Poker Kiev Ukraine
On 14 July 2020 the Ukrainian law “On State Regulation of Organising and Conducting Gambling” (Gambling Law) finally reached the end of its six-year journey to adoption. President Volodymyr Zelenskyy is expected to sign it into law soon, at which point it will formally become the cornerstone of a new regulated European market, lifting the ban introduced in 2009.
Alina Plyushch (pictured) and Dmytro Hotsyn of the gambling desk of law firm Sayenko Kharenko explain the nuances of the new Gambling Law.
Full List of Casinos In Ukraine If you are passionate about gambling and like casinos, you do not need to go to Las Vegas, you can go to Ukraine and spend a great time in the best casinos in Ukraine. Gambling business in Ukraine is well developed: slot machines in Kiev, as well as poker and other gambling outside the capital are very popular. Fortunately, the Sport Palace Kiev in Kiev, Ukraine, was able to step up and take over the first date of the EPT Season Six. It will mark the first official poker tournament in the Ukraine. PokerStars issued a press release which stated that, “The Kiev event replaces the previously-scheduled 2009 Russian Open poker tournament due to be held.
The operator: general requirements
While both local and foreign investors will have access to the market, only legal entities registered in Ukraine may become gambling operators. However, certain ownership restrictions will apply.
In particular, gambling operators shall not be controlled by a Russian resident nor have a Russian person as a shareholder or Ultimate Beneficial Owner (UBO). Neither should they have shareholders registered in countries currently blacklisted by the Financial Action Task Force (FATF), in other words North Korea and Iran.
In addition, a gambling operator must have a share capital of at least $1.1m (UAH30.7m/£906,000/€1.0m). They must open a deposit account or obtain a guarantee from a Ukrainian bank for $1.2m, and they must have a dot.ua domain name.
More generally, gambling operators are also obliged to follow responsible gambling standards and implement policies to prevent gambling addiction.
The verticals
Land-based casinos
Casinos can be located in 5-star hotels with 150 rooms in Kyiv, 4- and 5-star hotels with 100 rooms in other cities, out-of-town resorts with a total area of at least 10,000 m2 or “special gaming zones” within territories to be defined by the Ukrainian government. Total casino areas in such zones must measure at least 10,000 m2.
In addition, the law creates investment licences. Holders of investment licences are exempt from licence fees for 10 years on condition that they construct a new 5-star hotel with 200 rooms in Kyiv or of 150 rooms in another city. Investment licences may help boost underdeveloped regions by offering an opportunity to turn them into tourist destinations.
Online casinos
Online casinos are covered by a separate licence.
There are no particular requirements to premises and retail presence for an online casino operator (except for being registered in Ukraine). Previous drafts provided for keeping the operator’s servers in Ukraine but this provision has been dropped.
However, additional requirements for online casino operators may be set out in the licensing conditions.
Betting
A single licence covers both land-based and online betting.
The minimum betting shop area shall be at least 50m2 and these shops may be located in 3-, 4-, and 5-stars hotels with 50+ rooms in Kyiv or 3-, 4-, and 5-stars hotels with 25+ rooms in other cities.
These strict location requirements limit materially the offline betting opportunities for the majority of potential punters. Because of this, regulated online betting is expected to skyrocket in the near future.
Slot machine halls
Slot machines are allowed in casinos (with a general casino licence) and in slot machine halls (covered by a separate licence).
Operators of slot machine halls may open the venues at 3-, 4-, and 5-stars hotels with 50+ rooms in Kyiv or 3-, 4-, and 5-stars hotels with 25+ rooms in other cities.
These halls are not allowed in cities with a population of less than 10,000 people and cannot be placed within 500 metres of educational establishments. Operators of slot machines are prohibited from using equipment manufactured before 2019.
Online poker
Under the Gambling Law, specific licences are issued for online poker.
Offline poker can take place only in casinos as a casino game or in the form of competitive poker, which is not considered a game of chance.
