Ukraine Gambling Back After Lengthy Hiatus

Gambling is once again legal in Ukraine after Bill 2285D was finally passed in Parliament recently. After several amendments on the bill, including raising the legal gambling age to 21, the Ukraine parliament finally gave the nod to allow both online gambling and in casinos, as long as the casino is based in a hotel.

 The State of the Nation

After Ukraine gained its independence in 1991, the country soon had over 40 casino establishments located across 10 cities. Kiev was a hot spot with 18 casinos and offered 36 different slot machines for patrons from towns and cities nearby.

In 2003, the government moved to regulate gambling by introducing draft law N4204 and permitted bingo, horse racing, cylindrical games like roulette, games with cards or dice, and slot machines to be played at licensed venues.

Unlicensed venues weren't perturbed however and offered gambling to underage players until the situation reached critical mass in May 2009.

The 2009 fatal fire in a gambling hall in Dnipropetrovsk, now called Dnipro, caused an immediate move to ban gambling in all forms except for the Lottery by June of that same year. Gambling operators, however, noticed a loophole in the ban and simply moved their services offshore, continuing to provide online gambling in this manner.

 Challenging Changes

Thousands of people who had been employed at gambling halls and casinos lost their jobs, and patrons just moved to black-market gambling instead. And so, thanks to lax enforcement, weak legislation and a myriad of loopholes, only 2% of the estimated €5 billion gambling revenue was paid in taxes each year.

The Ukraine government sent a letter of intent to the International Monetary Fund in 2017 and unpacked a plan to raise tax revenue by regulating the industry, to enact economic reforms and qualify for financial assistance from the IMF.

Even though the 2018 deadline was missed, the recent legalisation is expected to increase tax revenue by around €200 million for the country.

 Positive Outlook

The Committee on Finance, Tax and Customs Policy is currently considering the possibility of creating an online gambling license with fees of UAH30.7 million (£906,000/€1.0 million/$1.1 million) every 5 years to manage and regulate the industry.

Bookmakers license fees will sit at around UAH70.8 million while a flat fee UAH121.6 million was set for casinos located in hotels in Ukraine's capital Kyiv. Casinos in hotels situated elsewhere within the country will pay UAH70.8 million.

With five tax bills currently under consideration, Bill 2713-D was filed by Oleg Marusyak and sets a 5% GGR tax on bookmaking, 10% for online gambling and lotteries and 12.5% for slot machines. While this bill seems to have the highest likelihood of being passed, it still must compete with four other bills, or have the possibility of the Rada introducing yet another new tax bill alternative.