According to the speech of Irina Sergienko (a lawyer, president of the Ukrainian Gambling Industry Assosiation, director of the Sergienko & Partners legal company, a consultant at Ukraine parliament) at the Fantasy Sport conference in Ukraine.
In her report, Irina Sergienko spoke about the concept of Fantasy Sport in Ukrainian legislation, how regulation of this business is currently carried out, and what legislative initiatives should be expected in the near future.
Statutory regulation of fantasy sports: yesterday, today, tomorrow
Yesterday and Today
For today, there is no legislation regulating Fantasy Sport activities in Ukraine. Therefore, it makes sense to talk about existing legal acts being in force at the moment, as well as those legislative changes that would be highly appreciated by the entire fantasy-community.
The concepts of “yesterday” and “today” in relation to Fantasy Sport in Ukraine can be boldly combined. In fact, it´s one and the same, since this specific activity appeared relatively recently on the country’s market. However, it is steadily gaining momentum, and, as world´s experience shows, it will be developing very quickly. Ukrainian legislation is usually much behind, but it is necessary to understand how the legislator considers the fantasy sport, in order to predict its possible initiatives.
The term of Fantasy Sport does not exist in Ukrainian Law, as well as its definition.
It would seem that once the issue is not resolved in the legal field, then you can do anything in the framework of this activity. However, you cannot. Traditionally, Fantasy Sport is considered to be a part of the gambling industry. And the most important question is not whether the Fantasy Sport is gambling from the players’ and market participants’ viewpoint, but whether it is from perspective of the legislators.
The only rule that contains the concepts of “gambling” and “gambling business” is Law № 1334 “On Prohibition of Gambling Business in Ukraine” adopted by Ukraine parliament in May 2009 after a fire in the arcade in Dnepropetrovsk.
The document imposed a total ban on the gambling business and participation in the gambling sphere. Before that, Ukraine had more than 10 thousand gambling establishments of various sizes, about 90% of which were constituted with slots, and less than 1% - with casinos.
At this stage, according to the Article 1 of the Law, “Gambling business is an activity aimed at organizing and conducting gambling in casinos, slot machines, in bookmaker offices, and electronic (virtual) casinos, carried out by organizers of gambling to receive profit”. This definition cannot be considered as complete one, but it enumerates certain kinds of activities, according to the legislator, are related to the gambling.
Despite the fact that the very name of Fantasy Sport is not on the list, it is necessary to carefully analyze what exactly falls under the definition of the "gambling".
Let us consider in more detail three defining conditions stated in the Law:
Returning to the given formulation in the Law: "Gambling includes any game that requires the player to make a bet…” we fix the first essential condition determining the game as gambling one.
Further, the Law states: “…that enables them to receive a prize, and the result of which depends on chance partially or completely”. The second defining feature is the ability for a player to get a win after the game, which in the case of Fantasy Sport means money.
And the statement "... depends on chance" is the third most important feature.
In order for fantasy sports to be part of the “gambling” concept from the point of legislator’s view, it must meet all three criteria.
Now we will analyze, how much Fantasy Sport corresponds to the above. The criteria "make a bet" and "to receive a prize" fit Fantasy Sport. But the third one is not so simple.
There are games of chance, or as they are also called, games of luck, as well as games of skills.
In the first case, the games can definitely be called gambling, if win or loss is mainly affected by luck. For example, casino’s roulette. The result depends on where a ball stops, but not on the player. The odds in the bookmaker offices, despite the fact that discussions are held about this, are considered as games of chance still more than 90%.
In Fantasy Sport, a player tests himself as a sports manager. The result depends on how well he chooses the team and simulates its game. It is a fundamental skill to define certain roles for the athletes in order to win. The same principle is used, for example, in the horseracing. But nobody considers it as a gamble. And there are many such analogies.
For example, it is the same about enterprise. To start a business, a person also invests money; he also wants to win by making a profit. Is he guaranteed to receive it? Not at all. There is a chance that he will not get anything. This can happen both for reasons beyond his control (force majeure), and because of an incorrectly selected team. For instance, an entrepreneur will select excellent specialists but, being a team, they cannot bring a desired income. Making comparisons, enterprise is also gambling.
Summing up, there is no definition of "antasy sport" in the legislation. According to one of the three criteria listed in the Law, it is not gambling. At least, there is no such practice. Therefore, according to Irina Sergienko, there is a reason to believe that Fantasy Sport is not banned in Ukraine.
However, the legislation can be updated at any moment, as the current gambling industry is actively discussed by the governments of many countries.
In recent years, there have been several legislative initiatives which have not been continued. One of them is the bill of the Ministry of Finance, dated May 16. Most likely, in the near future it will be slightly amended and submitted to Ukraine parliament for consideration. But if the fantasy-community does not affect this process in any way, the definition of "gambling" will remain the same, namely: “… any game that requires the player to make a bet…”, “...“…that enables them to receive a prize." Here almost everything is the same as it was. Next: “and the result of which depends on chance partially or completely”, that is an important and innovative moment. It seems that the wording has not changed too much. But being an experienced lawyer, Irina Sergienko, argues that real Fantasy Sport will be referred to the gambling industry very quickly. It will be enough a few precedents to happen.
In fact, all the bills being developed have a lot of defects. But to identify them, you need to be an expert and understand the industry in detail, to be, as they say, inside Fantasy Sport, knowing the smallest components and subtleties of this business and all its processes.
In the legislative plan, there is every chance of following the path of the USA. It is not the best example, but this kind of activity is not prohibited there. Therefore, now there are all chances to legalize it in Ukraine also.
Irina Sergienko noted: "In my understanding - it's still games of skills, but world experience shows that there is a subject for discussion. And so that we get normal progressive legislation, we all need to step up. "
She is sure that an independent organization should be established. Therefore, the Ukrainian Gambling Industry Association has been founded, that does not depend on any of the founders. And to date, there are already foreign companies participating in the gambling market: operators, providers, marketing agencies which are ready to support the association, without setting the mandatory condition for the promotion of certain ideas or solutions.
"Now we need partnership and professional support, so if someone has a desire to participate in this process, we are open for cooperation," Irina Sergienko emphasized.