Licence fees and taxes
Licence fees
The first versions of the draft Gambling Law were criticised for the exorbitant licence fees. Lowering these was deemed essential by the majority of international gambling operators interested in the market. Thanks to the multilateral dialogue with all stakeholders, the final version of the Gambling Law features more moderate fees.
Online casinos – $1.1m for a five-year licence
Betting – $5.1m for a five-year licence and $5,100 annually per betting shop
Slot halls – $1.2m for five-year licence and $1,000 annually per slot machine
Online poker – $850,000 for a five-year licence
For land-based casinos, a five-year licence will cost approximately $10.2m for casinos located in Kyiv and $5.1m for casinos in other locations.In addition, casino operators will pay equipment fees ranging from $30,000 for a roulette wheel, $15,000 for a gaming table and $1,000 for a slot machine.
Taxation
Ukraine’s parliament, the Rada, is yet to make a final decision on how it will tax gambling profits. Among the several taxation drafts proposed, the Rada is likely to vote for one that establishes a gross gaming revenue (GGR)-plus-corporate income tax regime.
GGR tax rates are expected to differ for each gaming vertical, ranging from 5% for betting to 10% for online casino and 12.5% for land-based casinos and slot machine halls.
Corporate income tax is set at 18% in Ukraine.
Practical issues
Increased licence fees for certain gaming verticals during the “transition period”
The Gambling Law provides that the licence fees for the online casino licence, betting licence and slot machine licence shall be tripled until the so-called “Online Monitoring System” is put in place.
The Online Monitoring System is a state-owned system of oversight and control allowing real-time monitoring of the national gambling industry. It is supposed to be launched within 30 months of the Gambling Law entering into force.
It is likely, though, that the launch may be delayed for technical reasons or due to financial hurdles. In this case, gambling operators may face significant increases in their licence costs for quite some period of time.
Poker Kiev Ukraine Wikipedia
Lotteries: a market on the edge
The first draft of the Gambling Law regulated all gaming verticals including lotteries to avoid potential overlaps and lacunas.
However, the final wording was modified to exclude lotteries from the legal framework envisaged by the Gambling Law.
As a result, the lottery market remains under the umbrella of the outdated State Lotteries Law. Although separating gambling verticals is not unusual, it is questionable whether principles and restrictions of the gambling legislation can be efficiently harmonised with those of lotteries legislation.
In addition, the State Lotteries Law means that international lottery operators may be unable to access the local market. To rectify this, further changes in gambling regulations would be needed.
Last but not least, separating games of chance and lotteries (which are not legally considered as games of chance) may preserve the current market situation, where de-facto slot machines and betting services are marketed as “e-lotteries” and “sport lotteries”.
The market: what’s at stake?
It is hard to estimate the current turnover of the market in Ukraine because it is almost entirely black, though estimates put it at around the €1bn mark. A successful relaunch of the Ukrainian market might triple this figure.
The government, in turn, expects to bring in an additional $160m in extra revenues by the end of 2020 alone thanks to legalisation of the gambling industry.
However, the Ukrainian consumer might also want access to more sophisticated products from other markets. This may allow international investors to introduce more complex games into the local market and in turn enjoy higher levels of spending from Ukrainian players.
Despite the intricacies of the Gambling Law, we are confident that a questionable regulation that actually exists is better than a blueprint of the perfect one.
Gambling in Ukraine is currently restricted by law by way of the Ukrainian parliament’s passing of “On Prohibition of Gambling Business in Ukraine” in 2009. (1) Any placing of bets in which the outcome is found to be determined by chance in whole or in part is considered gambling under the law, and is banned, except where permitted by law.
So what was done here is to specify which types of gambling are permitted, and aside from allowing things like lotteries and gambling for charity, it also set out “gambling zones” where gambling is allowed, which includes hotels rated at least 4 stars and with 100 rooms or more, certain entertainment and cultural complexes, and cruise ships.
So it’s not that gambling was prohibited in Ukraine, as the title of the law suggests, it’s more like it was regulated, and at least part of the rationale for this new regulation was the fire they had in a gambling hall immediately preceding the law in which 9 people lost their lives.
