Gambling Business in Ukraine: the Gaming Industry 2020 ― 2021
The gambling industry in Ukraine is a promising niche in the economy. The market and all its participants will have fantastic opportunities for increasing their profit after the full legalisation of the industry in 2020.
The gambling business in Ukraine began its development immediately after the country was declared independent in 1991.
In a matter of 28 years, the gambling industry has travelled a thorny path from an almost uncontrolled sphere to a completely legal one, and then back. In 2019, the authorities have started talking about the legalisation of gambling again, and they have registered several legislative proposals.
The most significant moments in the history of the Ukrainian gambling industry are:
- Autumn 1991 ― the opening of the first land-based casino in the country in the famous metropolitan hotel “Kievskaya Rus”.
- 1996 ― The Verkhovna Rada of Ukraine adopted the patent law. The acquisition of patents became necessary for many kinds of entrepreneurial activity in the gambling field: casino games, gambling establishments, and stationary tables with poker and roulette.
- 2002 — the Presidential Decree on the monopolisation of the issuance of lottery tickets. From that moment, the business has been concentrated in the hands of several large monopolistic companies.
- 2006 — patenting was partially replaced by special licenses. The State Lotteries Act sets the cost of a license — 150 thousand euros. The license term is 5 years.
- June 2009 — after long discussions, the government passes the Act No. 4256 about the complete prohibition of gambling. Both land-based and online casinos were sanctioned. The document has displeased legal operators and bookmakers, who have recently obtained a gambling license. Nevertheless, the country's legislature house remained hard-nosed.
- 2012 — the State Lotteries Act was adopted, which partially brought the sale of lottery tickets in from the cold.
- September 2015 — the first gambling congress in Ukraine. The speakers of the Ukrainian Gaming Congress were well-known foreign businessmen and industry experts. The main emphasis was laid on the need to legalise the industry, which currently operates in the shadow angle. At the same time, the Internet business was prosperous due to the fact that it was functioning in the .com domain zone under the patronage of offshore jurisdictions.
The idea to legalise the gambling sphere was on the list of promises of the President of Ukraine Vladimir Zelensky and the Servant of the people party. Therefore, they started talking about the fact that gambling should come out of the shadow immediately after the ruling coalition came to power.
Act No. 2285 was presented on October 17, 2019. Its first reading should take place during the November session of the Verkhovna Rada of Ukraine, and the voting will be on December 1 of this year. The government hopes that the law will enter into force on January 1, 2020, and is optimistic about the upcoming changes.
Act No. 2285 allows almost all types of casino entertainment, including gambling in Ukraine, betting, poker tournaments, etc. Gambling establishments and virtual platforms will be able to operate legally after they obtain the appropriate license. Their quantity and cost are ranked depending on the potential profit from gambling.
Licenses in the Gambling Industry
The number of licenses
The cost of one license
21,0 million hryvnias
3,0 million hryvnias
1,0 million hryvnias
1,0 million hryvnias
Gambling establishment with slot machines
1,4 million hryvnias
All permits will be implemented through electronic bidding via the Prozorro system. A certain percentage of the transaction will need to be transferred to the website itself for the organisation of honest and transparent public procurement.
Other important aspects of the legislative proposal:
- The field will be regulated by a specially created collegial body of 7 people. The composition of the commission will be formed by the Cabinet of Ministers of Ukraine without any personal interests in this area.
- The fiscal authority will have online access to game servers and equipment. Its main task will be to control the turnover of the received bets and prizes that were paid out. Experts believe that in such a way, the government will minimise fiscal evasion by licensees. The size of tax rates is still unknown. But they will certainly not be less than the generally accepted fees in other profitable sectors of the economy.
- A special fund will be created, and its replenishment will be provided by the issuance of gambling licenses. The expenditure side is still unknown but the development of infrastructure and the social needs of the population are a priority.
The Fight Against Ludomania
The law on gambling business prohibits access to gambling establishments for minors and disabled persons, as well as those people who are involved in the organisation of the gambling business in Kyiv or any other locality of the country.
The document also establishes strict requirements for the placement of any outdoor advertising. Only signs of casinos will be allowed, and it will be forbidden to use such words and phrases as “slot machines”, “bets”, “casinos” etc. Betting shops and gambling halls will not be able to be placed closer than 150 metres from social establishments ― schools, kindergartens, hospitals, libraries, physical culture school, and water parks.
Sports betting and other events from the world of politics, art, and social relations have always been and still are popular entertainment among local residents. Many betters manage to earn quite a lot of money by finding profitable odds and outcomes from bookmakers.
This direction is represented mostly by virtual betting platforms. They work in the international legal environment, are multicurrency and multilingual, and present a huge event line from European and North American tournaments.
Passage of the law on gambling business will legalise the work of national bookmakers. Any player will receive a wider selection of betting shops and beneficial odds for sports betting and other events.
Starting in 2020, 80 licenses will be provided for the betting market. The owner of each permit will be able to open a maximum of 10 land-based bookmaker’s offices. Another advantage is the organisation of online betting in the Ukrainian domain zone.
Licenses will be routinely granted to several cities:
- Gambling in Odesa, Dnipro, Lviv, and Kharkiv will get 16 permits (four licenses for each city).
- Other regional centres and inhabited areas of the country will receive the same number of permits.
- The share of the capital of the country will be 32 licenses.
The licensee will need to have a bank guarantee in the amount of 30.4 million hryvnias. The betting machines will have the tax burden as well. For each land-based betting shop, it will be necessary to pay 25.5 thousand hryvnias annually.
Payouts will take place only after the identity authentication of the lucky man. For this, you will need a passport and the identification code of an individual.
Thus, the tax office plans to control not only bookmakers but also those who receive prizes. The legislation of Ukraine provides for the payment of 18% tax on such income and 1.5% of the military levy.
Today, the lottery business remains the only legitimate niche but it will also be significantly reorganised. The authorities are planning to leave only one operator who will become a monopolist.
Already existing brands (Patriot, M.S.L., and UNL) and foreign concerns can compete for the right to be the only operator in the country. The government will choose the winner at the end of December by organising independent electronic bidding. Each participant must have to provide a financial guarantee (470.0 million hryvnias) and confirm that he has not less than 3 years of working experience in a similar industry.
- If a civilised market is launched, the country's budget will be replenished by more than 1 billion dollars annually, and these are even not the most optimistic forecasts. Prime Minister Alexander Goncharuk names the figure of 2.3 billion dollars as the planned income from casinos and other gambling locations.
- The presented legislative proposal uses the successful experience of Georgia as a reference. For this reason, the main concentration of land-based casinos will be in the Black Sea region, which is attractive for tourists. Kyiv and Lviv will also receive their quotas.
- The market will be opened not only for national entrepreneurs but also for foreign companies. Investments in gambling projects are expected to reach 4.0-5.3 billion dollars per year.
Major infrastructure and entertainment projects in the related industries deserve special attention. This is the construction of new hotels, shopping and exhibition centres, as well as the renovation of the existing transportation routes and the highway junction.
Already now, two large-scale projects from the world’s leading hospitality providers are nearing completion. The Radisson hotel is being put in service in Odesa, and the Sheraton hotel ― in Kyiv.
Gambling is a promising and profitable market, which will grow significantly next year. These changes will affect the entire industry and propel it to a completely new, European level.
According to the forecasts of experts, in 2020, all iGaming spheres will appear in the country. You will be able to place bets on sports events, visit a land-based casino, play games of chance in an online location, and purchase a lottery ticket. Entrepreneurs will have an opportunity to start their own business and expect the revenue from this casino.
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