Gaming License Costs in the Ukraine

Ukraine

UKRAINIAN GAMBLING LAW

This Alert (“Alert”) is based on the Ukrainian gambling law (“Gambling Law”) that was approved by the deputies of the Ukrainian parliament (Verkhovna Rada) in the second reading on 14 July 2020 and finally signed by the President Volodymyr Zelensky on 11 August 2020.

PLEASE BE ADVISED THAT THE CONCLUSIONS MADE IN THIS ALERT MAY CHANGE IN COURSE OF FURTHER DEVELOPMENT OF UKRAINIAN SECONDARY GAMBLING LEGISLATION.

REGULATED ACTIVITIES

The Gambling Law provides for the following eight verticals that will become regulated upon adoption of the Gambling Law:

  1. Land-based casinos;
  2. Online casinos;
  3. Land-based sports betting;
  4. Online sports betting;
  5. Slot machine halls;
  6. Online poker;
  7. Totalizator;

Each activity should be carried out on the basis of the respective license, issued by the Ukrainian Gambling and Lottery Commission (which was created on 23 September 2020) (the “Regulator”) to the gambling operator (the “Operator”) for a certain amount of time.

 

The Gambling Law establishes 11 types of licenses that may be obtained for the pur- poses of carrying out the activities mentioned above.

The list of activities and corresponding licenses can be found in Annex 1 to this Alert.

HOW TO OBTAIN A LICENSE

Entity wishing to obtain a license should apply for it, provided that the applicant (i.e. the entity that will be the Operator upon obtaining a license) is in compliance with the requirements that are established for Operators by the Gambling Law, inter alia:

  1. legal entity that is applying for a license should be incorporated and act under the laws of Ukraine;
  2. legal entity that is applying for a license should not be directly or indirectly controlled by residents of a foreign states recognized as an occupier or aggressor[1] or acting in the interests of such states;
  3. managers, head of accounting and UBOs of the applying entity should not be citizens of a foreign states recognized as an occupier or aggressor or acting in the interests of such states;
  4. shareholders of a legal entity that is applying for a license should not be:
    • UBOs of the residents of a foreign states recognized as an occupier or aggressor;
    • legal entities domiciled in the countries listed in FATF blacklist.
  5. legal entity that is applying for a license should not directly or indirectly own shares in the entity that is a resident of a foreign states recognized as an occupier or aggressor;
  6. the amount of the applying entity’s charter capital at the moment of application should be no less than 30,000,000 hryvnia (approx. EUR 890,000) – it is worth noting that the current Gambling Law provides for that the charter capital may consist of various assets (e.g. securities, receivables, real estate);
  7. it is forbidden to use for the payment of charter capital funds that are from the budget[2] or of unknown origin.

Together with the application for a license, the applicant should provide the following documents and information, inter alia:

  1. information about the UBO of the applicant;
  2. information about the amount of the charter capital and the date of completion of its formation confirmed by an independent auditor;
  3. documents confirming the origin of the funds used for the payment of charter capital;
  4. information about the brand of the Operator, which is defined as corporate style, name, logo and other means (including objects of intellectual property) allowing for the individualization of Operators – please note that the Gambling Law establishes that only one brand may be used under one license;
  5. information and documents confirming rights to domain names in .UA zone as well as information about the hosting service provider and domain name registrar (for online licenses);
  6. information in respect of the rights of the Operator to the software and hardware;
  7. other standard documents and information – confirming the absence of criminal liability of the management, shareholders, UBOs of the applicant, extracts from the relevant registers etc.

Moreover, we would like to add that amongst the key requirements to enter Ukrainian market there is a requirement to obtain either bank guarantee or set up a bank deposit in amount of approx. EUR 1,280,000 (UAH 43,200,000).

CURRENT STATUS

As of the beginning of February 2021, in spite of the fact that the Gambling Law was adopted on 14 July 2020, the Regulator begun its work on 23 September 2020,

 

Licensing Terms (secondary legislation concerning the licensing process) were adopted on 21 December 2020 and the Regulator issued first license on 02 February 2021, it is still impossible to operate on the Ukrainian gambling market without violation of the Gambling Law.

