On January 16, 2020, after difficult debate, parliamentarians finally succeeded in adopting in the first reading of the Bill No. 2285-д “On State Regulation of activities related to the organization and conducting of gambling” (hereinafter referred to as the Bill). This means that Ukraine has become one step closer to the formation of a civilized gambling market, however this is not the end, as the road to the session hall, the Bill preparation for the second reading and adoption of the act in whole involves a fierce struggle of different forces.

In general, the history of this act has already been covered by legends and myths, as almost a war has flared up between potential players in the gambling market over the past few months. We will not dwell on behind-the-scenes games, let’s note only that the first version of the Bill, introduced by the Cabinet of Ministers of Ukraine in October 2017, was successfully failed by the Parliament, after which 7 alternative bills were registered. Incidentally, none of them came to the voting hall. But the Bill No. 2285-д was not long in the walls of the Supreme Council of Ukraine. It was registered on December 18, 2019, and in less than a month, successfully passed the first reading.

What prepares for Ukrainians the Bill No. 2285-д? It defines the legal bases for the implementation of state regulation in the field of gambling organization and holding in Ukraine, defines the conditions of their functioning, aimed at the realization of rights and legitimate interests of citizens, support for health care, sports and culture.

Firstly, the Bill defines what gambling is. This is any game, the condition of participation in which is the staking by the player, which gives the right to win a prize, the presence and size of which depends entirely or partially on the randomness and/or knowledge and skill of players.

Secondly, the Bill defines casino gambling, bookmaking, slot machines, lotteries and poker. An innovation compared to the legislation that was valid until the gambling prohibition in 2009 is that now not only offline gambling but also online gambling can be allowed. According to the lawmakers, this will allow to attract additional funds to the budget at the expense of people who got accustomed to playing in the Internet without leaving home. In general, this approach is in line with global trends, as online casinos and other gambling are gaining such a popularity in many countries around the world, that they may eventually be able to compete even with offline ones.

Thirdly, another innovation was the increase in player’s age from 18 to 21 years old, as well as the establishment of the requirements for players and their identification. With it, the Bill provides for severe financial penalties for failure to comply with the relevant requirements and restrictions.

Fourthly, the Bill provides for the creation of a special body in the field of gambling organization and holding – the Commission for Gambling Development and Regulation. Perhaps, this decision is strategically correct, however the logical question arises – how long will it take to form such a body, staff recruitment, search of premises, and writing all regulatory acts necessary for its full-fledged functioning? Taking into account the experience of creating other new public authorities, it will take at least 1 year for full-fledged launch, which means that the rapid receipt of “gambling” money to the budget will have to be forgotten.

Fifthly, the Bill provides for the creation in the State Budget of a special Fund for the support of medicine, sports and culture, which will be formed at the expense of the funds received as payment for licenses. It is planned that these funds will be used for the prevention and treatment of mad dementia, the development of a medical aid system, the increase of salaries of medical and administrative staff of health care institutions, as well as for the support of sports and the financing of programs for raising the cultural and spiritual level of the Ukrainian population.

Below we offer a brief overview of the main requirements for each of gambling contained in the Bill:

• Casino halls are only allowed to be placed in “five star hotels” with a room fund of at least 150 rooms for Kyiv city and at least 100 rooms for other settlements (except Kyiv city). The gambling organizer provides the placement of gambling equipment in the amount of at least 10 gambling tables, including at least 2 gambling tables with a roulette ring, and at least 50 slot machines, in the case of location of a gambling establishment in settlements with population of more than 500 thousands of people; 5 gambling tables, including at least 1 gambling table with a roulette ring, and at least 20 slot machines in the case of location of a gambling establishment in a settlement with population of less than 500 thousand of people and outside settlements.
• Halls of slot machines should be located in the territory of buildings, in which “three stars”, “four stars” and “five stars” hotels are located with a room fund of at least 50 rooms for Kyiv city or at least 25 rooms for other settlements. The number of licenses for gambling organizing and holding at slot machines is limited and is formed at the rate of 1 slot machine per 1.000 population people of the relevant administrative-territorial unit of Ukraine, namely a regional center and region, save the population of the regional center of this region.
• In Ukraine, only state lotteries are allowed to be issued and organized by the Authorized Body by issuing for a state lottery operator of the license for lotteries issuance and organization in the order established by this Law. There are three types of lotteries – instant lottery; draw lottery (lottery with interest prize fund, lottery with fixed prize fund, mixed lottery, defined lottery, etc.) and combined lottery. In this case, the license for lotteries issuance and organization is issued by the results of the electronic auction conducted by the Authorized Body.
• For bookmaking activities, the Bill provides for special requirements for gambling equipment and its certification.
• Gambling organization and holding through the Internet is carried out by the gambling organizer under the brand name of the gambling organizer under the relevant license exclusively through online gambling systems. It is allowed to operate in the Internet both through the website and through mobile (software) applications on different operating systems. With it, the gambling organizer must have the website and the relevant domain name of the domain zone.UA on the right of ownership or use.
• Specific requirements for premises and conditions for offline poker tournaments are also established for poker.

Above, we have tried to analyze the main provisions of the Bill as briefly as possible, though it is clear that its text can be radically changed before the second reading. However, we continue to trace the latest gambling market trends.

If you would like to receive more information, please contact the VigoLex team for additional advice at the e-mail addresses provided on the website.