Ukraine’s legislature, the Verkhovna Rada, has passed a bill to regulate both land-based and online gambling in the country after a 248-95 vote at the second reading.
In October 2019, Oleg Marusyak introduced in Parliament the 2285-D bill as one of six alternatives to the reforms submitted by the Servant of the People Party-led government. Even if it failed to pass at first reading in December, after a few amendments it passed with another vote in January 2020.
Online gambling, bookmaking and land-based casinos would all be legal under the bill, but casinos may only be located in hotels.
The law is introducing a comprehensive regulation of the gambling market in Ukraine, offering two licences for land-based and online operations. The law will cover:
- the organisation and conduct of gambling in casino gambling establishments;
- the organisation and conduct of casino gambling online;
- the organisation and conduct of bookmaking activities in bookmakers online;
- the organisation and holding of games in the halls of slot machines;
- the organisation and conduct of poker games online;
The licence fees for online gambling is set at UAH30.7m (£906,000/€1.0m/$1.1m) and will be paid when a licence is renewed every five years. Bookmakers’ licence fees were set at UAH70.8m while a flat fee UAH121.6m was set for casinos located in hotels in Ukraine’s capital Kyiv, with a UAH70.8m fee for casinos in hotels elsewhere.
This version of the bill also sets out restrictions on the origin and ownership of businesses in the market. The bill stated that all operators and slot machine suppliers “must not be controlled by residents of an occupying state and/or the aggressor state in relation to Ukraine”.
Ilya Machavariani, Head of Eastern European Gaming and Gambling practice at Dentons declared: “My thoughts are simple – this is a huge step for Ukraine and for the Eastern European industry as a whole. Any flaws that adopted law might have are nothing compared to the fact that Ukraine has finally managed to legalise gambling, despite surrounding controversy and various forces trying to push the law in different directions.
“Despite the foregoing, my advice to everyone would be to stay alert, as there are a couple of major issues that need to be addressed before the Ukrainian market is live: there is no clarity on taxes, the composition of the regulator is also yet to be decided; and finally, Ukraine needs to adopt subsequent legislation that is able to push the overall industry framework into a different direction.”
Casinos were previously banned from advertising their services online or using third-party marketing, including affiliation. However, this was removed at the committee stage.
The version of the bill passed by the committee said the parliamentary Committee on Finance, Tax and Customs Policy may appoint members of a Tender Commission, which then elects the chairman and members of the Gambling Commission.
However, the legal committee of the Rada said that this is unconstitutional, as the creation of a regulator is an executive function and a committee of the legislature does not have this power in its formation. It is not yet clear whether the Rada passed an amendment to address this.
The Rada must pass some act to set how the industry will be taxed. Currently, there are five different gambling tax bills for the Rada to consider.
In June of this year, Marusyak filled a new tax proposal for gambling, Bill 2713-D. It sets a 5% GGR tax on sports betting, 10% for online gambling and for lotteries and 12.5% for slot machines.
Marusyak and Marian Zablotskyi jointly submitted the Bill 2713, which sets the tax rate for all gambling and lotteries at 25%. An alternative bill 2713-1, submitted by Dmytro Natalukha – proposes a 7.5% GGR tax rate from bookmaking, 12.5% from online gambling and 22% from lotteries.
The third bill, 2713-2, proposed by Oleksandr Dubinsky, is establishing a flat tax rate of 25% of GGR for all forms of gambling: online, land-based and lotteries.
Artem Dubnov proposed the bill 2713-3, which would scrap specific gambling taxes entirely, with the government making money from the industry only through licence fees and normal business and income taxes.
To come into effect, the bill needs to be signed by President Volodymir Zelensky.
In October 2019, Zelensky, a big supporter of regulated gambling, requested a government bill that will allow gambling only at hotels, which he said should help curtail the presence of illegal slot machines on the streets.
As soon as the bill 2285-D was rejected, president Zelensky announced that he will start enforcing strictly Ukraine’s anti-gambling laws. The Ukrainian courts ordered internet service providers to block access to many unlicensed gaming sites, including a list of 32 sites in February and 59 more in May.
All gambling except state-run lotteries became illegal in Ukraine in 2009, after nine people were killed in a fire at a slots parlour in Dnipropetrovsk in the east of the nation, but the country has looked to reintroduce legal gambling since 2015, when a new bill to legalise and regulate gambling activities across the country was introduced.
