When it comes to Ukraine, the question of casino entertainment remains open, as bans are accompanied by the appearance of slot machines on the streets.
The discussion has been ongoing for several years, with members of the Verkhovna Rada proposing new bills one after another, changing licence fees, tax rates, and other parameters.
However, there has been no progress whatsoever: gambling is banned in Ukraine, yet it continues to thrive and develop. Who benefits from this situation? Why were adequate laws not passed?
It is also worth mentioning the lottery business in the country, which is now not only legal and successful but also expanding, thanks to the opening of regular slot machines under the “protection” of raffles. Lottery operators open establishments ostensibly to sell tickets for the draws, but there are no actual coupons.
However, there is a wonderful atmosphere for those who do not need much and just want to play. Thus, the underground entertainment industry in the region thrives.
Is It Legal to Open a Gambling Business in Ukraine
Bets continue to captivate people, just as they did a hundred years ago. Today, the only difference is that one-armed bandits were replaced by modern slot machines.
Experts believe that it is useless to try to discourage customers from placing bids, so the best way to regulate this activity is to legalise it.
Ukrainian legislation prohibits gambling but permits raffles. This is defined by laws prohibiting the casino business and state lotteries.
Legal Manoeuvres
The concept “entertainment for money” assumes that it includes all activities related to the organisation of games such as slot machines and simulators.
This also means online platforms, regardless of where their servers are located. The ban also applies to bookmakers.
The law also defines gambling as any content in which players make deposits to participate in sessions, including electronic payment systems, and receive (or do not receive) prizes and rewards.
This legislative act was passed in 2009 and then vetoed by then-President Viktor Yushchenko, who considered that it should be finalised. However, the parliament, then headed by Yulia Tymoshenko, decided to pass the aforementioned law.
These events clearly demonstrated the attitude of the authorities, who violate their own rules, as Yushchenko later noted, stating that the Verkhovna Rada does not prioritise rights and freedoms but is merely seeking political self-promotion.
One cannot disagree with the former president, as the parliament has made many mistakes. One of them was the adoption of Article 4, which made previously issued gambling licences invalid.
Thus, the private casino business disappeared, and the country adopted a policy of rejecting not only ludomania but also everything related to the industry.
At the same time, the decisions of the authorities are somewhat surprising, as the established penalty for violating them is a fine of 8,000 of the subsistence minimum.
Of course, this amount has evolved due to changes in this indicator, which in 2009 was approximately 6 million hryvnias and in 2012 was 12 million.
The essence is the same: after paying the penalty, operators allegedly closed their establishments, but quietly continued working elsewhere and making profits.
Along with the fine, the law clearly stated that the government can confiscate gambling equipment and the earned income for its benefit. Naturally, the owners of such wealthy companies easily negotiated with public bodies to relax such measures.
Anyone who has ever read the law signed in 2012 by former President Viktor Yanukovych knows how the lottery business functions in Ukraine. The provisions of the document established an absolute monopoly on raffles, meaning that they belonged only to the state.
Article 4 of the Act stated that private gambling was supposedly permitted in the country. However, neither advertising nor the sale of tickets, nor any other actions, were permitted unless the lottery had national status.
Several notorious provisions regarding steps prohibited in Ukraine were listed in this point of the law:
- organisation of raffles;
- distribution and sale of lottery tickets;
- offering draws to the citizens located abroad;
- promotion of raffle brands;
- organisation of lotteries with progressive jackpots if payments are accepted behind the walls of one location;
- provision of services by persons not employed by the state.
All these points sound like a mockery of private business owners. After all, every condition formulated in the law ends with the same words: “If the lottery does not have the national status” or similar expressions.
Thus, the Yanukovych regime put an end to private enterprise in the lottery industry and took control of a huge part of the casino niche built on human weaknesses and earning a lot of money from it. Now experts say that legalisation of the entertainment sector in the region is necessary, but they also claim that it is impossible.
About the Lottery Business in Ukraine
It is almost the same as betting, because offline locations, known as “gaming halls” and branded as the “state operator”, began to appear under the guise of raffles.
People who missed casinos came to play, often finding small cafes or bars that served alcohol, which drew many visitors. The network connection was also established, allowing gamblers to launch sessions at home rather than at a club.
The document that defined 2 types of raffles and acted as the legal basis for the adoption of the lottery bill was even more interesting. This fact just struck the analysts, as the law explicitly permitted betting.
According to the legislation, instant and standard draws were allowed in Ukraine. The former were considered a raffle in which winnings (or losses) were created when the ticket (or other document confirming participation in the session) was produced, before its distribution.
