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Partners in Growth
Casino Life Ukraine Interview with Ganna Buiadzhy, Managing partner VigoLex Law Firm
ell us about VigoLex Law Firm?
TYes, sure. I have always been certain that the potential of the Ukrainian market is very large, but how actively foreign operators will enter the it depends primarily on how clear and transparent the taxation system will be. Another important factor is the adequate ratio of the taxation system and the cost of a gambling license. Almost all experts who comment on the gambling industry say that there are two main approaches to the regulation of gambling in the world: 1 - high license cost and low taxes; 2 - relatively low license cost, but with high tax rates. Ukraine has found its own special third way. We have established an exorbitant cost of licenses and retained the high level of taxation, and this despite the fact that the tax rates and payment procedure are not completely clear.
At the moment, the parliament in the first reading adopted a law draft that provides a resolution to this issue, in particular, by fixing a single tax rate for all types of gambling at 10%. Therefore, if the draft is passed in its current state or at least close to the present version, we expect that Ukraine will become an even more attractive country for foreign investors. Now most of our clients have opted for a wait-andsee policy, they want to see how the market works. Any business has to make money, and according to the current system, using the simplest calculations, it is not clear “where is the money, Billy?” For those who want to work legally and transparently, it is clear that operating in Ukraine is not very profitable yet,
so they are ready to enter the market subject to clear and transparent rules of the game, in particular, clear and affordable tax rates.
What are the specific areas in Gambling does VigoLex specialise and does the law firm assist both Land Based and Online Casino Operators as well as organisations wishing to supply services or products to the Gambling industry in Ukraine and Georgian Markets?
VigoLex law firm specializes in servicing online and offline gambling operators. Of course, we started with servicing clients, who mainly work in the field of online gambling and operated on the basis of a license obtained in Curacao or Malta. However, over time, brick and mortar establishments were added, which subsequently expanded our legal expertise and for us became a new and interesting experience. At the same time, in the long run, our main focus remains online casino support.
At the moment, we do not represent the interests of clients in the Georgian market, but we are always ready for new challenges and expanding our client base and geographical coverage.
What was involved in your role of Managing partner at VigoLex?
For six years I held high positions in civil service, however, at a certain point, given the political situation, I decided that it makes sense to return to the private sector and completely change the scope of my activity. Therefore, at the beginning of 2020, I made an absolutely impartial and verified decision that I was ready to leave the post of State Secretary of the Ministry of Justice of Ukraine and return to law practice. Previously, for many years, as an attorney at law, I rendered services to Ukrainian and foreign businesses, specialized in corporate, international private and commercial law, and, of course, also dealt with economic and administrative proceedings. So, in April 2020, I headed VigoLex law firm, which is interesting to me because it offered me an opportunity to grow in new areas in which I did not previously worked. At the same time, I am a specialist in international private law and in the field of corporate business structuring, therefore my knowledge is relevant for IT business and for those who operate in the field of gambling. In addition, having significant experience in the field of public administration, I understand the task of the newly created gambling regulator - the Commission for the Regulation of Gambling and Lotteries, so it was not hard for me to build a working relationship with it. At the moment I am a member of working subgroup on the preparation of draft regulations in the field of gambling and one of the experts in the field of gambling in Ukraine.
Over the past year you have spoken at a number of gaming industry conferences relating to Ukraine and Georgia Gaming legislation, what has been amongst the most frequently asked questions?
If we discuss the frequently asked questions, then, without a doubt, those concern the peculiarities of obtaining licenses for conducting gambling activity in Ukraine. This issue is extremely pertinent, since this is a new area and the last year was the year of the preparation and formalizing the practice of obtaining gambling licenses. Therefore, potential operators and clients were interested in the procedure and conditions of obtaining a license, the time necessary to prepare the documents, as well as the cost of such a license. Also, very popular inquiries are:
• the reasons for the high price of the license;
• the intricacies of taxation in the field of gambling;
• the process of certification of gaming equipment;
• features of further work on the gambling market in
Ukraine.
These questions are quite logical, since they are completely new for the entire market. Especially many questions arose from non-residents, since for them certain aspects of operating in Ukraine are largely incomprehensible. Therefore, I tried to ensure that my answers were always as practical as possible and close to real life.
Separately, it should be noted that some of my articles and comments are related to the advertising of gambling in Ukraine. Despite the fact that this area was discussed quite a lot and lively, the issue of advertising is still quite controversial, since it is at the intersection of administrative issues (obtaining permission to place advertising, advertising texts,
etc.) and, in fact, the scope of gambling. I have repeatedly expressed my thoughts regarding Ukrainian legislation, which, in my opinion, has a number of gaps and shortcomings, both due to the fact that the law does not include Gambling Commission as one of the subjects that has the right to impose penalties on abusers of the provisions of the law on advertising gambling, and the fact that in the special law on the regulation of gambling, the procedure for advertising such games is not established. The legislator bypassed this issue, which, in my opinion, did a disservice for all gambling operators, since the present chaos of gambling advertising on the Internet harms the operators themselves, who would like to work within the legal field if such the rules were set by the state.
