Gambling in Ukraine: New Regulations
After an eleven-year ban on the gambling industry, Ukraine has taken an important political step to relaunch the sector. To legalize gambling, the Parliament of Ukraine voted in favor of the new sector regulations which came into force on 13 August 2020.
2009 – Gambling was officially prohibited in Ukraine.
2020 – On 13 August, Law of Ukraine No. 768-IX “On State Regulation of Activities involving Organization and Conducting of Gambling”, which sets up a legal framework for gambling in Ukraine, came into force (1).
1. STATE CONTROL OVER GAMBLING MARKET:
Commission on Regulation of Gambling and Lotteries
Regulation of Gambling and Lotteries
The body will be created as a new collegiate authority: 6 members and a chairperson
Key areas of authority:
- licensing of gambling, including development and approval of licensing conditions;
- regulating the activities of gambling organizers;
- administering relevant state registries;
- investigating complaints filed by customers;
- setting up lists of certified entities and equipment which is subject to certification;
- exercising measures of state control.
Permission to use premises for organizing gambling activities
Issued to the owner of the premises by the Commission on Regulation of Gambling and Lotteries upon submission of the following documents:
- documents certifying ownership;
- certificate of attribution of appropriate category to the hotel; and
- specification sheet for the premises.
Once issued, such a permit can be used by the owner of the premises to conduct gambling activities or it can be lent to another person.
State online monitoring system
- Keeps records of all operations of gambling organizers.
- Information is transferred from gambling organizers to the State monitoring system in real-time.
- Once the system is launched, all gambling organizers must be connected to it within six months.
- State-owned Commission on Gambling has unrestricted access to depersonalized data, which is kept in the system and ensures functioning of the system.
2. GENERAL REQUIREMENTS FOR BECOMING A GAMBLING ORGANIZER:
- resident of Ukraine, subject to the laws of Ukraine, having organization of gambling indicated as a principal activity;
- minimal authorized (compounded) capital of UAH 30 million (about EUR 1 million) held in cash; sums of authorized capital which exceed the minimum may be formed in other forms (securities, property or property rights); cannot be formed using funds, sources of which cannot be identified or budget funds (not applicable to hippodromes which intend to conduct betting on horse races);
- must not have among its participants local government bodies or non-profit organizations (not applicable to hippodromes which intend to conduct betting on horse races);
- must have a valid bank guarantee or special bank deposit securing payout of winnings in an amount not less than the equivalent of 7200 minimum wages (about EUR 1,1 million in 2020);
- requirements for manager and chief accountant: impeccable business reputation, not a citizen of an aggressor state;
- beneficiary owners, founders and participants of the gambling organizer cannot be residents of aggressor states, countries that listed as non-cooperative in terms of anti-money laundering by FATF, or have any shares owned (directly or indirectly) by residents of aggressor states;
- the minimum age for participating in gambling, attending gambling establishments or being employed by gambling organizers is 21;
- if a gambling organizer allows a person with restricted access to gambling to participate in any gambling activity, tenfold damages must be paid;
- banks, other financial institutions, non-profit organizations and legal entities for which conducting gambling is prohibited by a court decision cannot be gambling organizers.
3. REQUIREMENTS FOR THE GAMBLING ORGANIZER’S ONLINE SYSTEM:
- data protection from loss, modification, falsification, copying, and illicit access;
- any physical elements of the online system for the gambling process must be situated on the territory of Ukraine; all data must be processed on the territory of Ukraine;
- must ensure timely acceptance of bets and payout of winnings;
- recording every operation related to gambling;
- connected to the state online system;
- gambling organizer must ensure certification and inspection of online system by an accredited certification agent (foreign certification institutions, accreditation of which is acknowledged in Ukraine according to international treaties).
4. ADVERTISING OF GAMBLING
- advertising in special publications and media devoted to gambling;
- advertising on the Internet;
- must be accompanied with a warning on the risks of gambling addiction;
- only the gambling organizer which owns the brand being advertised and possesses a valid license may purchase advertising;
- advertising must contain accurate information, as well as information on the license and the authorized body that issued the license.
