Gambling Business in Ukraine: Trends and Prospects in 202010 november 2019
3.1. An Opposing Opinion
3.2. Other Aspects
The Casino Market team offers you to launch your own gambling business in Ukraine. This is a promising niche, the possibilities of which will truly open up with the adoption of relevant laws in 2020. We will tell you about the advantages and features of the Ukrainian gambling further in this article.
The question of whether gambling is allowed in Ukraine remains burning for 4 months already. In fact, it all started much earlier ― in June 2019, with the start of the parliament election race. One of the obvious candidates for seats in the Verkhovna Rada ― the “Servant of the People” party ― has repeatedly stated that gambling in Ukraine must be legalised. This item was listed as one of the priorities in the party program of future deputies.
In Ukraine, The Gambling Act №2285 was registered on October 17, 2019. Parliamentarians thought of it as of a reference bill and promised to adopt it during the winter session at the end of last year. Nevertheless, at the moment, the document is “stuck” in the profile committees that do not agree with some of its aspects.
In parallel with this, the opposition forces have managed to present seven alternative documents, the purpose of which is identical ― to legalise the gambling business in Ukraine. According to analysts, the bill №2285-2 that described the future gambling in Ukraine as clearly and thoughtfully as possible deserves special attention.
Answering the question of when they will legalise gambling in Ukraine, representatives of the ruling coalition say that it will happen in 2020. Many deputies are planning to vote already during the spring session. After this, the Gambling Act in Ukraine will come into effect on June 1 of this year.
Despite a little confusion among the parliamentarians themselves and the availability of several alternative bills at once, most experts are unison in opinions: gambling in Ukraine in 2020 must be legalised.
The need for such changes is associated with the following features:
- The deficit budget of the country. The legalisation of gambling in Ukraine is one of the ways of replenishing the public treasury, according to both deputies and market analysts. The opening of a casino in Ukraine can generate 5 billion hryvnias per year. Optimistic forecasts insist on a figure of 43 billion hryvnias, which can significantly strengthen the national currency. The main sources of the replenishment are money from the acquisition of licenses and taxes on income.
- The presence of a shadow market. The ban on gambling has been in force since 2008, and over more than 10 years, about 30 thousand illegal gambling halls have appeared in the country. As a rule, such establishments are “hidden” under the signs of lotteries and various online clubs. The volume of the shadow turnover is about 1.5 billion hryvnias per year. Obviously, it means that the government does not receive a huge amount of taxes.
- An opportunity to unleash the potential of tourism. The opening of casinos in Ukraine should be directly connected with four- and five-star hotels, according to the representative of the Executive Office of the President. It is also important to interact with vacation sites and tourist zones of the country: the capital and such large cities as Lviv, Kharkiv, Dnipro, and the entire southern coast, including Odesa. Thus, the authorities are planning to attract tourists, who will provide the country with a decent profit in the end. For example, Turkey followed such a suit, having legalised gambling in high-class hotels back in 1996.
- The need to fight for investment. Large gambling zones are successfully operating in Russia and Turkey, offering its visitors a well-developed infrastructure and an ability to relax in luxurious resorts and. In 2014, the first casinos opened in Romania, although before that, the country had actively banned gambling. Land-based casinos in Poland and Hungary operate in a normal mode, bringing good income to operators. On this path, it is important for the domestic market not to get lost but to offer investors really attractive investment conditions.
- Creation of new job opportunities. Legal gambling in Ukraine means thousands of vacant positions with high salaries. Analysts believe that the gambling sector in Spain is a good example because this country is comparable to us in terms of the size of the population. Here, the gambling industry operates with 120 thousand job opportunities, which also increases tax payments to the budget.
When you are thinking about how to open a gambling business in Ukraine, it is important to understand that the market regulation will be carried out via the licensing mechanism. The bill of the Cabinet of Ministers (№2285) provides for a limited number of permits. They will be distributed in the following way:
|Number of permits|
|Gambling halls with slot machines||160|
It is also planned to include the ranking of licenses according to the region. The largest quota will be received by big cities: Kyiv, Odesa, Kharkiv, Dnipro, and Lviv. The remaining permits will be evenly distributed among other regional centres.
