For the past several months, the gambling legislation in Ukraine has remained one of the most crucial and talked-about issues in the industry. There’s a reason for all the attention: the potential appearance of a new market will open new opportunities for all possible participants in this concrete business sphere.
Now we can state without a doubt that the status of the process has switched from “potential” to “in action” after the Verkhovna Rada enacted legislation that is set to regulate gambling activities throughout the country. It’s also intriguing that the initiative came directly from President Volodymyr Zelensky, who, in December 2019, severely criticized the parliament for its initial failure to adopt the law at the first reading.
After the revision, law №2285-d had the letter “d” added to its title (the equivalent of the English word “revised”), and it was adopted on January 16. In less than a month, the opinions within the Verkhovna Rada delegates have changed significantly — 260 members’ votes were in favor of the legislation, 108 votes against it, 10 of members have abstained, 22 could not make up their mind.
Having been given the green light in terms of official recognition from the parliament’s side, law №2285-d has taken a massive and noticeable step forward towards gambling legislation. However, what will all the types of gambling look like, and what should operators expect from them?
Online casinos usually attract regulators’ undivided attention for the reason that controlling and regulating cyberspace while avoiding loopholes is incredibly problematic.
According to law №2285-d, operating an online gambling business will not be possible without a certain license. Additionally, an online platform offering its services must be certified, be connected to the online monitoring system, and belong to the .UA domain, as well as providing its audience an opportunity to limit their betting activity and the time spent on the platform of their own accord. Another one of the requirements is sufficient financial resources to start a business and provide winners with payouts (this would be extremely useful if an operator went bankrupt and its clients became victims of the situation).
It’s worth mentioning that poker tournaments conducted through an online platform are addressed by a separate point of the law. Long story short, arranging poker tournaments is prohibited unless the operator has a specific license for this particular online activity. It also should be noted that platforms mustn’t give access to their hotspots to any third party, no matter what — it’s prohibited by the law, as simple as that.
Generally speaking, there are just two licenses available for operating an online casino: the first one is a license for online gambling activity, and the second is a license to organize online poker tournaments. Both of them are issued by the regulator, which sets all the requirements and details for issuing licenses. To get more detailed information on the license costs, read our article “How to Start a Gambling Business in Ukraine.”
On the one hand, the potential for land-based casino legislation is huge. However, like any other business with huge potential, it requires operators to satisfy a list of stringent terms and conditions.
Land-based casinos may only be located in 5-star hotels with at least 150 rooms in Kyiv and at least 100 rooms in other Ukrainian cities. There are some exceptions to the rule.
Licenses for investment projects will be without fees for the first ten years. Some operators might wonder why these licenses might be free of charge.
Building an entire gambling complex from scratch is an expensive project. These kinds of investments come with tremendous expenses and are considered long-term projects. That’s why the initial ten years of the project are seen as a preparation period, and thus investors will not be required to pay for having a license. However, after the decade has passed, in order to continue their business activity, long-term investors will have to pay fees, according to set regulations.
Additionally, in land-based casinos located in cities with a population of more than 500,000, there should be a minimum of 10 gambling tables (at least two of which must be dedicated to roulette wheels). In cities with smaller populations, casinos will be required to have five gambling tables, one of which must be a roulette table.
Working hours for staff should be determined by casino management. However, terms that apply to the hospitality sphere must also be taken into account.
The law also regulates the possibility of arranging poker tournaments within such casinos.
All of the above applies to land-based casinos. However, it is important to bear in mind that there are also licenses for different kinds of gambling: for gambling halls, for gambling tables, for roulette tables, and for slot machines.
A license for gambling halls can be issued for a fee. The cost is equal to 750 minimum wages (UAH3,542,250 or USD141,690, respectively). To compare, a license for a slot machine costs six minimum wages (UAH28,338 or USD1,133).
Slot machines can be used in specialized halls or rooms in 3-,4-, or 5-star hotels with a minimum of 50 rooms in Kyiv and with a minimum of 25 in other Ukrainian cities. It also should be added that non-residential premises can be considered suitable for gambling activity with one condition — its total area has to be of 300 sq. m. in Kyiv and 150 sq. m. in other parts of the country. The licenses will be issued by electronic auction.
