Significant developments in Ukraine have seen the Committee of the Rada (Parliament) fast track the final readings of ‘Bill-2285D – Gambling Law’ to begin this week (18 May).
MPs will have the final opportunity to discuss changes to the bill of the ruling SoP Party that would restore the federal gaming system for Ukraine. Notwithstanding its fast pace, critics on a variety of core aspects of the bill remain unconvinced.
Ukraine’s Gambling Act has undergone several changes since its first publication in early January, but the government has been unable to provide clarity on conditions relevant to current lottery monopolies, licencing agreements, industry standards and taxation policies.
President Volodymyr Zelensky’s office believes that SoP will deliver its gambling bill by proceedings at the end of the year. However, fact suggests that Rada will settle for half-baked steps to support a fundamentally flawed system.
More developments see rifts emerging Ukrainian business news outlets report on how a system would satisfy the demands of the current and powerful lottery monopolies of the country.
Despite being marred by accusations of corruption and cronyism, the Patriot, MSL and UNL lottery monopolies have recently requested that SoP impose a ‘wish list of rights’ to further their gambling portfolios.
The manner in which the president addresses monopoly rifts would be closely watched by betting incumbents and opposition, as SoP advocated for corporate openness and ended the favouritism of the government against state-owned firms.
In addition to monopoly interventions, more pressure has been put on SoP for failing to study the processes and intricacies associated with controlling a regulated marketplace for gambling.
Critics claim that SoP chose not to amend or duplicate any successful provisions from existing European markets such as the UK, France and Sweden during the legislative creation of Bill-2285D.
The insular approach has led SoP to publish an individual licencing scheme that will function alongside a blanket (provisional 10%) GRR taxation policy for licenced incumbents in gambling.
Maksym Liashko, a partner at Parimatch Holdings, urged Rada leaders to put licencing and tax reforms at the top of the final agenda of the bill – or risk that the Gambling Act will become a dead-on-arrival requirement.
He recently said: “We are still far away from a crystal understanding of the situation, but hope that the legislators will choose a wise approach and will abandon the idea of introducing simultaneously a high fixed payment for licences, GGR tax and income tax – all three types of taxes altogether.
“Such an approach raises concerns among the professional community. But the process of discussion started and there can be light in the end of the tunnel.
“An appropriate approach is when the high fixed cost of licenses will enable the state to receive guaranteed payments to the country’s budget; income tax will be calculated on the basis of general rules, while there should be no GGR tax. This will be a win-win situation for both the country and the investor.”
In claiming that any practical business expectations would be torpedoed by a tax triple threat, Liashko urged Rada to abolish GGR tax rate. Alternatively, the Gambling Law law would guarantee government tax revenues by incumbents taking high fee licences and general taxes on wages.
As a stakeholder in Parimatch, Liashko noted that licenced operators would have to swallow various compromises during Ukraine’s nascent phases of implementing the Gambling Law. He concluded that all interested parties would support a long-term approach to the creation of a coherent Ukrainian market for gambling
He explained: “In the future, over the next 5 years, Ukraine can switch to the calculation and payment of GGR tax, when everyone will be sure that there is a reliable system for recording such information and a common understanding of the calculation of such tax.
“In addition, the powers of the future regulatory body, which will oversee the industry, should be clearly prescribed and outlined in the bill in order to avoid any misuses of powers and its work should be transparent… We are looking forward to the finalisation of the process by the Ukrainian MPs and hope that soon we will observe the opening of the regulated market in Ukraine.”