Ukraine passes bill to regulate online gambling

Ukraine online gambling

Online gambling in Ukraine has been passed into law, following a special sitting of the Verkhovna Rada.

Draft Bill 2285-D was voted in favour of by a considerable margin of 248 votes for and 95 against.

The legislation, which was approved following a second reading, is set to become law next month.

Ukraine had initially outlawed all gambling except for state-run lotteries in 2009, but has since made attempts to reverse this – which look to have finally been successful.

Amended bill more popular than the first 

2285-D was originally proposed in October 2019, but failed to pass its first reading in December. However, in January 2020 it was passed after various amendments.

The legal gambling age will be 21 under the legislation, while affiliate marketing will also be permitted. Originally, this had been outlawed. Other forms of third-party advertising will also be allowed.

Online gambling operator licences will cost UAH 30.7 million (£906,000/€1.0m/$1.1m). This fee will be paid every five years when licences are renewed.

Certain businesses will be restricted from operating in the market. The bill says that operators “must not be controlled by residents of an occupying state and/or the aggressor state in relation to Ukraine”. It has been confirmed that this applies to Russian-owned businesses, as other legislation in the country has also said.

The above clause will also apply to Russian directors, heads of accounting and ultimate beneficial ownership (UBOs). However, this does not seem to be applicable for gaming suppliers – with the exception of land-based slots.

What happens now? 

The legislature in Ukraine will now need to apply separate legislation related to taxation. There are five different bills up for consideration.

The favourite to pass is 2713-D. This taxes online gambling and lotteries at 10% of gross gaming revenue (GGR), with land-based activity taxed at 5% and 12.5% for land-based slot machines.

Bill 2713 would tax all gambling and lotteries at 25% regardless. Meanwhile, 2713-1 would apply a 12.5% tax for online gambling operators. This would be 22% for lotteries and 7.5% for land-based gaming.

2713-2, if passed, would tax all operators at 25% – just like Bill 2713. As for 2713-3, this would result in no tax having to be paid whatsoever. Instead, Ukraine would make money from licensing fees – as well as normal business and income taxes.

Ukraine shut down its regulated gambling market in 2009, after a fire at a slots parlour in the eastern city of Dnipropetrovsk resulted in nine deaths. Following the tragedy, only state-owned lotteries were permitted.

Ever since 2015, the re-regulation of gambling in the country has been sought after. In April 2017, the government pledged to bring back legalised gambling by 2018.

Land-based gambling in Ukraine will require all casinos to be located in hotels.