Exclusive: Ukraine grants early Christmas present with new bill to reduce licence fees

Ukraine’s parliament is set to debate a new bill which would significantly reduce the cost of initial licence fees for prospective operators in the country’s fledgling gambling market.

Under the bill, which EGR understands aims to bring more clarity to prior legislation, operators will no longer be required to pay tripled licence fees while waiting for a new online monitoring system to be implemented.

To illustrate, under the previous legislation, prospective sports betting operators would have been required to pay an annual licence fee of €2.8m (£2.5m) while the system is being developed, falling to just €960,000 (£868,000) thereafter.

Online casino licensees would also have been subject to the same pre-system price hike, paying €624,000 (£564,000) during the development period, dropping to €208,000 (£188,000) once the system goes live.

This new bill will see both casino and sports betting operators benefit from lower licence fees from day one.

In addition to the reduced price, prospective operators will also be required to submit an “audited financial report” to Ukrainian tax authorities before the online monitoring system is implemented.

Another amendment included in the draft law widens the area in which the physical gaming servers of prospective licensees can be located, with the aim of enticing more international firms to enter the market.

“Technical means of the online gambling system, through which services are provided, servers can be located and information processing can be carried out in Ukraine, the European Economic Area and / or other countries, where similar principles, standards and requirements for activities in the field of organisation and conduct of gambling,” the law states.

The bill also provides for an accelerated timeline of the online monitoring system, stating that the Ukrainian parliament must have the system up and running no later than July 2021.

As part of this, the bill obliges the Verkhovna Rada to appoint either an internal testing laboratory or an external international lab to certify the online monitoring system no later than 1 January 2021, despite prior criticism that this would require significant resources and time to realise.

The online monitoring system aims to provide real-time information on the deposits, bets and winnings of players under a similar framework to that used in neighbouring Russia and Belarus.

Ukraine signed the initial law to legalise online gaming and sports betting in August, despite not choosing a regulatory entity or agreeing a taxation rate for operators.

Since then, the country has made significant progress, creating the ‘Commission for the Regulation of Gambling and Lotteries’ and appointing its first officials in September.

The Ukrainian parliament has committed to seeking international assistance in setting up as a jurisdiction, something which has jumpstarted the previously slow regulatory process.

However, the issue of taxation has still to be formally settled, with this latest bill aiming to accelerate the decision-making process by requiring the Verkhovna Rada to submit its proposals for a tax framework no later than 1 January 2021.