authorities do not report on the stage at which the preparation of online monitoring is and whether it has begun at all. The section “Final Provisions” indicates that the norms on the operation of the system will come into effect from the moment it is put into operation, but no later than two years from the date of publication of the Law. The licensee is given six months to connect to the system. It is also indicated that during this period (maximum 2 years and 6 months), the sanctions for non-connection do not apply to operators.
Thus, there are two options for the development of events: either the operators will operate relatively uncontrollably for two and a half years, or the authorities have already prepared the appropriate software and a plan for its operational implementation for the period while work is underway to create the Regulatory Commission.
Ukrainian gambling license: information about tax rates
As a reminder, gambling activities, except for the lottery, were banned on the territory of Ukraine since 2009. At the same time, the Tax Code includes norms that, during the entire restrictive period, established tax rates on income received from the organization of such activities. Slot machines (Article 136.4.1) and bookmaking activities, including casinos (Article 136.4.2), are subject to a tax of 10% and 18% of income, respectively. Bookmakers additionally pay tax on income from betting, which is calculated separately from the total income and does not reduce the amount of the total tax (Article. 141.5.1). The norms were included in the Tax Code of Ukraine in 2016 and in January 2020. There are no new amendments regarding online gambling.
On July 19, when the bill on the legalization of gambling had already been in the committees for six months, the Verkhovna Rada received a draft of amendments to the Tax Code of Ukraine relating to the regulation of the sector. It stipulates that bookmakers and sweepstakes will pay 5% income tax, online poker, and casinos – 10%, slot machine halls, including ones at casinos – 12.5%, lotteries – 10%.
Responsible gambling principle
It is clearly implemented in the advertising regulations. There is a list of resources through which it is prohibited to promote the services of gambling operators from 6 a.m. till 11 a.m. Among them are TV and radio, print media, public places, and cultural institutions. Besides, restrictions on the content of advertising have been introduced: it is forbidden to feature persons who are under 21 years old and photo models.
It is prohibited to instill an opinion about an easy win and make appeals to the most vulnerable persons. 15% of the advertising message must have black text on a white background warning about the dangers of gambling. The purpose of all this is, of course, to prevent the appearance of gambling addiction among players.
What is the future of gambling in Ukraine?
Since the publication of the text of the draft law, experts have been actively commenting on how controversial the norms are and how exactly they will affect the situation in the country. Along with progressive provisions from international practice, the document includes contradictory articles, misprints, and obvious collisions that cannot be implemented in practice. Tax rates have not been approved, and the cost of the license is unreasonably high. In order to create an effective gambling environment in the jurisdiction, members of the parliament need to carry out large-scale work to amend the approved law. At this stage, the experts agree that the document in this form would not be able to establish the rules of the market. The law is an anti-motivation for legal businesses to enter the Ukrainian market while providing new opportunities for the shadow sector.
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