SBC Digital Summit CIS – Ukraine warned of high licensing fees

SBC Digital Summit CIS – Ukraine warned of high licensing fees

2020 saw Ukraine launch global gambling’s most ambitious regulatory endeavor, aiming to deliver a comprehensive ‘Gambling Law’ framework governing all industry disciplines for land-based and online gambling verticals by 2021. 

Speaking on the ‘Welcome to Ukraine’ panel at the SBC Digital Summit CIS, Boris Baum Deputy Advisor to the Head of the President’s Office, revealed a first-hand account of the early groundwork and research undertaken by the government in its assessment of market factors.

“The first paths were formed by the World Bank recommending that the government reform its gambling legislation, as Ukraine was the last European country to maintain a prohibition of gambling services,” Baum said

Baum revealed that in 2019, Ukraine’s government had hired experts to undertake an assessment of the black-market, in which it uncovered that Ukraine held over ‘200,000 illegal slot halls and a further 100-150 illegal land-based casinos’.  

“The challenge was in two-parts as we had to form the conditions to legalise a gambling market, whilst simultaneously terminating black-market activities.”

“The first approach was to split the laws, forming one for betting and one for lotteries, but that was rejected by the government’s experts who advised the laws must compromise of full gambling activities for land-based and online… This is where the idea started,”  Baum informed.

In a short time frame, Ukraine’s government will publish a full breakdown of regulatory requirements for “sports betting, land-based operations, lotteries, online casino and technology providers’ – a tough ask for any government.

“Right now we are in a very active phase, shaping the market. Last month we Elected the first members of Ukraine’s Gambling Commission. We are finishing draft documents on licensing, and  I believe that the Commission will issue its new licenses by the beginning of next year.”

Levgeniia Derbal Chief Legal Officer of Parimatch, states that CIS betting group is actively monitoring Ukraine developments, in which the company is eager to launch within its home market as a regulated incumbent.

However, Derbal underlines that Parimatch is currently reviewing all Ukraine conditions and requirements related to “product limitations, technical requirements, KYC, customer protections, anti-fraud, AML and of course taxation.”

Derbal marks Ukraine’s licensing costs and draft taxation policies as a prominent concern – “The market will require a balance between the regulations and the taxation, which should be reached ahead of its launch.

“We have carried out internal assessments in terms of the taxation against other European countries, and we came to the conclusion that the state either has to stick with a high licensing fee or a high tax rate.

“For sports betting the license fee is about €940,000 per year, and according to the Law once the state monitoring system is implemented the licensing fee will be tripled to €3 million. There needs to be a careful reassessment of high licenses fees when tax drafts are reviewed.”

Despite ongoing,  high license fees and taxation concerns, Ilya Machavariani Senior Partner 4H Agency, Independent Consultant to Ukraine Government underlines that the government has taken the correct in separating its tax policy away from the Gambling Law.

“For now Ukraine’s regulations should be considered amongst the best for CIS countries. There is a clear intention by the government to create a transparent market which will welcome international operators.”

“This is good for the CIS, as Ukraine will follow Georgia in creating an open approach. At least for now Ukraine’s government  in sending a signal to the international community that the country is welcoming to foreign businesses.”

Source: SBC News