- advertising on radio and television (from 6 AM until 11 PM), in print publications and media, inside and outside of vehicles and underground carriages, on goods (including clothes) targeted at people under 21 years old, in places hosting events targeted at people under 21 years old;
- using persons under 21 years old as models for advertising of gambling;
- sponsoring of broadcasts (except broadcasts of sporting events) or events targeted at persons under 21 years old;
- targeting advertising at vulnerable groups (minors, low-income, persons with mental disabilities).
REGULATION OF SEPARATE TYPES OF GAMBLING
Requirements to the premises
To be eligible for the standard casino license:
- must be on the territory of a 5-star hotel with at least 150 rooms for Kyiv;
- 5-star or 4-star hotel with at least 100 rooms for other cities;
- must be on the territory of a recreational complex, situated outside of the city, with an area over 10 000 square meters and a 5-star hotel contained in the complex;
To be eligible for an investment license:
- investing in a gambling organization which plans to build (does not include reconstructions) a new 5-star hotel with at least 200 rooms for Kyiv, or 150 rooms for other cities;
A special gambling zone may be created by a decision of the Cabinet of Ministers of Ukraine (up to 5 special gambling zones are permitted on the territory of Ukraine):
- must be situated within the borders of a city but outside residential areas, on territories which require additional economic stimulation;
- in such zones the minimum area of the casino must be 10 000 square meters;
The category of the hotel is approved with the certificate of attribution of such a category;
Minimum area of the premises – 500 square meters; the premises must be isolated in order to prevent entrance without identification;
Premises must have security alarms and video surveillance.
- at least 10 gambling tables, including two roulette tables, and at least 50 slot machines (2) in cities with a population of over 500 thousand people;
- at least 5 gambling tables, including at least one roulette table and 20 slot machines for casinos in other cities or outside them;
- at least 50 (under employment agreements);
In case casino is created in a special gambling zone:
- at least 20 gambling tables, including 4 roulette tables;
- at least 250 slot machines;
- at least 200 employees;
- must have a restaurant.
- One casino per license;
- Casinos are allowed to organize poker games and other types of casino gambling; organizing lotteries or receiving bets for results of lotteries is not allowed in casinos;
- Standard license is valid for 5 years, investment license for 10 years;
- Price of a standard license for a casino in Kyiv is equal to 60 000 minimum wages for 5 years (approx. EUR 1,9 million. annually), for other cities or outside cities – 30 000 minimum wages for 5 years (approx. EUR 950 000 annually);
- Investment licenses are given free of charge;
- The annual fee for a license for a roulette table is equal to 175 minimum wages (approx. EUR 27 500), for a gambling table – 90 minimum wages (approx. EUR 14 000), for a slot machine – 6 minimum wages (approx. EUR 940), until the State online monitoring system is launched license fees are tripled; equipment fees are also charged under an investment license;
- License fees are paid annually.
2. ONLINE CASINO
- Must conduct activities using the brand of gambling organization based on the relevant license using an online system which complies with the Law; only one brand is permitted under one license, and only one brand for one website; at the same time, it is permitted to conduct several types of gambling under one brand or using one website; information on the brand and website that will be used for organizing and conducting gambling must be provided at the time of application for a license;
- The website must be in a .UA domain, in the ownership or use of the gambling organizer, and may be used for conducting gambling upon notification of the authorized body; the website must be indicated in the state registry of online casino gambling organizers;
- A separate license is required for organizing online poker games;
- Conducting any type of gambling imitating lotteries, including accepting bets on results of lotteries, is prohibited;
- May receive bets from the territory of Ukraine or from abroad, from persons who are not restricted from participating in gambling;
- Access to gambling resources that are not organized by the organizer of gambling under a valid license is prohibited;
- Websites and mobile apps must provide certain information, including information on the organizer and equipment used, rules of gambling, the risks of gambling addiction, contact details of rehabilitation centers for addicted persons and information on the percentage of winnings;
- Receiving of bets and payouts of winnings must be conducted in cashless form in compliance with Ukrainian anti-money laundering laws; by submitting a bet the player agrees with the rules of gambling, set up by the gambling organizer;
- Preventing a negative balance in players’ accounts; it is prohibited for a gambling organizer to accept bets on credit or with delayed payment (except for the use of credit or debit cards with pre-authorization) or provide loans to players; players may set up a maximum limit of money they can spend on gambling.
- Under the license for online casinos it is prohibited to provide telecommunication services (organizing Internet clubs or cafes).
