How Will Gambling Legalization Affect Ukraine?
Last year, the Ukrainian authorities admitted the need for gambling regulations and started working on corresponding legal standards. In early 2020, Bill No. 2285-d was adopted in the first reading. How will gabling legalization affect the country?
The necessity to legalize gambling businesses in Ukraine has been existing for a long time in order to bring the gambling industry out of the shadows and reduce a level of corruption. Gambling regulations can be beneficial to the state because of some reasons: treasury replenishment, economic growth and many others.
Treasury revenues and new jobs
Prior to Ukraine’s gambling ban, 10 000 venues were officially operating, providing the treasury with tax liabilities. Following the adoption of the law in 2009, the Ukrainian gambling industry got into a frozen state and stopped generating meaningful profit.
At the same time, gambling businesses still exist semi-legally, thus Ukraine loses money and possibilities for developing the economy. Based on expert estimates, the actual market turnover can reach €1 billion. Its legalization, transparent rules and official taxes can substantially supplement the country’s budget. Oksana Markarova, Minister of Finance of Ukraine, states that this sector can bring between 5 and 9 billion UAH of profit.
Besides, new gambling facilities will result in job opening and employment of many citizens. 10 000 new jobs are expected to appear.
using gambling venues
Gambling legalization can attract the additional flow of foreign guests. With gambling being prohibited in some major countries, their inhabitants practice so-called gambling tours. In particular, casino lovers frequently visit Georgia where gambling is permitted. The country welcomes a lot of tourists from Turkey.
The gambling market development can make Ukraine receive huge flows of foreign guests. New tourists will be allured by an opportunity to play games of chance on legal grounds. It will encourage the advancement of the local economy and budget enhancement.
The government is going to support the sports infrastructure and healthcare using funds raised by gambling. According to Bill No. 2285-d adopted in the first reading, the state budget will establish the Foundation for healthcare, sports, and culture support to receive money from gambling licenses.
Funds will be used to build rehabilitation centers, improve a professional level of doctors and sick nurses, support mass, children’s and reserve sports etc. The Cabinet of Ministers of Ukraine will be responsible for money allocation.
Moreover, gambling legalization will allow the state to combat gambling addiction at the official level, prevent its development, control citizens suffering from problem gambling and limit their access to similar venues.
New infrastructure facilities
The authorities were negotiating on establishing casinos only at hotels with a certain amount of stars well before the adoption of the bill. Not only do such restrictions protect socially vulnerable populations, but they also encourage the evolution of the travel industry and the emergence of more high-end hotels. The relevant bill supposes that land-based casinos will be allowed only at five-star facilities.
This rule is not applied to investment projects. In this case, offline gambling venue operations are conducted based on the investment license (issued free for 10 years). This document can be obtained only when constructing a hotel of 200+ rooms in Kyiv or 150+ rooms in other Ukrainian cities. The following exclusion will lead to the establishment of new hotels and hotel business development.
Attraction of foreign investments
Gambling is one of the world’s most super-lucrative sectors. New markets constantly draw attention of major global players. Supposedly, gambling legalization in Ukraine will allure foreign investors aimed at putting money into new hotels as well as evolving gambling technologies and software.
Disadvantages of Bill No. 2285-d
According to expert estimates, tax liabilities expected by the government could scare potential operators away. Political analyst Anton Kuchukhidze believes that the cost of licenses is unreasonably high. Therefore, only large monopolist companies will be able to get an operation permit. The price of gambling licenses in Ukraine is too high in comparison with the EU countries. Far from everyone will be able or will want to start such a business.
A taxation issue is still controversial as well. Bill No. 2713 on Tax Code amendments introduced for consideration by the Verkhovna Rada implies a profit tax of 18% and charges on income amounting to 10%. Such conditions can not only frighten off new market insiders but also demotivate the old ones to come out of the shadow because it will be unprofitably.
Legalization advantages can be real for the country. However, it is possible only in case of proper gambling regulations at the state level and reasonable tax rates that will allow both dominant companies and beginning market players to grow their businesses. We will find out the efficiency of legalization and introduction of transparent rules after the ultimate adoption of this law.
You will be able to discover more about the prospects of Ukraine’s gambling market at Ukrainian Gaming Week 2020 to be held on April 15-16.