By the way, the principles of responsible gambling, oddly enough, also aroused particular interest, which is befitting. This testifies to the awareness of most of the market on this matter.
Do you plan to visit Shows in the future such as G2E Las Vegas and ICE London in 2022?
Before the pandemic, representatives of our group of companies regularly attended exhibitions in Malta and London, most recently in the winter of 2019. Visiting exhibitions in 2022 is a question of time. First of all, it depends on the epidemiological situation both in my country and in the world. Of course, this is appealing for us, and we would like to attend such events, since these are the largest international platforms where the most pressing issues and news in the industry are discussed. We want to remain informed on these issues, but as I have mentioned, it all depends on the further epidemiological situation.
How did the company come up with the name VigoLex?
The name did not appear by chance. We thought for a long time about the name of the group of companies, we wanted it to be meaningful, sound good and easy to remember. In addition, we wanted the core of the name to be compatible with the different directions in which the companies operate. After lengthy reflections and discussions, we settled on the English word “VIGOR” - energy, strength, power.
Do you see a lot of opportunities for International Land Based and Online Gaming organisations in Ukraine?
Yes, sure. I have always been certain that the potential of the Ukrainian market is very large, but how actively foreign operators will enter the it depends primarily on how clear and transparent the taxation system will be. Another important factor is the adequate ratio of the taxation system and the cost of a gambling license.
Almost all experts who comment on the gambling industry say that there are two main approaches to the regulation of gambling in the world: 1 - high license cost and low taxes; 2 - relatively low license cost, but with high tax rates. Ukraine has found its own special third way. We have established an exorbitant cost of licenses and retained the high level of taxation, and this despite the fact that the tax rates and payment procedure are not completely clear.
At the moment, the parliament in the first reading adopted a law draft that provides a resolution to this issue, in particular, by fixing a single tax rate for all types of gambling at 10%. Therefore, if the draft is passed in its current state or at least close to the present version, we expect that Ukraine will become an even more attractive country for foreign investors. Now most of our clients have opted for a wait-andsee policy, they want to see how the market works. Any business has to make money, and according to the current system, using the simplest calculations, it is not clear “where is the money, Billy?” For those
who want to work legally and transparently, it is clear that operating in Ukraine is not very profitable yet, so they are ready to enter the market subject to clear and transparent rules of the game, in particular, clear and affordable tax rates.
What advice would you provide an organisation in land-based and online gaming interested in gaining a licence in Ukraine?
The first thing, I would advise foreign operators, is to wait for transparent taxation, and its adoption depends only on the legislature, and second, to consciously approach the choice of the legal consultant. Obtaining a license is undoubtedly the most important, but only the first step. Further support of the economic activity itself should be carried out by specialized lawyers who understand not only the implementation of economic activities in Ukraine, but also understand the specifics of both gambling and the restrictions and regulations governing this area. The cost of a mistake is very high, since even unconscious and seemingly not obvious violations can lead to the loss of a license, the cost of which is very high. Therefore, here I have one piece of advice - approach the choice of a consultant thoughtfully.
Responsible Gambling is an important area of responsibility for all parties involved in the Gambling industry. What advice and expertise can VigoLex Law Firm provide the newly reopened Ukraine market?
I believe that the principles of responsible gambling are very important both in terms of gambling advertising and in terms of carrying out all the activities of gambling operators. On the one hand, this is a business and it is clear that it must bring profit to its owners. On the other hand, such a business should not cause social harm to the vulnerable segments of society as well as society as such. If a person is conscious, has no addiction and just wants to experience excitement - there is nothing wrong with that. It is worse when the system, the state or the operator push a person to take rash actions and form the impression of gambling allowing getting rich fast, or that one doesn’t have to work and can get money from the game. Such situations are unacceptable. Therefore, I welcome the introduction of a register of gambling addicts and provisions that limit advertising of gambling. Such provisions can still be refined using European experience, in particular, the introduction of provisions similar to the code of socially responsible advertising from the British industrial group for responsible gambling (IGRG). Some of these provisions have already been reflected in the provisions of the Law of Ukraine on Gambling, but the subsequent improvement of these norms is extremely necessary.
For organisations wishing to learn more about VigoLex Law Firm can you provide contact details?
We have 2 offices, in Kyiv and in Odesa. We welcome you at the address: 03127, Kyiv, Golosiivskyi prospect, 132 or 65026, Odesa, st. Zhukovskoho, 15 Or write us an e-mail at info@vigolex.net You can also contact us by phones: +38 (068) 52088-88, +38 (050) 520-88-88, + 38 (067) 539 50 04, 0 800 339 865.UKR