The reason for that is that there are a number of issues that should be resolved before the Ukrainian gambling market become fully operational (e.g., adoption of the technical requirements for the purposes of certification of the gambling equipment, adoption of the taxation framework of the Ukrainian gambling market, creation of the system of online monitoring etc.).

 

Please also see two Annexes attached to this Alert neatly summarizing the following:

  1. Annex 1 – Regulated activities and corresponding licenses;
  2. Annex 2 – Particulars of the licenses.

 

 

 

CONTACTS

Ilya Machavariani

Senior Partner, CEO

Tel.: + 7 916 353 34 08

Email: im@4h.agency

Ivan Kurochkin

Partner

Tel.: + 7 968 713 85 00

Email: ik@4h.agency

Dmitri Bezruchko

Head of Ukrainian branch of 4H

Tel.: +380 98 305 1879

Email: dmitri.b@4h.agency

           

 

ANNEX 1 — REGULATED ACTIVITIES AND CORRESPONDING LICENSES

No. ACTIVITY “MAIN” LICENSES “ANCILLARY” LICENSES
1. LAND-BASED CASINOS License for land-based casinos License for casino gaming tables and roulette tables[3]
License for slot machines
2. ONLINE CASINOS License for online casinos
3. LAND-BASED BETTING SHOPS License for sports betting activities License for land-based betting shop
4. ONLINE SPORTSBETTING
5. SLOT MACHINE HALLS License for land-based slot machine halls License for slot machines
6. ONLINE POKER License for online poker
7. TOTALISATOR License for totalisators
8. GAMBLING SERVICES (B2B LICENSE) License for the provision of gambling services4
9. CASINO / POKER INVESTMENT PROJECTS Investment license[4]

 

 

 

 

 

 

ANNEX 2 — PARTICULARS OF THE “MAIN” LICENSES6

No. TYPE OF LICENSE YEARLY7 LICENSE FEE8 MAIN LIMITATIONS
1. LAND-BASED CASINOS in Kyiv EUR 2,150,000  (UAH 72,000,000) •             This activity may be carried out only within special gaming zones, namely:

o           KYIV: 5-star hotels, no fewer than 150 rooms;

o              OTHER CITIES: 4 and 5-star hotels, no fewer than 100 rooms;

o            OUTDOOR HOTELS: hotel with a 5-star equipment, area no less than 10,000 sq.m.;

o HOTELS WITHIN SPECIAL GAMING ZONE DESIGNATED BY CABINET OF MINISTERS: area no less than 10,000 sq.m.

•             The casino should have the following minimum amount of gaming equipment:

o     FOR CITIES WITH POPULATION ABOVE 500,000:

(i) 10 gaming tables (2 of them being roulette tables) and

(ii) 50 slot machines;

o             FOR CITIES WITH POPULATION BELOW 500,000:

(i) 5 gaming tables (1 of them being a roulette table) and

(ii) 20 slot machines;

o          FOR SPECIAL GAMING ZONES:

(i) 20 gaming tables (4 of them being roulette tables),

(ii) 250 slot machines and

(iii) catering establishment.

•             The minimum number of workers is 50 and 200 for casinos in special gaming zones.

in other cities EUR 1,080,000 (UAH 36,000,000) •           The minimum area of casino premises located at 5-star hotels is 500 sq.m.

Additional comment: Holders of this license are able to hold poker tournaments in their casinos. Also, it is forbidden to organize games that have the attributes of lotteries and accept bets on the outcome of such games.

2.      ONLINE CASINOS EUR 700,000 (UAH 23,400,000) – before online monitoring system is live

EUR 233,000 (UAH 7,800,000) – after online monitoring system is live

•          It is forbidden for holders of this license to organize online poker without the relevant license. Also, it is forbidden to organize games that have the attributes of lotteries and accept bets on the outcome of such games.
3. SPORTS BETTING EUR 3,200,000 (UAH 108,000,000) – before online monitoring system is live

 

EUR 1,080,000 (UAH 36,000,000) – after online monitoring system is live

•             Betting shops should be located in special gaming zones, namely:

o         FOR KYIV:

3, 4, и 5-star hotels, no fewer than 50 rooms;

Horse racetracks.

o    FOR OTHER CITIES:

3, 4, и 5-star hotels, no fewer than 25 rooms;

•             The minimum area of the premises where the betting shop could be located is 50 sq. m.

