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Ukraine: Free rein for gambling

Historical moment in Ukraine! After quite long and tough negotiations, the new gambling law was passed here. President Volodymyr Zelensky put his signature to the reform, which should propel the country's market in a whole new direction in the future. Online gambling, as well as land-based casino games, will become legal under the new law. However, the companies and license applicants obviously have to adjust to stately license fees. There are also other costs, such as tax payments. Will the market in Ukraine still make the big breakthrough?

Croupier platziert Einsätze an einem Roulette-Tisch.

Thanks to a legal form, it will be possible to play in land-based operations and in online casinos in Ukraine in the future.(©whekevi/Pixabay)

President Zelensky as foster father of the sector?

Already in A new law on gambling on the Internet and land-based casinos was passed in Ukraine on July. The way was then cleared by the Vekhovna Rada parliament, now President Volodymyr Zelensky put hishistorical signature under the decree "2285-D". A total of 248 MPs welcomed the reform in Parliament at the time, only 95 MPs spoke out against the new law. The reform is a historic decision for the gaming industry. So far, it has hardly been possible to work successfully in this sector in the country. On the contrary: Since 2009, gambling has been completely banned. At that time, a total of nine people died in a fire in a casino. That brought the government to this enormously tough decision. Aroundsix years later, the opening of gambling offers was considered again for the first time. However, since the country is still in a state of war, these plans were pushed into the background for the time being.

In 2019, a new law was finally discussed for the first time. As an immediate result, countless regulations and laws were discussed, but the draft was rejected at the end of 2019. But: Only a month later, a slightly modified draft passed the first reading in the Ukrainian parliament. The second success followed in July. In concrete terms, this now means thatin addition to online games of chance, sports betting, arcades and land-based casinos may also be offered. Minor restriction: Big casinos should only be in hotels, so that tourists in particular can access the games on offer.

Access to the market is not cheap

The news from politics is shaped for the gaming industry, of course, positive news. However, there is a small catch, at least from a financial point of view. After all, if you want to be active in Ukraine, you have to dig deep into your pockets. Exactly how deep depends on the particular gambling product. In the case of online casinos, license fees of the equivalent of one million euros are due. The license is valid for a period of five years. The companies would then have to apply for a new license and then pay the sum of one million euros again. If you want to be active as a bookmaker in Ukraine, you have to dig a little deeper into your pocket with 2.1 million euros. Thehighest license fees are to be paid for large casinos in the hotels. In the city of Kiev, a total of 3.7 million euros have to be put on the table.

Providers are getting away from online poker much more cheaply. Here only around 730,000 euros are estimated as a fee. In all cases, however, there is not another catch. Sothe charges would be tripled until internet surveillance was established. This should happen within 30 months after the opening of the market. At least once it will be really expensive for the companies. In addition to this, it is stated in theUkrainian media that no Russian citizens are allowed to act as operators of gambling operators. The market is also not open to so-called Ultimate Benefical Owners (UBO). Instead, theLicenses can only be distributed to registered legal entities from Ukraine.

Further ambiguities in taxation

While most of the important framework conditions seem to have been clarified, there are still a few unanswered questions. The question of taxes, for example, cannot yet be answered.Originally, MP Oleg Marusyak presented a tax model, which required different rates depending on the type of gambling. Sports betting should be taxed at five percent, online casinos and lotteries at ten percent and slot machines at 12.5 percent. However, there are now other options. For example, there is an alternative in which all games of chance are to be taxed at a flat rate of 25 percent on gross gaming revenue. There is another alternative to this. Here, sports betting operators would have to pay 7.5 percent in taxes, lotteries 22 percent and online gambling operators 12.5 percent.

The variant probably preferred in the industry comes from the politician Artem Dubnov. He had spoken out in favor of a fourth model. Accordingly,specific gambling taxes are to be completely abolished. Politicians would only have the income from license fees and regular corporate taxes at their disposal. It is therefore highly doubtful whether this variant will actually be implemented. The fact that Ukraine is taking a big step forward with this new draft law is undisputed. And that should probably have a positive impact on the economy of the entire country.

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The article was published on August 24th, 2020 in the magazine by cpaws-ov.org under the keywords, ,, published.
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