Licensees will be chosen by bidding on the ProZorro website. To buy a casino in Ukraine, you will need to collect an exhaustive package of documents that confirm the registration, legitimacy, and financial standing of the company. A similar approach is provided for those entrepreneurs who are going to open a bookmaker’s office in Ukraine.
The cost of permits will be announced based on the results of electronic tenders. So far, this approach looks almost like a traditional auction where the winner is the one who offered the best price. A certain percentage of the transaction will be taken by ProZorro for the organisation of honest and transparent trading.
Many deputies (mostly from the opposition forces) take great issue with the licensing conditions stipulated by document №2285. The main concerns are related to the future monopolisation of the market through a limited number of permits. Experts believe that large companies will quickly buy all the licenses, making the gambling business in Ukraine inaccessible for foreign investors and small enterprises.
An alternative approach is discussed in the draft bill №2285-2. It provides an unlimited number of licenses and the lack of ranking depending on the type of gambling. Market regulation will be carried out on the basis of the heightened requirements for applicants: the estimation of solvency and the structure of the initial capital, the company’s business reputation and the reputation of its shareholders, contractual arrangements with major suppliers of the gambling equipment and the game content, requirements for premises, etc.
Among the main innovations that the Ukrainian gambling market expects, there are:
- The creation of a gambling development commission. It will include seven independent members who are not working for any gambling company in the country or abroad. The committee will be given control functions that will include the examination of license holders and their activities for compliance with legal standards.
- The connection of a company’s servers to the online monitoring system. This will facilitate the work of the commission and also allow the tax bureau to monitor the timely payment of taxes.
- The organisation of a special fund, the aim of which will be to provide social protection of those people who are suffering from ludomania. Each accounting period, the licensees will replenish the fund with payments.
Bookmakers will be provided with 80 licenses, which are distributed in the following way:
- 32 licenses ― a metropolitan limit;
- 4 permits each ― a quota of Dnieper, Lviv, Odesa, and Kharkiv;
- the remaining licenses will be granted to the regional centres and other large cities in the regions.
At the same time, there can be no more than 800 betting shops in the country. Accordingly, each licensee has the right to organise only 10 land-based betting locations but, for sure, there can also be less than 10. As for the online sphere, here, as is the case with the land-based business, no more than 10 Internet resources should operate under one license.
Before you open a bookmaker’s office in Ukraine, you need to complete certification of the used equipment and software. The advantage will be given to foreign bookmakers with vast experience in this field. First of all, experts expect to see on the market those companies that have their own departments for the formation of lines and odds for bets.
The government is planning to set a minimum price for permits, which will become the basis for the electronic auction:
- for land-based locations ― 375 subsistence levels (now, it is 788 thousand hryvnias);
- for online bookmakers ― 1240 subsistence levels (26.1 million hryvnias).
Almost all draft bills provide for strict requirements for those companies, the plans of which include the organisation of land-based casinos and gambling clubs. Such establishments can be located only in five-star hotels (200 rooms for Kyiv, and 150 for other cities). The minimum area of the gambling hall is 500 square metres, and the license itself will cost 39.3 million hryvnias.
Against this background, working on the Web looks much simpler and more preferable. Before opening an online casino in Ukraine, it is necessary to confirm the quality of software, the built-in applications (random number generator, payment module), and technical equipment (servers, modems, memory cards, and other equipment).
The requirements for the authorised capital are the same for both land-based operators and companies that operate on the Internet: 30 million hryvnias. It is quite understandable for a high-margin business. As for the cost of permits, the minimum price is 26.1 million hryvnias.
Some conditions aim to support fair play and prevent ludomania:
- Blocking of unfair Internet resources. The mechanism is described in the document №2285-2 but any limitation is possible only by decision of a court.
- User identification. This innovation is aimed at combating the platforms that allow minors to visit a casino.
Gambling in Ukraine looks quite promising, considering the fact that the reorganisation of this segment has been expected for many years. It is important for potential investors and entrepreneurs not to get lost in the whole variety of approaches and to manage to launch their own gambling project on time.
Do you want to know how to open an online casino in Ukraine or become a successful bookmaker? The Casino Market team knows the answer. We have vast experience in resolving various issues, and we are well-versed in the domestic legal framework. There are many fresh ideas in our arsenal, and we also offer several ready-made products that can be launched immediately.
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