7 minute read
Events
from SBC Leaders Issue 17
by SBC Global
WELCOME TO UKRAINE - THE MARKET OPPORTUNITY IS HUGE
AHEAD OF SBC SUMMIT CIS, Ukrainian Gambling Council Chairman Anton Kuchukhidze assesses the pros and cons of the new regulatory regime in Ukraine, and details why the market would welcome major international operators
BY MARTYN ELLIOTT
When President Volodymyr Zelensky gave final approval to the Ukraine Gambling Law in August 2020, it ended the nation’s 12-year prohibition and signalled the creation of a new regulated market in one of Eastern Europe’s most populous countries.
With high interest in the market from international operators, Ukraine will be one of the central themes of the agenda for SBC Summit CIS, Presented by Parimatch, the new betting and gaming industry conference and expo taking place at Parkovy Kyiv International Convention Center in Ukraine on 13 - 14 October 2021.
The event is being supported by the Ukrainian Gambling Council (UGC) and its chairman Anton Kuchukhidze will be among the 80-strong speaker lineup. Looking ahead to his appearance, Kuchukhidze gave SBC Leaders an update on the latest developments in Ukraine.
SBC: How would you assess the opportunity for both online and land-based operators in Ukraine following the introduction of the new regulations?
AK: If we are talking about regulatory acts that are to be adopted at the Commission on the Regulation of Gambling and Lotteries level, then we can say that all these documents must comply with the law, i.e. not to expand it in any way, but directly carry out provisions of the law on gambling legalisation. Thus, not the derivatives, but the law itself must be evaluated.
First and foremost, the law itself is socially oriented, with guarantees providing for the social protection of citizens, and gamblers. Therefore, I believe that the regulator will simply help to strengthen all positive aspects provisioned by the law.
At the same time, if we are talking about the financial monitoring
regulations from the Ministry of Finance, it requires special attention, since many provisions of their project decision on financial monitoring in the gambling industry do not correspond to the interests of gambling businesses.
UGC has submitted more than 140 amendments to this document and continues to maintain an active dialogue with representatives of the Ministry of Finance in this regard. The main principle of the law is that the regulations don’t expand the law in any way, but for some reason, there are such expansions in this regulatory act.
If we are talking about the negative scenario for the adoption of this document, then, of course, it will prevent the development of the gambling market. Even though the law’s framework is good for both online and offline aspects, you still need to make sure that other State executive bodies engage in dialogue with specialised gambling professional associations and maintain open communication with businesses to adopt decisions for the development, and not the destruction, of the market.
SBC: Taxation is a key issue for the UGC. What kind of changes to the taxation and licensing regime would you like to see to help operators?
AK: It’s obvious that the issue of taxation is crucial not only for UGC, but for the entire market. I think that the basis laid down in the first reading of the draft law 2713-д will remain the same. If we are talking about GGR and about the abolition of the triple licence fees, this is welcomed by the market.
The state understands that it is necessary to create adequate conditions. There will be a lot of technical amendments, such as how to define winnings, what winnings are, what a positive difference is, etc. Many such definitions will require technical and legal clarifications.
I think that the issue of liberalisation of tax on winnings is definitely worth fighting for. At the moment, there are amendments from MPs suggesting the increase of the taxation threshold on winnings from 8% to 10%, 15%, and even 20%. This is an absolutely outrageous story. Therefore, in our dialogue with Ukrainian MPs, the UGC will find a common ground that will suit both the State and businesses.
We will also support tax exemption
for non-residents on winnings. This is a beneficial step for Ukraine to become a profitable and comfortable jurisdiction for foreign players who choose our country as a tourist destination. And, of course, the exemption of foreigners from the tax on winnings or the adoption of the most loyal rates for them will make the Ukrainian market very competitive in comparison with neighbouring Georgia or Belarus, and in the whole region of Eastern Europe.
SBC: What benefits will the legal gambling industry have for Ukraine and its economy?
AK: There are many benefits. First of all, you need to understand that the legalisation of gambling is part of the policy of President Zelensky to deshadow the economy.
Thus, the first benefit is the deshadowing of a separate sector of the economy. The second is the introduction of social protection for citizens, and for minors.
The third is the social protection of gambling addicts. For the first time in 12 years, concrete opportunities have appeared for self-restraint, as well as for relatives to prevent their loved ones from gambling through a court decision.
Fourth, the State has precise control over the market. There is a clear list of organisers, a list of legal gambling operators. Anything that is not included in the registers of the Commission on the Regulation of Gambling and Lotteries is illegal. The state fights against illegal operators.
The fifth advantage is a decrease in the number of illegal operators by almost 80% compared with the situation at the end of 2019. There used to be over 5,000 illegal gambling halls. Now, 80% have already been closed. Currently, the work on illegal gambling halls closure continues. This means an improvement in the social security of wider society.
More than 1 billion UAH were already received by the State budget from gambling. Local budgets of the regions will receive 50% of the licence fees from the casinos located on their territory. And there are a lot of other aspects that allow any Ukrainian to feel the positive impact of this reform.
SBC: What’s your message for international operators considering entering the Ukrainian market?
AK: My main message is very simple - Welcome to Ukraine.
We have a wonderful country, a country that has shown with the example of the legalisation of gambling that our State can fight corruption and illegal gambling operators, and protect Western investments. Our State is carrying out tax reform. All these things are aimed both at the internal development of the economy and at attracting Western investment.
Also, do not be afraid that the legal market has just started operating in Ukraine. It has been operating since May 14, after the opening of the first gambling hall. In the long run, you need to understand that this is the largest market in Central and Eastern Europe, and the largest legal market in the entire post-Soviet territory. Therefore, the opportunities are huge.
The professional level of gambling companies’ employees is very high in Ukraine. The tourist flow is also gradually starting to concentrate in Ukraine since, as I already mentioned, this is the largest country in the region and many tourists are interested in visiting it. There is an excellent quality of services provision in Ukraine - hotels, restaurants, and all other areas related to gambling. Therefore, step-by-step, Ukraine will turn into a regional leader. This is an obvious fact.
Despite the recent launch of the market, this summer already demonstrated a huge flow of tourists from the Middle East to Ukraine. And one of the most important reasons was the opportunity to engage in legal gambling.
The market is off to a good start, but it can be even better if foreign investors come. Also, you need to understand that the State itself is extremely interested in this because the entry of the largest Western gambling giants to Ukraine will mean increased competition within the market. Both the gambling operators and the State itself will benefit from this. Quality will be improved; new principles will appear, etc. Therefore, you are welcome.
The market is large and interesting, and it can be a bridge to Central Asia. The market will strengthen its position in the CIS region. Ukraine is an excellent base for promoting and expanding your business in the whole region. •
