Reports UKRAINE - MARKET REPORT
lottery operations, also needs big incentives to set up shop. Only 10 per cent of bettors use bookmaking land-based facilities. With high licensing fees this may limit offline betting opportunities although online betting is expected to boom.
Te new law is also expected to reduce the number of slot halls that exist in Ukraine today by at least eight times and the number of slot machines by 20 times.
Tere is no limit on the number of licences that can be issued per category and the National Police have the job of locating and shutting down any illegal operations although these operators are then able to submit a licence application for legal operations if they wish.
In December last year, the adoption of the Licensing Conditions was the next step in the process to kick-start Ukraine’s gambling market, so companies now interested in setting up business in Ukraine can apply to the new regulator - Regulatory Commission on Gambling and Lotteries (KRAIL) - for gambling licences.
KRAIL has been set up to implement state policy in the field of gambling and lottery and oversee the state supervision of the gambling market including licensing, monitoring and inspections and player protection. Te commission is made up of a chairman, Ivan Rudyi, and six members who can serve for four years and it was established at the end of September last year via Law No.891.
By the end of February, KRAIL had issued two licences for online casinos and was waiting for payment to issue another two – these are for the companies Spaceiks, Parimatch, Gamedev and First Element.
Spaceiks LLC was the first company to receive a licence for an online casino. Spaceiks owns the trademark Cosmolot and was registered in March 2020. Cosmolot CEO Sergei Potapov said it was an ‘important step’ to the creation of a ‘white’ market.
Te annual cost of an online casino licence is 6,500 MMW (UAH6,000 in 2021), which amounts to UAH30m for a five year licence. However, the law stipulates that until the central monitoring system is established, the fees are tripled.
KRAIL’s Natalia Chuykova commented: “According to the law the Ukraine Gambling and Lotteries Regulatory Commission has two years since the adoption of the law to have the state online central monitoring system implemented. It means that, according to the law, this has to be accomplished by August 2022. However, we are doing everything we can to get it done as soon as possible.”
P54 WIRE / PULSE / INSIGHT / REPORTS
In December, the adoption of Licensing Conditions was to kick start the Ukraine’s gambling
market so companies now interested in setting up business in Ukraine can
apply to the new regulator - Regulatory Commission on Gambling and Lotteries (KRAIL) - for gambling licences.
Before Spaceiks was approved, five other companies were rejected by KRAIL due to incorrect documentation. Spaceiks was rejected three times before the commission finally granted approval.
Previously, Cosmolot held an instant lottery licence under UNL’s operations, but stopped with this activity two years ago.
Apparently, by the beginning of February 2021, some 15 companies had their licence applications rejected by KRAIL. Some say KRAIL is incompetent and unable to handle the licensing procedure, whilst there is a call for greater transparency.
Merkur Gaming signed a MoU with KRAIL at the end of February to bring its experience in manufacturing and operating to the Ukraine and will work alongside the authorities to help create market opportunities. Te company has also opened a Kiev showroom and will provide in-country sales and after-sales service, plus technical and logistical support.
Parimatch was founded in Ukraine back in 1994
“According to the law the Ukraine Gambling and Lotteries Regulatory Commission has two
years since the adoption of the law to have the state online central monitoring system implemented. It means according to the
law this has to be done by August 2022.”
Natalia Chuykova, KRAIL
and has grown into an international entertainment and technology business with more than 2.6 million customers worldwide. It was among the first companies to submit an application for gambling and applied for three categories within the betting category.
Maksym Liashko, Partner at Parimatch said: “Te government of Ukraine foresaw in the state budget the income from the gambling industry in the amount of approximately €225m. Almost all types of gambling are legalised in Ukraine, including betting, virtual games, casinos and poker etc. which makes the international companies look closely at this newly opened market.
“However, the key issue of taxation for the industry still remains unresolved. Work still remains to be done on reforming tax legislation before the Ukrainian market becomes attractive to foreign investors. Under current legislation the gambling industry is going to be triple taxed – 18 per cent tax on GGR, 18 per cent personal tax on winnings and 18 per cent corporate profit tax – in addition to the licence fee (one of the highest in Europe), which altogether creates a burden for the newly created industry.
“Taxation should be transparent and logical so that it doesn’t create additional obstacles for foreign investors. At this stage the cost of licences for various types of gambling activities is so high that together with taxation, it does not make investments in the Ukrainian market attractive. So Ukraine could lose the competition in terms of investment to other countries.
“Under favourable legal conditions specialist market capacity and qualifications will allow Ukraine to become a gaming hub for the Eastern Europe region. Like Malta and Manila, Ukraine now has the potential to become a centre of expertise for gambling entertainment.”
Te new gambling law is also a well needed boost for the struggling Ukraine hotel and tourism industry. Te year 2019 was a dismal one and figures dropped significantly with the average hotel occupancy in Kiev during the first eight months of 2019 at just 54 per cent. Most badly hit were four and five star hotels, which saw occupancy drop to around 43 per cent. Te arrival of Covid-19 in 2020 has just about finished the industry off.
Tere are over 1,000 hotels in the Ukraine. Only a handful are five star hotels. Kiev sees around 4.9 million tourisms each year, of which three million are domestic guests.
A report on the Ukraine Hotel Market and impact of Covid-19 called ‘Sentiment Survey’ was conducted by Horwath HTL and the Ukrainian Hotel and Resort Association and was released in January this year.
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