The law on the legalization of gambling has already been passed by the parliament and signed by the president, but the big gambling business is holding a pause. What happens to the law and how much money will the gambling industry bring to the budget?
Until recently, the gambling business in Ukraine was in a shadow, under the guise of lottery licenses. Using rather aggressive marketing, these companies nevertheless did not want to attract too much attention. But in August, Ukrainian President Volodymyr Zelenskyy signed a law to legalize gambling. Thanks to the document, the activities of bookmakers, casinos and slot machine halls – both offline and online – will be legalized and licensed in the near future.
Many foreign gaming operators are interested in developing their business in Ukraine. Thus, the Parimatch holding is already preparing to launch its products. Also Michael Boettcher’s Shangri La by Storm International expressed interest in the Ukrainian market. And these are not the only brands that are ready to enter the market.
Maxim Lyashko at Parimatch is responsible for the legal, financial and communications activities of the holding. Since 2016, he has led the legal team, and in 2018 he became a partner. At Parimatch, Lyashko is implementing the corporate strategy of the holding, and also knows firsthand how the Law on State Regulation of Activities for the Organization and Conduct of Gambling was written.
About the adopted law and the market regulator
Are the Ukrainian gambling industry and your company satisfied with the adopted law?
Maxim Lyashko believes that the very fact that such a law has been adopted is a huge breakthrough. Ukraine became the last in Europe and one of the last countries in the world to legalize this type of business. If you do not take into account the countries where betting or online casinos are prohibited for religious reasons, there are not many countries left in the world where this issue is not regulated. All civilized countries have already regulated the activities of the industry: some forty years ago, some more, but everywhere this is an absolutely normal type of business. However, the fact that for more than a decade the gambling business was outlawed, has led to some condemnation and close attention to this industry in Ukraine. In other European countries, we do not encounter such an emphasis on the industry: it is exactly the same as other entertainment industries.
If we talk about specific points of the adopted law, then we consider it very progressive that the document regulates all types of business, that we did not go the way of Ukrainian closest neighbors, where, for example, betting is allowed, but online casinos are not. For example, in Belarus for a long time, only online betting was allowed, and only a year and a half ago they allowed operating for online casinos: they realized that all players who would like to receive this service get it abroad via the Internet.
Of course, it is better to do this on your own territory. Anything that is prohibited forms a shadow business, offshore business, and this is damage to the state.
Another important and correct step was linking the brand to the license. This deliberately negates the practice when one company can obtain one license, but operate many brands, leasing or subleasing them. From the point of view of the state, this is the right approach: if you want to operate with several brands, buy licenses. This approach is not so common abroad, but in those countries where it exists, the operators’ discipline is much higher – both in terms of the public conditions they offer to players and in relations with the regulator. When you have one brand, you lose business in the country, when you have 20 brands, you lose only one of 20 brands, the diversification of assets is very high.
Each operator will have questions about how to enter the Ukrainian market if the tax field is not regulated.
The only thing that is a dark spot in the history of the gambling business legalization is the fact that the law has been adopted and signed (although it requires some technical clarifications), but there is no state position on taxation of the industry. The amendments to the Tax Code were never adopted, although we have heard more than once in the rhetoric of the state that the adoption of the law and the amendments to the Tax Code will take place simultaneously. Today, in fact, the law has been adopted, and amendments to tax legislation passed the committee’s consideration, but were not even considered by the Rada in the first reading.
Therefore, in the future, each operator (and a foreign one in the first place) will have questions about how to enter the Ukrainian market if the tax field is not regulated. In the form in which it is now, business cannot be developed.
Darren Keane, Storm International CEO, believes that the benefits of legalizing casinos will be not only for the state and entrepreneurs, but also for ordinary citizens. For example, there will be thousands of new high-wage jobs. Also, many Ukrainian employees of foreign units Shangri La, Darren Keane noted, will have the opportunity to return to their homeland and work alongside their family.