Just over ten years after the disastrous gambling hall fire in Dnipro, Central Ukraine that killed nine people and prompted a government inquiry into gambling practices, which eventually lead to a blanket ban on gambling in the country, the Ukrainian Parliament (or Verkhovna Rada) has voted to reconsider the move.
$200 million deal
The first step to a proposed legal gambling market, Bill 2285-D, was put through Parliament on January 20th and passed with an easy majority—260 Ukrainian politicians voted for the bill, while 190 voted against it.
It’s still early doors for the proposal, which will need to go through two more parliamentary readings before hitting President Vladimir Zelensky’s desk, but a big majority at this stage is still encouraging.
If it passes, the law could see up to ten new online operators granted licenses within the country, as well as some room for foreign online casinos. The law even outlines the potential cost of a license, which would be around $280,000 for an online operator.
That’s small change compared to estimated revenues, though, as government researchers think taxes and other income from legalized gambling could make the struggling eastern European economy over $200 million a year.
That projected revenue figure also includes land-based casinos—the bill provides space for 20 or so of these establishments. However, operators will pay significantly higher fees for a license, with up to $2.5 million as a possible benchmark.
Gaming halls have remained extremely popular in Ukraine despite the nationwide ban. The physical market is there, but the online market is unproven as of yet.
Limits on Machines
Since the fall of the Soviet Union, small independent gaming halls with a few dozen slots, blackjack tables, and sports betting facilities have been big (if slightly under the radar) business in Ukraine.
Even though they were nominally banned after the Dnipro fire of 2009, which was caused by a faulty slot machine and worsened by the lack of regulated safety procedures, Ukrainian media reported that just since December 2019, some 900 illegal gambling halls were shut down in a government crackdown.
Under the new law, any land-based operators will be required to tack on to new or existing 4- or 5-star hotels, guaranteeing their safety credentials.
The government is also looking to impose a limit on the number of physical slot machines—not per casino but overall in the country. How Ukraine will go about policing this is so far unknown, but it could represent an interesting new avenue for gambling lawmakers across the world.
These new laws have provoked lukewarm responses from casino operators in both the local region and further afield.
Russian betting conglomerate Parimatch said in a statement, “The adoption of Bill 2285-D in its first reading is the first step towards creating a fair and transparent gambling market in Ukraine, which will, in turn, attract investment and introduce new technology to the country.”
According to local news, a report from Ukrainian lottery operator MSL (who, by the way, will be exempt from any tax hikes under the new legislation), the cost of the licenses and fees may be too high for smaller local operators.
However, a government official countered that claim on local radio, stating that “only illegal establishments that still exist today will have losses because of this law.”
However, things might work out under new laws. Clearly, a majority of Ukrainian Parliament members consider the prospect of a regulated market to be more circumspect than the proliferation of shady illegal venues that they have on their hands at the moment.
What this could mean for foreign online casinos is yet to be seen. We’ll keep you updated on this story as it develops over the coming weeks.