The New Year in Ukraine starts with great news for the gambling industry. On 21 December, 2020, the Ukrainian government has officially approved the licensing conditions that dictate specific rules and requirements for each gambling product. Their approval takes the Ukrainian gambling market to the final move within the whole legalisation process. And this means that the Gambling Commission is ready to start accepting licence applications.
Expectations for the market have always been high. Having previously estimated the market potential, many established international operators already announced their intent to apply for licences as soon as the possibility arises. So, the first gambling operators will start filling the market in the coming months.
So why is the Ukrainian market promised to be so advantageous to foreign investors? Let us briefly explain the reasons and the current legal status of Ukrainian gambling in this overview. The focus is going to be exactly on the benefits that accompany the legalisation and, of course, on some important legal requirements to be kept in mind while considering the expansion of the gambling business to Ukraine.
As Covid-19 will start to slow down, experts expect the real revival of the tourism sector in Ukraine. So any investments in land-based casinos, betting, and slot halls are about to bring considerable revenues in the years to come
Big opportunities of the Ukrainian re-emerged market
The global gambling market demonstrates gradual but significant growth each year, especially its online sector. The pandemic has only accelerated such trends. Internet gambling experienced a real boom due to Covid-19, and many well-known operators searched for new markets to expand their business activity.
Such rapid development of online gambling is currently prompting huge market interest exactly to this sphere of Ukraine’s legalised gambling. At the same time, land-based gambling should be of no less interest for a potential investor. In recent years, Ukraine’s tourist attractiveness has noticeably increased. The beneficial position of being at the centre of Eastern Europe, moderate prices for accommodation and leisure activities, as well as the authentic culture are among those factors that define Ukraine’s favourable image for tourists.
Apparently, the new Ukrainian gambling market unfolds incredible possibilities for investment and development. And this applies to both online and offline gambling. As Covid-19 will start to slow down, experts expect the real revival of the tourism sector in Ukraine. So any investments in land-based casinos, betting, and slot halls are about to bring considerable revenues in the years to come.
What gambling products have been legalised in Ukraine
The Ukrainian gambling law legalises all well-known gambling products, though dictates strict rules for the organisation of each. Casinos, betting, and slot halls are included in the list of legalised land-based gambling products. All of the mentioned might be carried out only in special gambling zones. The definition of a special gambling zone is specified in detail below and usually means the territory of hotels meeting the requirements of the gambling law.
Following the example of other jurisdictions, the full range of online gambling is now also allowed in Ukraine. This includes online casinos, online betting and online poker. With online gambling booming in recent years, it provides a perfect alternative for gambling at physical premises. Notably, the gambling law prescribes one licence for both types of betting, meaning that a betting operator might carry out land-based and online betting on the basis of the same licence.
Separately, it’s worth singling out the B2B licence that allows Ukrainian legal entities to supply gambling software to national operators and also abroad. In the meantime, when it comes to the lottery, unlike in some other jurisdictions, it does not belong to gambling activities in Ukraine. It’s left outside the scope of the gambling law and is regulated by another legal act.
How to enter the Ukrainian market: requirements for the operator
The Ukrainian gambling market will be equally accessible for all foreign and national operators. One of the main goals of legalisation was to stimulate the flow of foreign investment to the country. As a result, identical transparent conditions are prescribed for all operators. So what things should the potential investor consider while planning to organise gambling in Ukraine? First of all, any gambling activity might be carried out by a legal entity registered in Ukraine. Second, the operator shall reasonably estimate its financial capacity. The amount of the authorised capital, the bank guarantee for the payment of winning to players, and the fee for a licence are the figures to keep in mind while applying for a licence. To be more specific, the minimum amount of the authorised capital is approximately €860 931. The bank guarantee is approximately €1,239,741. A huge advantage here is that money from the paid-up capital might be used for any other purposes and at the full discretion of the operator.
Third, there is also a range of requirements that might be grouped as organisational and reputational. For example, any relationship with Russian legal entities or citizens is strictly prohibited. The same prohibition also applies to countries classified by the FATF group as those violating the anti-money laundering legislation. Besides that, there are, of course, many other requirements. For example, all major officials of the legal entity must have an ideal business reputation.
Important specific requirements for certain types of gambling
Once the operator complies with all general requirements, it shall also satisfy all specific requirements defined by the gambling law for each gambling product. For example, all operators must have an online system that ensures the collection of data on accepted bets, payment of winnings, and all other data related to the gambling operation. But, usually, the most specific requirements will depend on the type of gambling product.
For example, operators planning to engage with online gambling should have a website with a ua. domain. As for the land-based types of gambling, such operators will be obliged to have premises that comply with the minimum requirements established by the gambling law.
Requirements for casinos’ premises are tight to guarantee the safety of players and visitors. Any casino might be opened only in a 5-star hotel with at least 150 rooms in Kyiv and a 4 to 5-star hotel with 100 rooms in other cities, a 5-star suburban leisure centre with 10,000 square meters, or in special gambling zones created by the Cabinet of Ministers of Ukraine. There is also an option to agree an investment project with the government of Ukraine following an individual procedure. In this case, the requirements for the premises will not apply.
Regulation for the location of a betting shop and a slot hall is similar. It must be a 3, 4 or 5-star hotel with at least 50 rooms in Kyiv and 25 rooms in other cities. But for betting, the gambling law also prescribes the possibility to organise sports betting at racetracks.
General overview of the licensing procedure
The licensing process is rather fast. If an operator satisfies all the requirements of the gambling law, it prepares and submits the full package of documents to prove such compliance. All applications are submitted to the Gambling Commission and have 15 days for consideration.
Then the Gambling Commission can either grant or refuse to issue the licence. Luckily, there is no restriction to resubmit the application by the same legal entity as many times as deemed necessary. As for the list of documents, it’s determined by the gambling law and might be, additionally, specified by the licensing conditions. Documents will differ depending on the type and form of a gambling product.
With online gambling booming in recent years, it provides a perfect alternative for gambling at physical premises. Notably, the gambling law prescribes one licence for both types of betting, meaning that a betting operator might carry out land-based and online betting on the basis of the same licence
Fees and duration of the gambling licences
The gambling law sets out different fees for each licence. As all licences are issued for five years, the general fee should be divided into five equal parts that are to be paid annually. For example, the annual instalment for the land-based casino licence in Kyiv is €2,066,234, and, in other cities, €1,033,117. Notably, one licence will allow establishing only one land-based casino. An operator will also have to pay extra for gambling equipment: €15,496 for each gaming table, €30,132 for a roulette wheel, and €1033 for a slot machine. These are the subsidiary licences issued for one year.
For the betting licence, an operator must pay €1,033,117 annually. As already noted, such a licence will cover both online and land-based betting but an operator will have to pay, additionally, €5,165 for each betting shop.
For the slot machine hall, an operator must pay €258,279 annually, and besides that, €1033 for each slot machine per year. The licence fee for online casino is €223,842 annually, and for online poker is €172,186 annually. And, finally, the B2B licence costs €51,655 for five years.
It should be emphasised that some annual fees, for betting, online casino and each gaming machine for instance, are tripled until the introduction of the state online monitoring system that will ensure the state control over the private online systems of each operator. As expected, it shall be introduced within two nearest years.
In the near future, we will get the chance to observe the real formation of the legal gambling market in Ukraine. The Ukrainian government succeeded to meet the expectations of the stakeholders and make the legalisation process fast and efficient. Only within half a year after the adoption of the gambling law, it managed to adopt everything necessary for the launch of the market regulatory acts. Bottom line: Ukraine is ready to welcome foreign investors and national operators.