Gambling Bill Amended in Ukraine

The gambling bill in Ukraine has recently been amended and released to the public. The revisions have altered license fees and removed the ban on online advertising. The amended legislation has also set out rules related to the origins of the businesses that operate in the market. This is related to the recent conflict between Ukraine and Russia.

Kyiv in the Winter.

Amendments to the gambling bill in Ukraine will lead to changes in the licensing fees, advertising and organs of operators in the country once it has been read for a second time and passed by the government. ©12019/Pixabay

The amendment to the bill included a passage stating that the slot machine operators in the country must not be owned by those originating from an occupying state or a state that is involved in a conflict with Ukraine. This wording is aimed at Russian-owned companies and will also prevent any businesses that have Russian nationals as directors from operating.

The legislation restricting the origins of companies does not seem to apply to all facets of the gambling market in Ukraine, however. The only businesses that will be affected are physical slot games, with the online gambling industry seemingly not being affected.

In addition to this passage of the law, a further amendment to the bill suggested that those who wish to apply for and receive a license to operate in Ukraine should have a base in the country to be considered.

The initial amendments to the bill were brought forward by the Servant of the People Party, which holds a majority in the country. This bill received a total of 3,498 suggested amendments from members of the government sitting on the Finance, Tax, and Customs Policy Committee. Of these suggestions, over 1,800 were then incorporated into the final bill.

Changes to Fees

The changes made to the bill have caused significant alterations to the license fees that were proposed in the bill when it passed its first reading back in January. These changes represent both increases and decreases depending on the license in question.

Online gambling, for example, will see a decrease in the amount operators are expected to pay to receive a license. The fees suggested in the initial version of the bill were UAH59.0 million. This figure will now be cut to UAH30.7 million.

This is significant because the payment structure has also changed for online gambling. The fee was previously due to be paid annually by the operators. Now, however, this fee will be paid once every five years when licenses are renewed.

The fees for bookmakers will also see a substantial decrease from UAH566.8 million to UAH70.8 million.

Licensing for casinos situated in hotels in Kyiv will also become cheaper as a result of these amendments. This fee was previously calculated on a variable scale depending on how many rooms the hotel had. For buildings made up of 200 to 250 rooms, the fee was UAH141.6 million and would rise to UAH283.3 million if the hotel had more than 250 rooms.

Now, this fee will be a flat sum of UAH121.6 million, regardless of the size of the hotel. If the hotel-casino is located outside of Kyiv, operators will be expected to pay a fee of UAH70.8 million regardless of the size of the hotel.

The decrease in licensing fees will also apply to slot machines in Ukraine. These fees will drop to UAH28,338 and are expected to be paid each year. Gaming tables will also cost less to license under the amendments. A roulette table will now cost UAH826,000 to license.

Some areas will see increased licensing fees, however, with slot machine halls and online poker seeing increased rates. For a hall of slot machines, operators will have to pay UAH35.4 million, compared to UAH3.5 million in the old plans. Online poker licenses will be raised by half to UAH23.6 million.

Other Amendments to the Bill

Not just licensing fees have been altered in the newest gambling legislation in Ukraine. Now, there will also be changes to the numbers of slot machines allowed in the country and to the advertising rules that operators have to abide by.

Previously, there was a rule that limited the total number of slot machines in Ukraine to 40,000 units. There was also a rule stating that slot machines could not be located within 500 meters of a school. These rules have now been removed from the gambling bill after the amendments were made.

Additionally, there was previously a ban on casinos advertising their services online. This has also been removed from the bill after the most recent round of changes. Third-party marketing and affiliate marketing will also now be permitted in the country.

There will still be a limitation on advertising for such services on TV and radio. This will be subject to an advertising blackout between the hours of 6 AM to 11 PM. This has been slightly changed, however, as in the previous bill the window was from 7 AM to 11 PM.

Changes to Taxation

Should this bill pass through the Ukrainian parliament without any hitches, a further discussion will need to take place on how to tax the industry effectively. Right now, four competing tax bills have been suggested, although there is still a possibility that a new one will be drafted instead.

One bill, Bill 2713, has been suggested that would set the taxation rate for all gambling and lottery services at 25%. Another popular bill would see the rate set at 7.5% of gross gambling revenue for bookmaking, 12.5% for iGaming services, and 22% for lotteries in the country.

The government may enact the 25% gross gaming revenue tax across all forms of gambling in the country suggested in the bill 2713-2. The final option that has been drafted at the moment is to remove all direct taxes on the gambling industry and for the government to only profit from license fees and normal taxes levied on businesses.

It is not yet known when the amended bill will be read for a second time, and, therefore, it is not known when the tax structure will be decided.

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