Gaming was banned after tragic fire
After a six-year ban on gaming in the Ukraine, the Eastern European country is reportedly planning to relaunch the industry full-force. The Ministry of Finance has published a bill that would legalize and regulate online and internet gambling as well as sports betting and a national lottery.
Published reports indicate that licenses will be made available to Ukrainian companies with more than €2 million (US$2.2 million) in ready capital, which does not require them to borrow more. Licenses alone are expected to cost between €300,000 and €1 million and up to €1.5 million for online operators. The country will license one lottery operator.
The country banned betting in 2009, after a fire in a gambling hall in Dnipropetrovsk that killed nine people, reported the World Casino Directory.
Two bookmakers will also be licensed. The website CalvinAyre.com reported that bookies “are not loving” the plan, which would price the licenses at €1.5 million per year plus €1,500 to €3,000 per retail shop, and an additional €300,000 to operate online.
The bill calls for the creation of a national gambling regulator that will report to the Ministry of Finance.
Land-based casinos would pay an annual license fee of €300,000 to €600,000, and €1 million for a casino in the capital city of Kiev. Online casino operators will pay €1.5 million per year.
The Ukraine Gaming Association wasn’t happy with the proposed draft.
“Despite our efforts, it does not meet international standards and is flawed in key areas,” the organization’ founder, Glyn Thomas, said in a press release, “but at least it brings gambling back and out of the shadows. The next stage though is to make sure that those flaws are recognized and changes made to ensure that the gambling industry develops properly, transparently and for the benefit of the three key stakeholders—consumer, operator and government.”
The lack of any kind of regulatory agency in the draft also bothers Thomas.
“The government has a right to control the industry but in the case of gambling it is complex, technical and changes rapidly,” he said. “Managing the process internally means it is open to corruption. The government should consider the international model of an independent gaming regulator.”
Thomas also pointed out that treatment of problem gambling was not addressed in the proposed bill.
The bill is subject to change before it passes. Irina Sergienko, director of the All-Ukrainian Union of bookmakers, told Betting Business Russia the proposed 20 percent tax on gross gaming revenue is too high and could lead to a market that is controlled by “very large companies that operate according to the law of large numbers.”
Darren Keane, CEO of Storm International, said the license fees are fair, with the exception of the online license.
“When you compare it to both Armenia and Georgia, two developed gaming markets, the €1.5 million proposed in Ukraine dwarfs them by a 7 to 1 ratio,” he says. “It does seem too high a price to pay to enter that market.”
He recommended more relaxed requirements and other changes.
“Casinos should be only restricted to four- and five-star hotels with more than 200 rooms, as there are too few hotels that match these criteria in the Ukraine,” Keane said in a statement. “Limiting casinos only to hotels will first limit the maximum amount of tables and slots possible. This will in turn limit the amount of taxes payable on both areas and will give less space for casino restaurants, relaxation areas and concert facilities. Other issues will arise due to space and conformity of working within the given hotels such as car parking, independent kitchens and bars. Without additional services it will also be difficult to reach the 250 minimum requirement of staff.”
