Winter judgements to re-shape Ukraine’s gambling marketplace

A make-or-break end of year beckons for Ukraine’s nascent gambling sector, as the definitive tax framework and technical amendments of the Gambling Law are scrutinised by the Verkhovna Rada. 

Though sanctioned last August, the Rada’s failure to settle on the Gambling Law’s tax, licensing and technical arrangements has frustrated domestic incumbents, whilst leaving international operators in limbo with regards to entering Ukraine’s re-formed gambling marketplace.  

A frank assessment of year-1 developments of Ukraine’s marketplace by regulatory stakeholders opened the day-1 conference panels of the SBC CIS Summit in Kiev.   

“We are aware that tax is the dominant issue that will affect the next wave of operators and whether they choose to enter our market,” said Boris Baum, First Deputy Chief of the Expert Advisory Council Ukrainian Gambling and Lotteries Regulation Commission.

Baum detailed his frustration at the Rada’s insistence that all gambling tax proposals be reviewed, as the Committee on Finance had recommended tax code 27/13D as the market’s consensus framework.

“We have been informed that the vote will happen in three weeks, with a final settlement to be approved by 10 November,” he explained.

Supportive of tax code 27/13D amendments, Baum noted: “The market will see the changes that will finally allow operators to plan their financial models.”

At the centre of policy developments, he disclosed that the Committee on Finance had settled on a “10% GGR tax rate applied across all licensed activities, with triple licences fee removed”.

Further positives saw Baum state that the Gambling Law amendments would maintain technical parity as “game servers can be hosted in member states of the European Union”.

“This is a big achievement as we have removed a number of collisions,” he offered. “The only technical requisite that is required is that servers containing player data on financial transactions, accounting and personal data be hosted in Ukraine. This is logical market demand for everyone involved.”

Reawakening from its 11 years under prohibition, the legislative and commercial developments of Ukraine’s gambling sector will be overseen by the newly formed State Regulatory Agency of Ukraine.

Addressing CIS delegates, Head of the Executive Body Oleksiy Kucher outlined the role of the State Regulatory Agency in providing guidance to wider regulatory stakeholders – be it the police, national health, or community services – in adjusting to the impacts of a new regulated marketplace.

“We are a government oversight service, and we are focused on making sure that gambling has a positive outcome,” he explained. “The gambling sector is very fortunate to have our support as a new business sector.”

The State Agency will hold no regulatory authority on Ukraine’s gambling market, though Kucher explained his department would act as a mediator between the government, licensed operators, and the market regulator.

“We are the filter that is checking and screening everything. We realise that misunderstandings can happen at the early stages of regulation.”

Kucher outlined that ‘legislative transparency’ was at the top of the Agency’s agenda as it maintains duties to report to Ukraine’s Finance Committee on how government organisations have adjusted “to the implementation and understanding of the new market laws”.  

The Gambling Law’s enforcement and licensing are maintained by KRAIL- Ukraine Gambling and Lotteries Regulation Commission.

Almost a year following its inception, KRAIL Chairman Ivan Rudyi weighed progress against operators’ high regulatory expectations.

“KRAIL took on the challenge to legalise a marketplace that had been illegal for 10 years,” he remarked, explaining that Ukraine’s gambling context could not be compared to other European markets.

“We have faced numerous hurdles, but our perspective has always been to protect the rights of citizens and to have transparent conditions to monitor a competent gambling industry.”

Rudyi acknowledged operators’ desires to settle the Gambling Law’s final tax framework, but underlined that KRAIL will scrutinise each new application with the warning that “Ukraine will not be a 1,000 licence market”.   

Though questions have been asked with regards to the low number of licences issued by KRAIL, Rudyi responded that the regulator had been busy updating its technical resources in which the regulator “has blacklisted over 1,000 websites and over 100 illegal gambling prosecutions”.  

“In our first 11 months, we have delivered on our ambitions,” he said. “We are doing our best to be attractive and reliable for the market. Our job is to be fair to the licensed operators and to protect citizens… remember that we are working for them.”

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