Additional comment: It is forbidden to accept bets on the outcome of (i) virtual events or (ii) events the outcome of which is determined by random number generator or (iii) lotteries (including foreign lotteries).

4.      SLOT MACHINE HALLS EUR 270,000 (UAH 9,000,000) •             This activity may be carried out only within special gaming zones, namely:

o           FOR KYIV:

3, 4, и 5-star hotels, no fewer than 50 rooms;

the minimum area of the slot machine hall should be 300 sq. m.

o   FOR OTHER CITIES:

3, 4, и 5-star hotels, no fewer than 25 rooms;

the minimum area of the slot machine hall should be 150 sq. m.

•             One license allows for placement of no more than 250 slot machines (no less than 50 slot machines in one slot machine hall.

5.      ONLINE POKER EUR 180,000 (UAH 6,000,000) •         This license is rather straightforward with the main limitation being unclarity on the subject of poker liquidity.
6.      GAMBLING SERVICES (B2B LICENSE) EUR 10,760 (UAH 360,000) • According to current version of Gambling Law it is unclear if the B2B licensees are subject to the same compliance level and requirements as B2C licensees or there is a separate regulation framework for B2B licensees.

 

  • Please note that this chart does not include (i) the general requirements for Operators or standard requirements for premises akin to Russian ones or (ii) information on lotteries (as they are state-controlled), (iii) information in respect of the investment license (which is issued in relation to the investment projects that are approved by the Cabinet of Ministers of Ukraine) and (iv) information on totalizators license as it is available only for racetracks owners.
  • All “main” licenses are issued for the term of 5 years.
  • License fees are calculated on the basis of the level of minimal wage amount set by the Ukrainian budget law for each year. Starting from 1 January 2021 minimal wage amount equals to 6 000 hryvnia (approx. EUR 180); licensee fees are calculated on the basis of a 5 year term. For instance, the 5-year price of the casino license for Kyiv is calculated in the following way: EUR 180 * 60,000 (number of minimum wage amounts payable for such license according to the Gambling Law) = EUR 10,800,000 (UAH 360,000,000) for five years.

 

 

 

 

ANNEX 2.1. — PARTICULARS OF THE “ANCILLARY” LICENSES

No. TYPE OF LICENSE YEARLY LICENSE FEE
1.   CASINO GAMING TABLES AND ROULETTE TABLES EUR 31,000 (UAH 1,050,000) – one roulette table  EUR 16,000 (UAH 540,000)  – one casino gaming table
2.   SLOT MACHINES EUR 3,180 (UAH 108,000) – one slot machine, before online monitoring system is live

EUR 1,080 (UAH 36,000) – one slot machine, after online monitoring system is live

3.   LAND-BASED BETTING SHOP EUR 5,400 (UAH 180,000)

 

This document is intended to provide a brief overview and does not compulsory cover every aspect of the topic. Information in this document can not be considered in any case as legal or any other advice.

[1] Status of the occupier or aggressor is determined by the Ukrainian legislation.

[2] Aside from Operators, which have rights to the horse racetracks and are going to organize a totalizator.

[3] Please note that the licenses in italics may be considered ancillary ones as they may be (i) obtained only under the “main” license (i.e. land-based casino license) and (ii) used only together with the “main” license

(e.g. an “ancillary” license for slot machines can be obtained both under the “main” license for a land-based casino and a “main” license for land-based slot machine halls). 4 For example, the supply of software used by Operators to determine the outcome of gambling.

[4] This license is issued free of charge for 10 years in relation to the investment projects that are approved by the Cabinet of Ministers of Ukraine.

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3 responses on "Gaming License Costs in the Ukraine"

  1. Crazy amounts for license fees and taxation as well. I wonder on what the decision to set such high levies was based on.

  2. Casinos don’t loose, so we can ask for high fess and Taxes, or to put it more simply GREED

  3. Well, casinos are a business as well, and they have to turn a profit. With these taxes it will be difficult. Other than greed, I believe it serves the interests of the few local companies already running the gaming industry in the country.

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