A lot of the unapproved gambling operators didn’t exactly go away quietly though and since then there have been hundreds of arrests resulting in gambling operators being shut down and their equipment seized. This is the target of this new law, to ensure that whatever gambling occurs in Ukraine meets with government approval and to look to shut down the gambling which does not.
The Crimea region was also deemed to be an approved gambling zone although this area is now under dispute as the Russians have effectively taken it over, and have established it as a gambling zone of their own. So this area isn’t really subject to Ukrainian law for all intents and purposes at present.
Playing Poker In Ukraine
When the law passed, people claimed that poker wasn’t gambling and therefore not subject to the new laws, since poker was considered a sport by the Ukrainian government, but the government quickly stepped in and removed poker being designated a sport so it would be instead viewed as gambling.
However, the poker industry in Ukraine didn’t take this lying down, and they disputed the government ruling, taking it all the way to the Ukrainian Supreme Court, who ended up ruling that poker was indeed a sport and therefore was distinct from the gambling with Ukrainian laws prohibit. (2)
So this resulted in a resurgence of poker clubs in Ukraine, who now offer dozens of places that players can play poker at, throughout the country, especially in the Kiev area which is a hotbed of poker and features the largest poker room in Eastern Europe (3).
In spite of the fact that some people have interpreted the Supreme Court’s decision to only deem tournament poker as a sport and not cash poker, both forms of poker are offered now in Ukraine, and cash poker here is even more popular and even more widely offered, even though there is plenty of tournament poker offered as well.
Online Gambling in Ukraine
The government claims that the new law applies equally to both land based and online gambling, and they have stated that online businesses offering gambling should be shut down alongside their land based counterparts. (4)
This presumably would mean that if a business set up an internet gambling site in Ukraine the government would seek to shut them down, although this really has little practical effect, since there are a lot of online sites that operate outside the country and therefore aren’t subject to Ukrainian law at all.
This did cause Ukrainian online gambling operators to move their servers outside the country to avoid the law, as the original law did provide this loophole, but it was closed in 2011 and any Ukrainian business found to be involved in online gambling is subject to being charged. (5)
In spite of poker now being declared a sport by the courts though, considering it to not consist of “gambling” in Ukraine, and therefore not illegal, there are no online poker sites in Ukraine, although players have no trouble playing at the large selection of online rooms located outside the country, and some even offer play in the Ukrainian language.
It remains to be seen if any Ukrainian operators will look to set up poker rooms within the country but keep in mind that the biggest reason why operators do this is to comply with regulation, meaning that they are told they have to do that by the government, and it’s simply easier to set up shop wherever it would make the most sense to based upon tax and other laws.
The Future Of Online Poker in Ukraine
So if Ukrainian businesses were looking to set up a poker room it would make more sense for them to run it from another location anyway, as they have been forced to do with their other gambling ventures, like sports betting and casino, which are not considered to be sports in Ukraine by anyone and would be illegal.
Given that poker sites offer other forms of gambling as well on their sites, and there is obviously money to be made off these other forms of betting even among poker players, it really wouldn’t make sense for them to set up in Ukraine regardless of what the law may be toward poker right now.
The bottom line though is that Ukrainians can play all the live poker they want right now at one of the poker clubs in the country, and they can also play as much online poker they want as well, at any poker site they wish, poker is considered a sport and therefore legal, and there are no regulations either causing the online poker sites they wish to play at to have to pay higher tax rates, and they are located in low tax rate areas, so this is an ideal situation right now.
Poker Kiev Ukraine News
In time, Ukrainian officials may look at regulating online poker and perhaps even online gambling in general, but this is not on the horizon right now, and that suits players just fine.
References:
(1) Gambling in Ukraine
(2) Online Poker Sites in Ukraine
(3) Poker in the Ukraine
(4) Ban On Gambling in Ukraine Applies to Internet Casinos As Well
(5) Online Gambling Law in Ukraine
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