Change of license conditions in Ukraine

May 5 this year, The Ministry of Finance of Ukraine released a draft regulation on new licensing terms for lottery operators at the official site.

Under the bill, lottery business to be run only by large operators which:

  • Have at least 10 years of experience in the industry;
  • Have not less than 5 000 land based ticket sale offices;
  • Have not less than 5 000 electronic betting terminals;
  • Permanent separated departments operating in localities inhabited with not less than 500 000 people.

Besides, the operators registered in Ukraine and not listed in the sanctions lists will be allowed to organize lotteries. If you comply with all conditions, you can apply for a license to organize and operate lotteries.

It is suggested that licensees should be state-owned banks of Ukraine - Oschadbank, PrivatBank, Ukreximbank, and others. The acquisition of license will be carried out with a one-time payment of 100 000 of minimum subsistences or more than 168 million UAH. In addition to license purchase, the operator is required to pay an annual fixed payment for each ticket sale office, as well as current payments of public taxes.

According to the Ministry of Finance, the Ukrainian lottery market generates about 40 billion UAH annual revenue. In 2014, the total revenue of lottery operators was 12.4 billion UAH, while only 3% of this amount was paid to the budget (318 million UAH).

The authorities are confident that new conditions will contribute to the state treasury and finally solve the problem of licensing and regulation of the lottery market in Ukraine. Banks’ access to the lotto market should promote healthy competition and demonopolization. But is everything as rosy as the officials talk?

Expert opinion

According to gambling expert, Zoryana Toporetskaya, the bill has a major disadvantage, which could lead to the legalization of slot machines currently banned in Ukraine.

In the draft law, there is no word about licensing and certification of software for lottery terminals. This will allow you to install gambling machines disguised as lottery terminals or modify terminals to "one-armed bandits". Thus, a lack of legislative provisions could lead to the legalization of gambling.

Other experts insist that the bill will cause a monopolization of the market by one operator, since at the moment, in Ukraine, there are only three lottery companies which meet the licensing conditions, two of which are on the sanctions list and, according to the Ministry of Finance, will not be allowed to obtain permission for lotto-activity in the country.

Let us recall that since 2014 the Ukrainian lottery market was uncertainty hanging: the licenses of operators expired, and the authorities refused to develop new licensing terms for the current law on lotteries and issue new permits. To date, operators are forced to work semi-legally and wait for the solution.

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