Safeguards to prevent provision of access to gambling online without a license
- Any person providing access to gambling without a license and hosting providers must block access to resources providing access to gambling without a valid license upon request of the authorized body within 3 days; the requirement for telecommunications providers to block access to such resources has been removed;
- Banks must block payments to any account belonging to entities providing access to gambling without valid license.
Cost of license:
- equivalent to 6 500 minimum wages for 5 years (approx. EUR 1,1 million, EUR 205 000 annually);
- The cost of a license is divided into equal annual payments;
Before the state online monitoring system is launched, annual payments are tripled.
3. BETTING ACTIVITIES
- Both online and offline betting through betting stations permitted;
- Betting stations may be situated in 3*-5* hotels with at least 50 rooms (in Kyiv) or 25 rooms (in other cities), as well as hippodromes;
- Minimum area of betting stations – 50 square meters;
- It is prohibited to receive bets for:
- results of virtual events;
- results generated by a randomizer;
- results of any other types of gambling or lotteries, or any events that contain visualization of gambling or lotteries;
- events related to possible violations of the national sovereignty and integrity of Ukraine, moral bases of society or constitutional rights of citizens;
- It is prohibited to:
- provide spirits, beer, wine or tobacco products as winnings or instead of winnings;
- force attendees of a certain event to participate in betting;
- conduct bookmaking activities that are not prescribed by the rules of the betting;
- conduct betting without license;
- imitate betting activities while conducting other types of gambling;
- Betting organizers may restrict participation in betting by:
- removing certain events from the lineup of events (with compulsory returning of bets received for this event);
- refusing to pay out winnings to anyone who did not make a bet and has no right to receive winnings; this provision is not applied to cases of refunding bets made by persons under 21 years old, or legally incapable persons;
- refusing to pay out winnings on the bases prescribed by Ukrainian anti-money laundering legislation; in such cases a grounded allegation must be provided in written or electronic form within one day;
- restricting access to a betting station or website for person who disturbs public order, obstructs betting or the payout of winnings, violates the rules of betting, violates the dignity of the betting organizers, its participants or third persons, refuses to provide documentation for age verification or obstructs normal bookmaking activities in any other way;
- The maximum time for the payout of winnings is 10 days; prolongation of the maximum of 10 working days may be made by the betting organizer with mandatory notification of player and providing an explanation for the prolongation;
- A certified and tested online system in ownership or use for the recording of operations of receiving bets and payouts of winnings, containing all the events for which bets have been received, having a mechanism for identification of players and their age, as well as personal data protection mechanisms;
- Receiving bets is allowed from the territory of Ukraine and from abroad;
- The domain name of the website must be in the ownership or use of the bookmaking organizer, or its participant (founder) which exercises control over the organizer of bookmaking activities;
- Betting and payouts of winnings are conducted in cashless form through the online system of bookmaking activities organizer;
- It is prohibited to place betting stations in administrative buildings, in pre-school education institutions and schools, cultural institutions, medical institutions, in special entertainment centers for children, religious institutions, residential buildings, and in temporary buildings;
- It is prohibited to install equipment imitating other types of gambling in betting stations.
- Types of licenses:
- for betting activities (single license for offline and online);
- for betting on hippodromes (offline only); ♦ separate annual payment for each betting station (offline only);
- The cost of a license for betting activities: equivalent to 30 000 minimum wages for 5 years (approx. EUR 945 000 annually) for organizing and conducting betting;
- For offline betting, there is an additional annual payment for each betting station, equivalent to 30 minimum wages (approx. EUR 4 700) annually;
- The cost of a license for hippodromes is equal to 1 minimum wage (EUR 157) and allows the opening of one offline betting station that accepts bets on competitions held on the hippodrome in question; The cost of a license is divided into equal annual payments.
- Before the state online monitoring system is launched, the annual payment for a license for betting activities is tripled; the annual payment for betting stations or hippodromes is not increased.
