Legal gambling in Ukraine 2022

2020 was full of surprises, but not all of them were unpleasant. One such outlier was the re-legalization of the Ukrainian gambling market after 11 long years. Droves of foreign and domestic investors flocked at the opportunity, but is it worth the investment? Let’s have a look at the past and present of the Ukrainian online casino and betting market. 

Uneasy History 

Back in the 90s, gambling was legal in Ukraine, but not particularly well-regulated. The country gained independence after the dissolution of the Soviet Union, and like many other markets at the time, casinos and slot machine halls were free to operate almost completely unfettered. The industry quickly accumulated a bad rap in society: slot machines were set up in many public places with no barriers for children, player safety was unheard of, and casinos came to be associated with organized crime. 

Little by little, the government tried to impose regulations: in 1996, the new Law On Patents for Certain Enterprises instructed operators to purchase a patent from the government that allowed them to stay open, and in 2002 the Cabinet of Ministers discussed an automatic control system that would track movements of all funds in the casino business. 

During the 2000s numerous other laws were drafted and then subsequently rejected by the Rada. These efforts were mostly focused on the subject of licensing and taxation — or in other words, the government's cut of the profits. 

The focus changed dramatically after a fatal fire in Dnepropetrovsk in 2009. Public discourse shifted towards problem gambling and player safety — both mental and physical. 

After some discussion, Ukrainian legislators chose a radical way to address the problems and anonymously moved to ban all gambling enterprises in the country: casinos and sports betting, both online and land-based. Then-president Viktor Yushchenko initially refused to sign the law, citing loss of jobs and tax income as reasons, but after a rather quick political battle, the law came into force. 

New Ukraine — New Legislation 

All forms of gambling stayed illegal for a decade. Several times during the course of these years, attempts were made to bring the industry back from the dead, but all potential laws ended up blocked by the Rada. In 2019, Ukrainian president Volodimir Zelensky asked the government to find ways to legalize the industry. As it wasn’t the first time the topic was discussed in the highest echelons of government, many experts were skeptical. However, a year later, the skeptics were proven wrong when the bill was suddenly passed. 

New legislation introduced the licensing regime for online casinos, land-based venues for gambling and betting, lotteries, and testing laboratories that offer services to the industry. 

The implementation and oversight of the new law are handled by KRAIL, the newly created Regulatory Commission on Gambling and Lotteries (the English version of the website is still under construction). 

A big concern for many investors was that while legal operators are burdened by compliance-related expenses, like newer slot machines, KYS, and monitoring systems; the black market — which suffers no such overhead — will continue to compete and cut into the profits of the legitimate business. So far, Ukrainian authorities have been doing their best at proving the skeptics wrong. In 2020, they blocked 59 illegal websites, according to reports, and in 2021, 130 more illegal iGaming sites suffered the same fate. 

Land-based venues that try to stay off the grid also became targets for authorities. For example, in June 2021, a series of illegal gaming halls disguised as stores or kiosks were discovered and fined.

Also in June 2021, KRAIL implemented a national registry of self-excluded and excluded players, aimed at protecting players that exhibit problematic behavior. A period of exclusion can last anywhere from half a year to three years.

A player can be put on the list voluntarily, by court order, or at the request of a close relative or legal representative (for a period of six months).

Advertising restrictions are in line with European standards:

• Advertising is prohibited in daytime
• Responsible gambling warnings should be displayed 
• Gambling should not be presented as a guaranteed or easy source of income
• Ads should not be aimed at children or other vulnerable groups

The legislation is now in the process of constant revision and improvement. A number of bills are pending approval, including one that will introduce a new tax rate of 10% of GGR for all operators.

As it stands now, casinos and bookmakers are taxed 18% of GGR, gambling halls 10%, and lotteries 30%. All operators also pay a corporate income tax of 18% that applies to all companies regardless of industry.

Players’ winnings are also taxed at a rate of 18%. Ukrainian players also pay an additional military fee of 1.5% on their winning, as it applies to all sorts of income. 

Getting a license 

To apply for a license, a company must be registered in Ukraine, have a minimum capital of UAH30,000,000 (approx. €926845 in January 2022), and have no ties to states designated as aggressor countries. 

Many costs associated with the license are calculated based on a minimum wage and scale up or down, as this sum changes in any given year.

In 2022, the minimum monthly wage is 6,500 Ukrainian hrivnas, according to the state budget.

Here are some of the current costs of various gambling licenses:

It’s important to note that poker isn’t considered gambling when played as a sport, but that classification only applies to land-based poker tournaments. 

All licenses are valid for 5 years, and the fees are split into yearly installments, which means that the operator doesn’t have to pay the entire sum upfront. 

Land-based operators will have to adhere to some more rules. In Kyiv, a casino must be located in a 5-star hotel with more than 150 rooms. A casino should be at least 500 m2 and be at least 500 meters away from any educational institutions. It should employ no less than 50 people, have at least ten gaming tables — two of which must be roulette tables — and 50 slot machines. 

For other cities, the rules are a little lighter: a hotel where a casino is located can be a 4-star venue with no less than 100 rooms, or, alternatively, be an out-of-town resort with at least two buildings and a territory of 10,000 m2. If the city has a population of fewer than 500 people the minimum requirement for tables is five(with at least one roulette table) and 20 slot machines.
 

Uncertified slot machines and machines that accept cash are not permitted. Cabinets that were manufactured prior to 2019 are also not legal — operators have to install newer units that can interface with modern monitoring systems.

Land-based gambling halls have to be in a three-star hotel with at least 25 rooms (50 if it’s in Kyiv) in localities with no fewer than 10,000 residents. The area of the gambling hall should be 300m2 or more.

Like casinos, a gambling hall should be more than 500 meters away from schools and have no less than 50 slots. 

For betting on horses, Ukraine offers a separate totalizer license. This license is issued for a single betting shop located on a racecourse, and allows the shop to accept bets for the races that take place on this racecourse. Such a license costs 1 minimum wage. Sports betting shops can also be located near a racetrack, or in a hotel (same requirements as a gambling hall). 

The Ukrainian market in 2022

Obviously, in terms of business, a year is a very short period of time, and the market is only starting to function at full capacity. Legislation is being revised, so taxation and fees, and also details of the licensing regime, are expected to change (hopefully for the better) in the near future. 

For international investors, Ukraine is still a difficult market to enter — KRAIL doesn’t have an English-language website, the legislation is still subject to change, and the rules are strict. But with a population of more than 44 million people, Ukraine is poised to become the biggest legal market in the region.

If you are thinking about starting a business in Ukraine, it’s a good idea to discuss it with specialists that understand the local licensing regime and have experience with the application process. Slotegrator’s own legal experts are one such option. They can help you evaluate the pros and cons, understand if it fits your budget, and walk you through the process step-by-step during a free consultation. In any case, it’s a good idea to do research and study your target market. Always look before you leap.