Ukrainian Government submits draft law to dissolve the nation’s Gambling Regulatory Authority
Author:
Muhammad Gregory
A new draft law proposing a change in the gambling regulatory body of the country has been submitted to the Ukrainian legislature, Verkhovna Rada. The proposal was finalized by the Government of Ukraine and submitted by the Deputy Prime Minister for Innovation, Education, Science and Technology of the country, Mykhailo Fedorov. If the draft law is passed, a new executive regulatory and supervisory authority will replace the Gambling and Lotteries Regulatory Commission of Ukraine (KRAIL).
A new draft law proposing a change in the gambling regulatory body of the country has been submitted to the Ukrainian legislature.
?Viktor Talashuk/Unsplash
In May 2009, a gambling hall in Dnipro caught fire, resulting in the death of nine individuals. As a result, the Gambling Ban Law was passed a month later, and all gambling activities were banned across Ukraine. The law was signed by former Ukrainian President Viktor Yushchenko in June, and it was imposed two days after it was signed. All gambling and betting activities, including iGaming, were banned, and only lotteries gained an exemption. The situation did not change until July 2020 when current Ukrainian President Volodymyr Zelenskyy signed the “On State Regulation of Organising and Conducting Gambling” law and ended the 11-year-long blanket ban on gambling activities in the country. KRAIL was instated as the central authority to regulate and supervise gambling activity across the nation. Strict regulations were implemented for all gambling operators who would commence their activities after gaining the gambling permit. Parimatch was the first operator to gain a gambling license in Ukraine. However, about two months ago, after new sanctions were placed by President Zelenskyy, the Ukraine-based operator decided to wrap up its operation in the country.
The gambling law in Ukraine is strict, and the nation only allows licensed operators to enter its regulated gambling market. KRAIL keeps an eye out for unlicensed operators trying to target Ukrainian nationals with their games. The domains of such operators are eventually blocked and made inaccessible to the people of Ukraine. Only operators with a share capital of at least €1 million and a deposit account in a Ukrainian bank with a guarantee of €1.1 million are eligible to obtain a license in Ukraine. A Ukrainian gambling license costs UAH 39 million (€959,000) and is valid for five years. In addition to that, the gambling law also specified that gambling permits would not be issued to operators who have shareholders registered in countries that are on the blacklist of the Financial Action Task Force (FATF). After the sudden Russian invasion, Ukraine stopped issuing licenses to gambling operators based in Russia or to operators directly or indirectly funding the Russians.
In 2022, annual revenue of a little over €28 million from all betting and gambling segments was reported by KRAIL. Two years after legalization, gambling activity increased as more and more operators wanted to enter the Ukrainian gambling market despite the country’s ongoing war with Russia. Martial law was introduced in the country after the armed Russian invasion. That disallowed the Ukrainian Gambling Authority to conduct meetings, causing unfortunate delays in issuing licenses to operators after properly examining their applications and background. Despite that, KRAIL was able to issue over 60 licenses in 2022. The total number of license applications submitted was 667. 603 licenses were issued, while the remaining were rejected because of errors in their respective applications. However, the Government of Ukraine believes that KRAIL is consistently failing to issue gambling licenses on time. Hence, the new draft law to dissolve the regulator has been submitted. If passed, KRAIL will be dissolved and replaced by a new gambling regulatory and supervisory body.
The move has come as a shock to KRAIL, and the entity claims that there are only two unresolved issues with the regulator, and these issues can easily be solved by recruiting just one or two individuals. Ivan Rudy, Chairman of the Ukrainian Gambling Authority, specified that everything functions correctly apart from the two problems at KRAIL – the launch of the State System of Online Monitoring (DSOM) and clear tax law. Rudy also clarified that the rest of the problems highlighted by the Government do not exist. The country’s Deputy Prime Minister for Innovation, Education, Science and Technology, Mykhailo Fedorov, confirmed that this law would automate the licensing process by removing the human factor. Rudy questioned this move as he claims there already is a certain automated process for license application in place.
“To be honest, I didn’t understand what this story was for or the final efficiency. After reviewing the main theses, I saw that the proposed changes are, in fact, current legislation. I didn’t understand what we were changing. Indeed, a quorum is necessary because we have packages of documents for obtaining licenses. It is necessary to make decisions regarding the sanctions policy and cancelation of licenses. Engaging 7 people is much more difficult than engaging one person. Therefore, the transition to a single-person form seems to be a riskier story than a collegial one. Why appoint a person who can make a decision alone? The rest of the problems, in fact, do not exist because the body is working, the reform is working. Over the past year, the commission fulfilled the plan for 99%, which was established in peacetime.”
KRAIL reported a decrease in illegal gaming websites
Days before the Government of Ukraine proposed a draft law to dissolve and replace the country’s gambling regulator, KRAIL announced a significant decrease in the number of illegal gambling websites nationwide. According to the regulator, the law enforcement officers of Ukraine coordinated with KRAIL to block over 1000 domains that were owned and operated by operators who did not have a license in the country.
KRAIL had detected 1,895 such illegal domains, including mirror sites that are used to offer services on a temporary basis. 1,168 illegal domains were blocked while the regulator continues coordinating with relevant authorities to block the remaining 727 detected domains. However, the recent developments may hinder KRAIL’s progress and could slow down the process amidst dissolution concerns.
Self-excluded players count rises in Ukraine
The presence of KRAIL in the regulated gambling market of Ukraine will not affect the rampantly growing gambling activity in the country. Since the blanket ban was lifted in 2020, more and more residents of Ukraine have started participating in iGaming and betting activities. The mercurial FIFA World Cup 2022 in Qatar encouraged the masses to table their wagers and win big, while the iGaming segment grew with the arrival of new operators.
As Ukraine’s newly regulated gambling market went live, the country’s official self-exclusion register was also activated and accessible to everyone. Players intending to take a temporary or permanent break from gambling can register on that platform and keep away from all legal gambling activities in the country.
In the first year, 195 individuals self-excluded themselves. Between 2021 and 2022, there were 315 new players in the register. Recently, KRAIL revealed that in the first three months of this year, 245 new individuals had self-excluded themselves from all forms of legal gambling activities in the country.