4. SLOT MACHINE HALLS
Requirements for slot machines
- Must be owned by the gambling organizer;
- Must be certified by a certification agent, approved by the market regulator; the software used by the slot machines must be licensed and certified; the gambling organizer must ensure the certification and inspection of all equipment;
- Must be connected to the online system of the gambling organizer, transferring data to the state online monitoring system, or directly connected to state monitoring system; slot machines must be connected to the state online monitoring system within 10 days of the granting of a license for gambling activities, or from the day of receiving a license for a slot machine;
- Every slot machine must indicate:
- manufacturing number, year of manufacture, information on modifications or repair (if applicable), name of manufacturer; the percentage of winnings is to be indicated on the front panel;
- additional information on the organizer, gaming facility location and respective licenses should be available on the official website of the authorized body;
- It is prohibited to introduce modifications to slot machines that are not approved by the manufacturer or not prescribed by the technical specifications;
- It is prohibited to use slot machines with a percentage of winnings less than 90%; it is prohibited to use gambling machines with a winning percentage which is set up manually;
- It is prohibited to use non-certified slot machines, slot machines manufactured earlier than 2019, produced or supplied by an aggressor state, or equipped with a cash terminal;
- All slot machines must be equipped with a randomizer.
Requirements for the organization of gambling in slot machine halls
- Can be located on the territory of 3*, 4*, 5* hotels with at least 50 rooms (for Kyiv) or 25 rooms (for other cities);
- Having at least 300 square meters of floor area;
- Having at least 50 slot machines in one slot machine hall;
- It is prohibited to locate slot machine halls in the buildings of state or local authorities, religious institutions, closer than 500 meters to residential properties (including non-residential facilities of apartment blocks), unfinished buildings, kiosks, tents, or temporary or movable property;
- It is prohibited to locate slot machine halls in towns with a population of less than 10 000 persons;
- Slot machines must not be visible from outside the premises;
- The category of the hotel is proven by a certificate of category attribution;
- The receipt of payment and payouts of winnings must be conducted exclusively through cash desks, and in compliance with anti-money laundering legislation;
- Winnings must be paid out within 30 days.
- The cost of a license for organizing gambling in slot machine halls is equal to 7 500 minimum wages (approx. EUR 1,2 million, EUR 236 150 annually); the license fee is divided in equal shares to be paid annually;
- The annual payment for every slot machine is equal to 6 minimum wages (approx. EUR 940); until the state online monitoring system is launched, the payment is tripled (approx. EUR 2820);
- Under one license for organizing gambling in slot machine halls it is permitted to open slot machine halls and install up to 250 slot machines;
- Licenses must be received for organization of gambling in slot machine halls and for every slot machine separately;
- The license for organizing gambling in slot machine halls is valid for 5 years.
5. ONLINE POKER
- Conducted based on the license for organizing poker games through the Internet, using an online gambling system which complies with all the requirements of this law, through a website which is indicated in the state registry of online poker organizers and mobile applications;
- May receive bets from persons who are not restricted from gambling in Ukraine and abroad;
- Under the license for online casinos it is prohibited to provide telecommunication services (organizing Internet clubs or cafes).
- License is issued for 5 years;
- License fee is equal to 5 000 minimum wages (approx. EUR 160 000);
- License fee is divided into equal parts and paid annually.
6. SERVICES IN SPHERE OF GAMBLING
- License is issued for 5 years and allows residents of Ukraine to supply and provide software used for conducting gambling to gambling organizers in Ukraine and nonresidents who have a foreign license;
- License fee is equal to 300 minimum wages (approx. EUR 47 230).
- Not considered to be gambling and regulated by a separate law on lotteries;
- Minimum age for participation in lotteries – 18 years;
- Minimum authorized capital for an organizer – UAH 30 000 000;
- Distribution of lotteries is prohibited on any temporarily occupied territory of Ukraine, in government premises, in cultural and medical institutions, residential premises, religious institutions, specialized entertainment centers for children, in objects of unfinished construction, or through the Internet;
- All bets must be recorded on an electronic bet-recording system.
- Only three licenses are available; to qualify for these, an organizer must have at least three years of experience in organizing (not distribution) of lotteries;
- A license is issued for 10 years; the cost of a license is equal to 28 000 minimum wages (approx. EUR 4 408 133); the license fee is divided in equal parts and paid annually;
- Imitation of other types of gambling under a license for lotteries is prohibited.
(1) However, the current version of the Law contains a discrepancy related to the appointment procedure of Commission members, which could make practical application of the Law impossible until it is amended.
(2) Requirements for slot machines are listed in Section 4 “Slot machine halls”.