What norms of the law should be detailed for the legal gambling market to start working in Ukraine?

07.09.2020

What countries are considered exemplary today from the standpoint of gambling advertising regulation and what advertising bans will be valid in the Ukrainian gambling industry? The lawyer and specialist in corporate and tax law Tetiana Klymenko highlighted these issues in the interview for Ukrainian Gaming Week 2020.

Tetiana is the senior lawyer and head of legal department at Kyiv office of Law & Trust International. The expert specializes in tax structuring, development of international holding structures in the gambling industry, gambling licensing. She has experience in company registration, opening accounts, and customer support in the EU, the UK, China, India, and other countries.

You can read more about subordinate acts, the adoption of which is essential for the practical implementation of the gambling legislation, as well as peculiarities of regulation of gambling advertising abroad in the interview.

Interviewer: Ukrainian Gaming Week (UGW)

Respondent: Tetiana Klymenko (Т. К.)

UGW: In your opinion, what amendments does the law on gambling legalization in Ukraine need?

Т. К.: At the initial stage of the gambling market launch, it is necessary to detail the operation of the online monitoring system, as it is rather powerful and requires many resources to start functioning and for its further control.

The mere fact that the law envisages the online monitoring system is a rather serious step toward the long-term existence of this industry, as the system ensures monitoring of performance and its transparency. However, to achieve efficient results, it is necessary to develop instructions and subordinate acts that detail the operation of the online monitoring system.

It is necessary to develop detailed requirements to technical inspection and certification of gambling equipment. Besides, it is important to detail requirements to the organization of online gambling and websites.

All gambling operators have to comply with AML regulations. These instructions and related obligations of operators have to be clearly stated for the purpose of their subsequent efficient control.

In other words, today the main task is to detail the standards of organization of every type of gambling activity and requirements to operators for the possibility to enter the market and start working. After the issuance of the first licenses and the start of work, practical experience will be accumulating and normative acts will be adopted, allowing filling in the gaps of the current legislation.

UGW: The final version of the law contains a conflicting norm about formation of the competition commission intended to select members of the Authorized body. Is the correction of this provision possible?

Т. К.: Yes, the correction is possible. And it will be carried out, most likely.

The law envisages that the person that once was a member of the competition commission does not have the right to participate in the competitive selection for the position of a member of the Authorized body within 12 months from the day of termination of his powers as a member of the competition commission.

This norm contradicts with the constitutional provision, according to which Ukrainian citizens have the right to be elected as members of public authorities and local self-government authorities. And constitutional civil rights and liberties are guaranteed, cannot be cancelled and restricted, except for cases envisaged by the Constitution of Ukraine. Therefore, this article has to be corrected.

UGW: How will the new law regulate gambling advertising in Ukraine?

Т. К.: Ads will be prohibited on radio and television from 06:00 to 23:00, in publications and mass media apart from specialized publications dedicated to gambling.

Gambling advertising is not allowed on products intended for individuals under 21 years of age, among others, as well as in transport, venues of entertainment, theater and concert, sports and other events intended for individuals under 21 years of age

Only license holders can conduct advertising.

UGW: According to your estimates, does the law envisage enough measures to protect players against gambling addiction? Please, explain your point of view.

Т. К.: The measures envisaged by the current version of the law are rather comprehensive. As the law shows, the responsibility of detailing the measures is imposed on the Authorized body that has to take action against apparent gambling addiction.

In this case, assessment of sufficiency of protection measures against problem gambling will be possible when they are adopted, explanations of the Authorized body are given, and gambling organizers are imposed with the responsibility to adopt their own policies, train personnel, conduct internal instructions and detect gambling addiction among attendees.

UGW: What subordinate acts is it important to draft in order to use the new law in practice?

Т. К.: It is necessary to adopt regulations on the online monitoring system, the compliance of equipment and game development with technical characteristics and to detail these requirements.

It is essential to work out requirements to gambling operators on counteraction to money laundering and problem gambling, to detail responsibilities and liability of the Authorized body.

UGW: In your opinion, what legal errors should entrepreneurs beware of when they decide to run a gambling business in Ukraine?

Т. К.: It is important to take a very thorough approach to the organization of work process as early as at the stage of preparation of documents and business project for license acquisition.

Not all provisions of the law can be interpreted unambiguously. If you address the license acquisition practice, you will have more questions than answers. For this reason, you should primarily choose a team of specialists that will be responsible for license acquisition and thoroughly prepare the business plan factoring in the assessment of the market, profits, and time needed to launch the project.

UGW: What jurisdictions can be currently considered exemplary from the perspective of regulation of gambling advertising and why?

Т. К.: Currently Estonia, Spain, Belgium, the UK, and Malta can be considered the best jurisdictions from the perspective of regulation of gambling advertising.

In fact, Baltic countries have rather detailed laws that regulate gambling advertising. Estonia is not an exception. Despite significant legislative restrictions in the form of a general ban, there is a big number of exceptions from this rule. Ads are allowed in cruise liners, planes, airports, gambling facilities, etc. The lawmaker is aware now that primarily tourists show big interest in gambling, so it has given gambling operators a possibility to advertise their services in places crowded with tourists.

The British legislation is also rather transparent and handy for gambling business. There are general bans on advertising for the underage, social responsibility toward advertising. Time limits are determined for ad placements in different mass media.

Jurisdictions that allow gambling advertising are also considered exemplary. They are Spain, Austria, France, etc. The laws of the mentioned countries stipulate rather general restrictions allowing business owners to use more tools to promote their brands.

Some specialists also mark Denmark, as only this EU country has managed to implement all recommendations of the European Commission.

Mentioned jurisdictions have such advantages as mobility, flexibility, and prompt response to queries of consumers and businessmen. By protecting consumer rights and reasonably restricting advertising, the European lawmaker creates a wide range of opportunities for the realization of marketing and advertising projects.

UGW: Can we expect loosening of gambling advertising regulations in the global market?

Т. К.: One of the main problems of gambling advertising regulation is the fast-growing demand for online gambling. Despite the fact that online gambling started to develop relatively not a long time ago, it already accounts for 21% of the whole market.

Like any other traditional field that shifted to the Internet, gambling cannot escape all problems at the start. Consumers are not protected against fraud, business owners can find illegal ways of advertising their activities, there is no unified KYC (know your client) system.

There are no boundaries on the Internet, so many players use services of other jurisdictions advertised in the player’s residence country.

As I have already mentioned only Denmark fully complies with the recommendations of the European Commission. Other countries have partially adapted its regulations to their laws. Taking into account that the European Commission paid attention to the urgency of regulating this field back in 2014, we cannot expect loosening or any big opportunities for gambling advertising.

UGW: In your opinion, to what nuances should gambling operators primarily pay their attention when they advertise their services?

Т. К.: Advertising is one of the main components in the promotion of gambling services and demand. Today gambling development trends and numbers are gaining momentum. At the same time, rules for advertising gambling services and products are getting tougher.

Any advertising materials must be developed in strict adherence to the legislation of a certain jurisdiction and taking into account obtaining necessary permits for the distribution of gambling advertising in a chosen country.

UGW: You will be a speaker at UGW 2020 conference. What will you be talking about in your report?

Т. К.: I will review legislative restrictions on advertising that will be valid in Ukraine. I will analyze gambling advertising regulations in such jurisdictions as the UK and Malta, where gambling business is developed best of all. I will also mention the toughest restriction measures through the example of regulation in Belgium.

You can listen to Tetiana’s presentation and ask her questions about peculiarities of gambling advertising at UGW 2020 conference on November 26.

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