During the lottery, customers placed bids and learned whether their coupons were successful. The winnings were then collected in the gaming hall.
In European countries, instant draws are defined as tickets with erasable control strips, revealing information about the rewards (or their absence).
In Ukraine, raffles similar to slot machines have appeared. There, the coupons are the way to claim winnings in a state-owned location. The only difference is the method of payment.
Lottery Business Licensing in the Jurisdiction
Operators can obtain a permit based on a document that classifies such draws as a type of economic activity.
Article 9 of the law mentions the issuance and organisation of raffles as such a kind of service. A certificate obtained by a company cannot be transferred to other legal entities. But this is irrelevant: in any case, the legislation clearly states that a licence is granted only to state-owned brands.
The situation remains the same as it was under Yanukovych: lotteries belong only to the government, and gambling halls can offer instant solutions.
Both employees and customers prefer to hide their faces (photos or videos are prohibited on these premises). However, in casinos, there are often no tickets advertised on signs in front of these establishments.
As a result, state lotteries remain monopolies, and private individuals or ordinary people cannot get into the “state ranks”: after applying for a licence, they have to wait for who knows how long and without result: after all, such issues are considered by the local Cabinet of Ministers.
To date, permits have been issued to only 3 operators: the Ukrainian National Lottery (UNL), an organisation called Patriot, and M.S.L. All of them provide gambling services, both offline and online.
How to Make Money When the Casino Niche is Illegal
Even if, by some incredible chance, entrepreneurs obtain a certificate and become state-owned operators, will it be possible for them to generate income from their business while hiding profits?
Government lotteries raise revenue through draws that allow Ukrainians to win jackpots worth millions of hryvnias. For example,"M.S.L. offers Lotto-Zabava and Megalot, where people can win from 3 to 8 million hryvnias. UNL conducts 3 raffles, the most famous of which is Keno.
If the revenues of state lotteries are treated as funds from ticket sales, and each organisation contributes a significant percentage to the public budget, it can be assumed that the profits are quite small.
By sending money to nursing homes or orphanages, the government promotes the value of raffles, which are claimed to be sponsored.
In fact, state lotteries collect very little income. Behind the million-dollar draws, there are regular gambling establishments: casinos and bookmakers. Their work brings the actual money.
For example, M.S.L. offers an instant draw called Golden Triumph. However, on the organiser's official website, customers are offered a different option: to choose the nearest gaming hall where they can play and collect their winnings.
Furthermore, each of these companies operates its bookmakers, from which the state lotteries also earn a decent amount of money.
In other words, the activities of these organisations fall under the definition of gambling, which is prohibited by law. But today, no one thinks about this anymore, because it is impossible to argue with the government. Entrepreneurs will only make things worse for themselves.
Moreover, the casino legislation, which private business had pinned its hopes on changing, can no longer be taken seriously.
For so long, the authorities have been pretending to be fair judges who try to support gambling. They do it, but only unilaterally, having invented know-how such as government-organised raffles, right under the nose of Ukrainian law.
State Lotteries: the Underground Entertainment Sector
By establishing a monopoly on gambling in the country, legislators have deprived it of healthy competition: players have nowhere else to go but to M.S.L. or UNL, where, by the way, they will not be deceived.
Why run into trouble when it is possible to earn millions of hryvnias? All casinos have the right to configure their slot machines under a scheme that is favourable for them, not the clients.
For example, in UNL locations, according to players, there is absolute chaos, even though these establishments are monitored by law enforcement agencies (according to the official version).
This state-owned lottery, like M.S.L., undoubtedly pays taxes to the budget. But are all revenues taken into account? Of course not, especially considering that the owners of these projects are private investors.
According to media reports, UNL belongs to a Swiss company that offers 7 lotteries. As for M.S.L., people can find 13 popular products on its official website.
The Main Things about the Gambling Business in Ukraine
While the government argues about the casino industry and lotteries, people are content with what is available to them — participation in the draws of 3 state lotteries. But they have another option: illegal betting locations owned by private investors.
Everyone knows that the underground sector is thriving in this country. If the police raid a gaming establishment, the next day, it will open elsewhere and continue working successfully.
The conclusion is clear: it is impossible to start a casino business in Ukraine until the authorities decide to break the cycle of imperfect legislation, state lotteries, and underground wagering.
However, parliament is content with the current state of affairs; no one is rushing to change it, so the legalisation of gambling in the state remains on the verge of fantasy.
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