What to expect from the betting market is a crucial question, as many experts believe that, for the most part, law №2285-d satisfies exactly this particular segment.
Land-based betting shops require a license to conduct betting activities (the cost of which is 120,000 minimum wages, that’s to say UAH556,760,000 or USD22,670,400) must hold the permission for operating a betting retail shop. Betting shop operators will be required to hold documentation proving the right to the property.
Moreover, there is a set of technical requirements which operators must meet or risk facing consequences. Law №2285-d implies that a betting retail shop must be located in 3-,4-, or 5-star hotels with at least 50 rooms in Kyiv, or 25 in other Ukrainian cities. The area of a betting hall must be not less than 50 sq. m.
Another requirement is to connect a betting point to the offline system, which monitors a variety of sportsbook events, the placement of bets, payouts, and more. Regulators are currently testing a system for issuing official certification. Bets can be accepted in cash, by card, or in an electronic currency that does not go against Ukrainian law.
Online betting comes with much smaller expenses. To start an online betting platform, operators will pay 80 minimum wages (UAH377,840 or USD15,174).
Online systems have to meet all the requirements set by regulators. The crucial ones are providing official events and betting odds, placing bets through the system, protection of personal data, and detection of external fraud. On top of all of that, there is a platform certification conducted by the regulator. We want to note that the audience of a betting platform can be either local or international.
Betting licenses for both betting retail shops and online betting platforms are valid for up to 5 years with an annual fee.
To a certain extent, poker was constrained by regulations during the period when gambling was illegal in Ukraine.
As a type of gambling, poker didn’t have the smallest chance to exist under the current law. However, as a kind of sport, the game had been permitted for the last decade. The game had been growing in popularity despite attempts to eliminate it.
The new law recognizes both online and offline poker. Operators who have chosen online poker are required to hold a license for organizing and conducting poker games. The cost of the license is the equivalent of 2500 minimum wages (in 2020, the sum will be in the vicinity of UAH11,807,500 or USD474,196), and the license will be valid for the next five years. All operators’ actions will be monitored by regulators.
There is a slightly different situation when it comes to organizing land-based poker tournaments. Regulators will decide whether to issue a license for a poker tournament. At the same time, such licenses are absolutely free of charge. However, this does not mean a limitless number of inquiries from those who are interested in organizing poker tournaments will all be met with approval. According to the terms of the law, an organizer is not allowed to conduct more than one competition within a 6-month period, and the tournament cannot be held for longer than two weeks. The exception is the World Series of Poker, which has special privileges.
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For the whole decade, national lotteries have remained the only legal type of gambling in Ukraine.
After enacting law №2285-d at the first reading, we can state without a doubt that lotteries are now divided into three groups: instant lotteries, lottery tickets, and combined lotteries. However, technically, all of them are still under the umbrella of the national lottery. Also, operators will be responsible for all of the expenses for running the lottery.
Regardless of the number of interested parties, the regulator will select only three operators through electronic auction. Among the requirements for successful candidates, operators must prove their involvement in the lottery business by demonstrating 3 years of previous experience in the market. Operators who win the auction will get a license allowing them to conduct any lottery activity (if they meet all the rest of the requirements). The license will be valid for the next five years.
The most important requirements include proof of access to financial resources of at least 100,000 minimum wages and offering a certain percentage of lottery revenues as the prize. Operators must stick to the following proportion: from 50% to 60% of lottery revenues of bets should constitute payout expenses.
There are other requirements, including legal ones like operators’ registration and business plans, not to mention a set of technical and advertising requirements and prohibitions, most of which are identical to all types of gambling activities.
The adoption of law №2285-d is paving the way back to gambling regulation throughout Ukraine and providing the necessary means for removing gray areas within an industry that has been flourishing in the shadows for the last ten years.
The loopholes that existed previously allowed the unregulated gambling business to operate successfully. To take back control and redirect revenues from the gambling industry to other incredibly important social spheres is a decisive and forward-looking step on the Ukrainian government’s part. The regulation process will take some time. However, most importantly, the first step towards regulating the unregulated industry has already been taken.