Half measures threaten Ukraine Gambling Law being ‘dead on arrival’

Major developments in Ukraine have seen the Rada (parliament) committee fast track final readings of ‘Bill-2285D – Gambling Law’ to be commenced this week (18 May).

MPs will be given the final chance to debate amendments of the governing SoP Party’s bill which will reestablish Ukraine’s federal gambling framework. Despite its fast track, observers remain unconvinced on a number of the bill’s key provisions.

Since its first publishing in early January, Ukraine’s Gambling Law has undertaken numerous amendments, yet the government has been unable to deliver transparency on criteria related to existing lottery monopolies, licensing arrangements, industry standards and taxation policies.

The office of President Volodymyr Zelensky maintains that SoP will deliver its gambling bill by end of year proceedings. Nevertheless, reality indicates that Rada may settle on half-baked measures to approve a fundamentally flawed framework.

Further developments see Ukraine business news sources report of rifts developing with regards to how a framework will settle the demands of the nation’s existing and influential lottery monopolies.

Despite being marred in allegations of corruption and cronyism, lottery monopolies Patriot, MSL and UNL are reported to have demanded that SoP enforce a ‘wish list of rights’ to further their gambling portfolios.

How the president handles monopoly rifts will be closely followed by betting incumbents and opposition, as SoP campaigned for business transparency and ending the government’s favouritism towards state-owned enterprises.

Beyond monopoly interventions, further criticism has been placed on SoP for failing to research the mechanisms and intricacies related to governing a regulated gambling marketplace.

Critics argue that during the legislative development of Bill-2285D, SoP chose not to review or replicate any effective provisions from established European markets such as the UK, France and Sweden.

The insular approach has led SoP to publish a much-derided high-fee individual licensing system, which will operate alongside a blanket (provisional 10%) GRR taxation policy for licensed gambling incumbents.

Maksym Liashko, Partner at Parimatch Holdings, advised Rada members to place licensing and tax amendments at the top of the bill’s final agenda – or risk the Gambling Law becoming a dead-on-arrival mandate.

“We are still far away from a crystal understanding of the situation, but hope that the legislators will choose a wise approach and will abandon the idea of introducing simultaneously a high fixed payment for licences, GGR tax and income tax – all three types of taxes altogether,” Liashko told SBC News.

“Such an approach raises concerns among the professional community. But the process of discussion started and there can be light in the end of the tunnel.

“An appropriate approach is when the high fixed cost of licenses will enable the state to receive guaranteed payments to the country’s budget; income tax will be calculated on the basis of general rules, while there should be no GGR tax. This will be a win-win situation for both the country and the investor.”

Stating that a tax triple threat will torpedo any realistic marketplace ambitions, Liashko urged Rada to eliminate the GGR tax rate. Instead the mandate of the Gambling Law should guarantee government tax revenues through incumbents taking on high fee licenses and through general income taxes.

As a Parimatch stakeholder, Liashko noted that licensed operators will have to stomach numerous concessions during the nascent stages of Ukraine enforcing the Gambling Law. He concluded that all interested parties should accept a long-term approach in developing a coherent Ukrainian gambling marketplace

He explained: “In the future, over the next 5 years, Ukraine can switch to the calculation and payment of GGR tax, when everyone will be sure that there is a reliable system for recording such information and a common understanding of the calculation of such tax.

“In addition, the powers of the future regulatory body, which will oversee the industry, should be clearly prescribed and outlined in the bill in order to avoid any misuses of powers and its work should be transparent… We are looking forward to the finalisation of the process by the Ukrainian MPs and hope that soon we will observe the opening of the regulated market in Ukraine.”