What do we know today about liberalization of online casinos in Ukraine?

Oct 13, 2020 Artyom Ustinov
Ukrainians often find it extremely difficult to play in online casinos. Many casino operators block users whose IP address stems from within Ukraine. Moreover, attempts to use VPNs to access online casino sites are usually intercepted. Besides, Ukrainians face challenges withdrawing their winnings if, during processing of documents (scanned copy of a credit card) or KYC (Know Your Customer) procedure, the gambler’s true place of residence is revealed. In such cases, the gambler’s funds are frozen, and their game account is blocked. However, August 2020 saw a drastic change of course that would most likely allow Ukrainians to play in licensed online casinos without fearing of falling victims to fraudulent activities perpetrated by operators.

Until recently, all forms of casino activities, including online casinos, were banned in Ukraine. Gambling activities were outlawed by Yulia Tymoshenko’s government in June 2009. Since then, running online casinos has been illegal. Violators were severely punished with huge fines and prison time.

On August 13, 2020, President Zelensky signed a bill (Law 768-IX) legalizing gambling business in the country. The law gave green light to the activities of online casinos in Ukraine under certain conditions. The following conclusions can be drawn from this law:

  • Gamblers must be at least 21 years of age. Casinos must verify the gambler’s age using available means before the person can be allowed to sign up, deposit and bet;
  • An online casino operator can only be a legal entity established under the laws of Ukraine. Obviously, foreign companies will not be able to operate (at least officially) in the Ukrainian market. However, in clause 1 of Article 14 of the newly signed gambling law, it is clearly stated that foreign nationals can be heads, accountants and ultimate beneficiaries of such gambling establishments;
  • A would-be gambling company must have a minimum authorized capital of at least ₴30 million (approx. $1.1 million);
  • Online casino operators must demonstrate a bank guarantee or capital reserves of at least 7,200 minimum wages (approx. $1.5 million);
  • Clause 7 of Article 16 of the law states that the gambling operator must have a “self-exclusion” option, allowing gamblers to voluntarily limit their gambling activity for 6 to 36 months. For this purpose, the casino must have an online form. All casinos licensed by Curacao, Malta and many other jurisdictions have similar functionality (but in a more flexible way);
  • Casino rules must be written in Ukrainian and English languages ​​(and optionally in any other languages);
  • An online casino must have a .UA domain name.

Control over the activities of online casinos and other gambling operators will be provided via a hardware-software system designated in the Law as “State Online Monitoring System”. Each gambling company must connect to this system. The system will track information about bets placed, winnings paid out and other operations. At the time of this writing, the System is yet to be developed; however, the Law allows casinos to operate in full and connect to the System within 6 months after the System has been launched.

There are 11 types of licenses for gambling activities. An online casino must acquire only one 5-year license, which costs 6,500 minimum wages (approx. $1.4 million).

Issues related to income tax on online casinos are still unanswered. Ukraine’s parliament plans to consider the gambling tax rates only after the above-mentioned Online Monitoring System has been launched.

Based on the current law, you can roughly calculate the main initial costs of running an online casino:

  • Authorised capital: $1,100,000;
  • Security deposit (refundable): $1,500,000;
  • License: $1,400,000.

Companies planning to launch an online casino in Ukraine should wait at least several months, since the new law has provided rooms for future additional regulations, amendments to the country’s tax laws, and some other measures that might affect an operator’s decision to open a business in Ukraine. For this reason, it makes sense to monitor the situation around this issue closely, and, if necessary, seek advice from our experts.

Artyom Ustinov

Artyom is Head of White Label & Turnkey Solutions and has been working in complex B2B/B2C sales, as well as business development and management consulting in iGaming for more than 10 years.

Together with the Key Account Management Team, he has helped over 100 start-ups and experienced gaming companies to launch their projects with SoftGamings.

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