Consideration of Draft Law 2285-d Continues: Opinion of Ihor Makiievskyi

01.07.2020

Yesterday, on June 30, the Verkhovna Rada of Ukraine started the second reading of the draft law 2285-d, which envisages legalization of the gambling business. UNN reported that deputies had considered 126 out of 3,500 amendments by 15:00. Today the consideration of the draft law has continued and deputies managed to process even more amendments.

The head of the All-Ukrainian Association of Employers in the Recreation and Entertainment Sector Ihor Makiievskyi shared his opinion regarding the version of the draft law presented for the second reading.

“The text that was prepared for the second reading, in our opinion, contains excessive overregulation of the market. The law stipulates lots of norms and requirements, which are very difficult to fulfil altogether and which directly influence such a parameter as simplicity of doing business. Well, speaking about the “simplicity of doing gambling business” in Ukraine – it is very difficult.

Besides, we note a very high price of market entry and big license payments, which may be acceptable for Kyiv and some standalone locations but are too high and unaffordable for most of the regions and Ukrainian business. Eventually, according to our estimates, if the format of legalization submitted for the second reading by the committee is adopted, the gambling market will bring approximately ten times less of revenue to the budget – around 30-50 million dollars per year. Instead of 300 million to half a billion dollars per year in case of a transparent and comprehensible approach and regulation.

I would like to remind you that experts distinguish Georgian and Belarusian approaches to regulation of the gambling market. These countries are closer to us in terms of mentality and more understandable in terms of the market. Georgian approach applies three licensing fees, more precisely, a general license, patents, and a payment to the local budget. Moreover, the country differentiates payments depending on the region and its economic status. The general idea is as follows: payments are high, but businesses make three payments per year and that is where their relations with the government end. That is, businesses fulfil their obligations to the government and can seamlessly organize operations.

Belarus uses another system. The government imposes tax on gambling revenue through an online monitoring system. Payments are lower there but the taxable base is wider because they control almost every slot machine.

Our legislature made a mixture of the Georgian and Belarusian approaches, combining them in one draft law. There are high licensing fees and the online monitoring system, which implies a revenue tax. Altogether, it creates an explosive mixture that does not gladden home or foreign investors.

As for the investment prospects, there is hardly any. For this reason, what competition can we speak about? If investments in Ukraine and the gambling industry are not profitable, nobody will invest money there. People will prefer markets of Belarus, Georgia, and Bulgaria – countries that regulate this kind of business more efficiently.

However, there is hope that common sense will take hold. Adoption of the law just for the check in the box is not the option needed by everyone. We need to launch the economy, economic processes, related businesses, create workplaces. To achieve it, we need to live according to the realias and understand the economic situation in Ukraine, the purchasing power of population.

I do not even mention the peculiarities connected with the coronavirus and restrictions. And the fact that if the gambling market opens, it will start working in the midst of restrictive measures, which will also directly influence figures, investments, and revenue. For this reason, there is a need for reality check. We see it as a reasonable approach.

If the unsustainable format is chosen, it will remain as is. If the underhanded or grey component prevails, all the corruption risks, which the enactment of the law is expected to eliminate, will stay. But we hope for the common sense to win,” the expert noted.

While deputies keep reviewing the draft law 2285-d at the second reading stage, you will find the latest news about developments on the website of Ukrainian Gaming Week.

You can read more about the changes that Ihor Makiievskyi believes to be necessary to add to the Ukrainian law about gambling industry regulation in the interview.