Ukrainian Gambling Market 2021

Anton Kuchukhidze Chairman of the Ukrainian Gambling Council Interview By: Lyudmyla Kyrychenko

hat a big year it’s been for you!

WFor me personally, as for the head of Ukrainian Gambling Council, the largest profile public association in the sphere of gambling in Ukraine, it’s very pleasant to see that the gambling market is growing and developing and that the cooperation and dialogue between the state and legal gambling operators is improving.

Indeed, it was a great year both for the and for the UGC. We managed to legalize gambling in Ukraine and the state budget has already received over 30 billion UAH (over 1,1 billion USD) in revenues from the economic activity of this industry.

The year was and still is pretty busy for UGC.

In September we took part in SBC Summit in Barcelona and already in October acted as a coorganizer and strategic partner at the SBC Summit CIS, which was held in Kyiv and became the largest gambling event of the year in the Eastern Europe and CIS region. During both events, we managed to demonstrate opportunities offered by the Ukrainian gambling market to investors and partners, as well as present our country as the new potential leader of the gambling industry in Eastern Europe. I strongly believe that we have sufficient willpower of authorities, human and financial resources in Ukraine to achieve this.

Also, around a month ago UGC launched a legal counseling program for people suffering from gambling addiction. It’s free of charge 24/7 legal assistance provided by lawyers to people who suffer from this addiction and to their family members. By contacting our lawyers, people can receive counseling on how to restrain themselves from gambling or how to limit their close relatives from gambling.

A few weeks ago we also adopted the memorandum on gambling advertising, which UGC together with legal gambling operators has been developing starting from July 2021. 11 gambling operators - UGC members signed the document containing a set of rules and agreed to observe them in their online and offline advertising. The memorandum is based on responsible gambling principles and helps legal gambling operators to execute a comprehensive, socially responsible approach to the advertisement of their gambling products and services.

What is the current situation with the Gambling Commission Members as there have been a number of changes over recent months?

A couple of months ago it was still unclear whether the new members of the Commission for the Regulation of Gambling and Lotteries (CRGL) will be elected since the legal collision with their appointment was still unsolved. The thing is that due to the COVID-19 restrictions, members of the Commission for the Regulation of Gambling and Lotteries were elected just for 1 year under the so-called “COVID procedure” even though their tenure according to the profile law should last 4 years. Thus, the stable operation of the Commission was under threat, since CRGL couldn’t reach understanding with the Cabinet of Ministers which appoints the Commission members in accordance with a specific procedure.

The Commission could have ceased its work already in November this year, but fortunately, CRGL and Cabinet of Ministers managed to find the resolution of the legal collision. Thus, we can be sure that the Commission will carry on its work, including the issuance of licenses, and the gambling market will continue its full-scale operation.

What do you think is the likely outcome of issue with Tax on Winnings and its effect on keeping many patrons going to illegal casinos?

The tax on winnings will definitely remain in place, though it may be decreased following the adoption of the updated draft law 2713-д on the taxation of gambling business, which preliminary should take place already in November. According to this draft law, the taxable base of winnings will be increased up to 10 minimal salaries (around 2’400 USD). It’s definitely a big step forward taking into account that currently winnings of any size are taxed.

As for the illegal casinos, their operation is just a matter of time. The state is fighting against illegals both online and offline. Furthermore, players going to illegal gambling establishments aren’t protected. Illegals don’t have systems of players’ registration and identification they don’t observe any principles of responsible gambling and are only interested in shortterm profits. Thus, players face much more risks when going to such establishments. And now, when the taxable base of winnings will be substantially increased, the players will think twice when choosing between illegal gambling basements and freshly built gambling halls with high quality of services and social protection. The increase of the taxable amount is definitely a big advantage for the legal gambling market and a considerable incentive for players to stop going to illegal casinos.

Can you please provide details on the UGC memorandum on gambling advertising?

On 18 October, members of the UGC – 11 licensed gambling operators, notably Parimatch Ukraine, Shangri La Kyiv, Slots City, First, PIN-UP.UA, Cosmolot, Volna 4444, PokerMatch Ukraine, FavBet, GGPoker, and VBET signed memorandum on gambling advertising. We worked on this document since July together with lawyers and operators’ representatives. Finally, we managed to come up with and adopt a set of rules forming the basis for a joint approach of gambling operators to online and offline advertising of their products and services. It is based on responsible gambling principles and the idea of social responsibility of the gambling business to players.

One of key advantages of this memorandum is that it was developed by the licensed offline and online gambling operators already working on the Ukrainian market. The document encompasses all major aspects of advertising and marketing of products both on screen and on the streets. Even though it’s an instrument of general regulation and self-regulation and does not establish new legal

framework, it still serves as a confirmation of the signatories’ intentions to adhere to the rules defined in it. The legal operators-members of UGC already started bringing their advertising and marketing strategies in compliance with the provisions of this memorandum.

This year has seen a massive growth in Members of the Ukrainian Gaming Council. Whom are the standout members that have joined?

All members of the UGC are equally prominent since they are the pioneers of the legal gambling market, every operator in his own sphere. The majority of our members started investing their money in online and offline infrastructure before the profile law was adopted. After the law was adopted, they paid millions of dollars to receive licenses even though the regulatory and taxation frameworks weren’t yet fully developed, let alone adopted and implemented. Thus, they took a lot of risks when entered the newly forming market without clear rules of the game and to these days continue to develop their business, pay taxes, create job places, invest in social responsible gambling projects, etc. Thus, I deeply believe that efforts of all our members should be highly valued and praised.

How do you see 2022 for the Ukraine Gaming Market?

We expect new licenses to be issued, more operators coming to the Ukrainian market, including foreign ones, more revenues for the State budget, as well as the positive effect of gambling legalization for society. Budget revenues from license payments alone are estimated to be around UAH 1,5-1,7 billion (USD 5565 million).

Furthermore, next year we’ll already have clear taxation rules. This will facilitate the entrance of foreign companies and investors into our market.

We also expect more efficiency in the fight against illegal gambling operators and an increase in the number and quality of social responsibility programs implemented by the gambling business.

Thus, our expectations for 2022 are more than positive, and I think next year will bring us closer to the status of the gambling industry leader in Eastern Europe and the CIS region.