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What you need to know about legalization of gambling in Ukraine

Author : Anna Peshkova

Source : 112 Ukraine

Volodymyr Zelensky spoke about the legalization of gambling during his election campaign. Representatives of the shadow business spent the entire quarantine paying rent for premises in anticipation of legalization. Finally the law has been passed, but it is still impossible to play legally
21:13, 27 July 2020

Open source

The law is expected to come into force in September. A regulator body will be created, which will issue licenses to the business, and every Ukrainian who wishes will receive a completely legal right to bet on sports and visit casinos.

What are the rules for the game?
Where can you play

Bookmaker points, like slot machines, can be installed on the territory of three-, four-, five-star hotels, as well as at racetracks.

It is unlikely that after the full-scale launch of the market, one should expect that bookmaker offices will appear at every step - only about 10% of bettors use them.

As for the slot machines, the deputy head of the Servant of the People faction, Evgeniya Kravchuk, suggests that there will be 20 times less of them due to the limited number of licenses. However, experts emphasize: abuses with their location are possible. Vending machines may not be located in the hotels themselves but on the street.

It will be possible to play poker with bets only in the casino. But poker tournaments without bets are not considered gambling. You can only find casinos in special zones or in 5-star hotels. It is assumed that these can be attractive territories for tourists or, on the contrary, depressed regions of Ukraine. The places have yet to be chosen by the authorized body. So, you will probably have to take a bus to some Novi Sanzhary to play. Unless, of course, local residents protest against such a decision.

Mikheil Saakashvili, who heads the National Reform Council, is convinced that the norm is worth it, as depressed regions will turn into Klondike. True, Russian examples are not the most indicative in this regard. On the border of the Rostov region and the Krasnodar Territory, two casinos were actually built in an open field. The decision was recognized as unprofitable, since there was no high demand for this zone, to put it mildly. In Europe, there are many alternatives to play, and for many players, it is more expensive to go for adventures to the poor regions.

In general, Ukrainians reacted not very positively to the provision of special zones. The original version of the law, which only allowed casinos to be located in five-star hotels, was less toxic. But with grief, the norm was adopted in half - that casinos cannot be located closer to educational institutions than 500 meters away. So the parents of the younger generation, who are afraid of a bad example for their children, can breathe out.

As for five-star hotels, there are relatively few of them in Ukraine - about 40. It is not yet known exactly in which establishments it will be possible to play. But some holders of such assets have already announced their plans.

In Kyiv, you will definitely find where to spend your money. Boris Fuksman, co-owner of the Hilton hotel, has already announced that they plan to open a casino with an area of ​​about a thousand square meters on the territory. Investments will amount to about $ 20-25 million. There is also a project of an underground casino in Hilton Kyiv for 2 thousand squares with an area of ​​$ 5 million.

There are also many rumors about the future of the recently sold Dnipro hotel. Experts in the field of gambling suggest that the sale took place just for the placement of gambling halls. The building is now a four-star hotel, but capital investment could raise its rating.

Several investors, after the news about the legalization also announced the construction of hotels from scratch. Not far from the Kyiv-Pechersk Lavra at the end of 2022, they plan to build a Radisson Hotel. True, there is not a word about the casino yet. But ArtBuild Hotel Group directly states that one of the old buildings will be converted into a hotel in the center of Kyiv, and a casino will be placed there.

It cannot be ruled out that the gambling will take place at hotels of a lower "star rating". Mochalova suggests that we will be faced with "adding" stars on hotels. If there are more significant differences between hotels of a lower classification, then between establishments of 4 and 5 stars it is small and rather subjective. The difference is that five-star hotels resemble small "towns" in which you can find several bars and restaurants, shops, hairdressers, gyms. A fifth star can be added by the large size of the room, the presence of a second bathroom, the quality of the work of staff.

Register of gambling addicts and compensations

Opponents of the law fear that more people will want to try gambling due to legalization. Most likely, this really cannot be avoided. However, there will be restrictions.

If you are under 21 years old, you will not be allowed into the casino. The new law provides for mandatory identification. How exactly it will happen is still unknown. It is about checking "on the basis of a passport and identification code, or other methods to be used by the organizer." Identification assumes that the data will be entered somewhere and can be verified by a special authority. Experts see this as one of the reasons why the legalization of the gambling business may not work fully.

"What is the point of a registered passport for the tax authority? It's not just a written down name and surname in order to offer the client bonuses and call for promotions. It is needed to track taxes, registration of winnings. Therefore, not everyone wants to come and show themselves as a player in the casino. Someone will want to hide in an institution where they will not ask for a name. Why do we need this rule, if we want to fill the budget with taxes from legalization? "- asks Mochalova.

The psychotype of the player in society is not perceived in the best way. It is believed that these are people who are ready for anything for money. If the truth about business or government representatives who will visit gambling houses is revealed, it will seriously damage their reputation. If only for this reason, there will be demand for illegal casinos.

If you suddenly spend all the money in the casino, the organizer will not let you play in debt or with payment by installments. But it will be possible to pay with credit or debit cards.

Related: Kharkiv Palace Hotel 5* prepares to open casino

The creation of a register of self-limited persons is envisaged. You can independently submit an application to the authorized body created in the near future, or contact a specific casino with it. Your relatives can also get your data placed in the "register of gambling addicts" if they prove the presence of illness in court. If you are included in the register, then you cannot play from six months to 3 years. Legislators believe this will protect addicts. But, again, the existence of such a register is dangerous, because in Ukraine there are often leaks from databases.

If you are on the registry, incapacitated or you are under 21 years old, and the casino administration allowed you to play, you can get compensation from it. You must be reimbursed ten times the loss. This rule is intended to force establishments to treat identification responsibly. However, the implementation of this norm can be difficult.

"For another 2.5 years, the online monitoring module will not be launched. That is, in fact, monetary transactions in the casino will not be monitored yet. All this time, only the owner himself can be responsible for identification. Blackmail, manipulation, and the payment of amounts will begin. For example, the person bet 100 thousand hryvnia, brought a piece of paper that he is self-limited, and you give him money. Most likely, this norm will have to be rejected in the future," Mochalova comments.

What will the online game be like?

On the bookmaker and online poker sites that purchase licenses, you will also need to verify your identity using an electronic digital signature, MobileID, BankID method. The organizer can ask the player to send a photo or answer a video call. You don't have to go through the check every time. It will continue until you receive the first payment.

However, even now the offices require you to send a passport photo and go through photo verification in order to accrue your winnings. This is done so that one player does not place multiple bets from different accounts. Sometimes, when players use documents of relatives, they are blocked, detecting the same IP address of two different clients. 

So the actual online game for the client will not change. Unless, if you do not want to enter yourself into the register of gambling addicts, you can limit the game on the Internet in terms of time and amount spent.

Legislators will still need to pass a bill that provides tax rates for different types of gambling business. The option that is now being considered assumes that income taxes for the gambling will be 2-2.5 times lower than for other areas. But despite this, there are doubts as to whether gambling sites will come out of the "shadow" at all. Now some Ukrainian companies acquire licenses from Malta, Gibraltar or Curacao, Macau, or they refuse to bet - they say, they only sponsor a number of sports structures. Bookmakers work under the guise of IT companies under the "roof" of law enforcement officers.

Does large-scale legalization mean that popular sites that do not want to work transparently will now be closed?

The probability is very low. Fighting online casinos is difficult: blocking servers and pressure on providers is almost useless. In February, the Pechersky Court ordered to block sites such as PariMatch, Favorit, 1xBet, Kosmolot, but they calmly continue to function. Therefore, analysts, in particular, economic expert Olexander Okhrimenko, say: although 80% of gambling occurs on the Internet, the Ukrainian gambling law does not regulate this area.

Taxes on winnings

On the financial side, there is good news for the players. There is no need to pay deductions to the treasury for the winnings. According to the FATF (Financial Action Task Force on Anti-Money Laundering) regulations, a 28.5% tax will be levied on winnings from 2,500 euros. But while there is no online monitoring, it will be impossible to monitor the amount of winnings for at least 2.5 years. So you won't actually have to pay taxes.

In Georgia, for comparison, the tax on winnings ranges from 1 to 5%, but amounts up to a thousand lari are not taxed. In Belarus, the rate is 4%, in Kazakhstan - 10% for residents and 20% for foreigners. And in the United States, the tax reaches 35%.

On the one hand, the absence of taxation can increase the flow of tourists into the country. On the other hand, it can lead to a large-scale legalization of funds earned from crime. Just recall the public outcry caused by the three wins of ex-MP Oleg Lyashko in the lottery for half a million hryvnia.

After online monitoring starts, wealthy casino players may still face problems if the taxation of winnings is not settled.

What casino legalization will give to those who do not play

A reader who is not going to go to the gambling hall immediately after legalization is probably wondering: what does he get out of all this?

If you are not going to play, you will not feel the positive consequences of the formation of a legal market directly on your own skin. The effect will be indirect. It is assumed that the proceeds from taxes from the industry will go to the State Fund for the Support of Medicine, Sports, Education, Culture and Science. However, these are only intentions so far. Such a fund has not been created, and the memorandum we signed with the IMF generally states that we cannot create special funds, since all the "extra" money must go to pay off a loan. And there is no mechanism for distributing this money. Therefore, sports or tourism will not necessarily be financed - these can be other areas, economic expert Oleg Pendzin emphasizes.

What amounts are we talking about?

The state budget already this year includes proceeds from the legalization of "gambling" in 4.5 billion hryvnia (164 million USD). This is 118 hryvnia (4,3 USD) per each Ukrainian. And the head of the tax committee Danylo Getmantsev suggests that legalization can bring even more funds. But experts do not believe that they will be collected in six months. Licenses are too expensive and, most likely, those operators who cannot afford them will operate on a "franchise" basis.

If we dream that the budget will still receive 4.5 billion hryvnias, then for education this amount is a drop in the ocean. Last year, the budget allocated 25 times more for the sphere. For them, it will be possible to develop separate paramedic points, outpatient clinics.

But it is worth getting ready for the increase in the amount of advertising. However, there are a number of limitations. Gambling establishments cannot be advertised in the media and programs for Ukrainian minors, in places where entertainment and sports events are held. The outdoor advertising is allowed from 21:00 to 7:00. That is, most likely, these will be sliders. Signs of establishments should be less than 3 sq. m, the words "casino", "slot machines" and "bets" are prohibited.

However, experts believe that these measures will not be an obstacle to PR, especially on the Internet.

"We will see quite aggressive advertising of legalized gambling establishments. And this will probably expand the circle of people who will join this type of business. But we will cut off at least someone with restrictions," says Pendzin.

But while the market has not started yet, it is rather difficult to foresee all the nuances of gambling.

Related: 37 nightclubs fail to follow lockdown restrictions in Ukraine

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