In June 2019, the recently elected President of Ukraine Volodymyr Zelensky made a surprising statement about his intent to legalize the gambling business in the near future. The public reaction, as well as the local officials’ one, was uneven. Is that a sign of progress in the situation concerning gambling legalization in the country? Let's try to figure out whether Ukraine is ready for this or not.
The ban on gambling in Ukraine was introduced in 2009. According to the legislation, any form of gambling involving betting for money is illegal. The only exception is state lotteries.
From then until today, two official lottery operators have been working on the territory of the country – “Ukrainian National Lottery” and “M.S.L. However, as it turned out, the ban was played only for the benefit of casino owners. No one was going to shut down such a profitable business. Gambling halls and casinos have gone into the shadows, disguising their operation with lottery signs. At the same time, none of them remits any taxes to the state. All revenues go straight into casino owners’ pockets because their purpose is to receive as much money as possible. Everybody can gamble in underground casinos because no one checks the documents there. Teenagers, gambling addicts, and pensioners who leave their last money there are welcome. Such gambling establishments can be located even next to educational institutions.
In 2014, Interior Minister of Ukraine Arsen Avakov promised to eradicate underground casinos in the country, because they were spread everywhere at that time. By joint efforts of the official authorities, as well as active citizens who also wanted to get rid of illegal gambling, in three years they managed to close about 1300 underground gambling establishments. However, as it turned out, the efforts did not bring any significant improvement. Gambling clubs were closed in one place and opened in another one, changing signs and names. This is quite logical, as it is unlikely that a gambling addict will pay attention to the casino name.
First Steps Towards Legalization
In 2015, the government decided that the most rational way to deal with the illegal gambling problem was to legalize and regulate this business. Thus, the Ministry of Finance of Ukraine published a draft law regarding this issue on its website. However, the Antimonopoly Committee was not in a hurry to approve the updated document. The law was criticized by the Committee, which stated that it needed substantial revision. Four years have passed since then, but no progress has been achieved so far. Meanwhile, the situation has worsened and reached a critical point. This Illegal business brings casino owners about 5 billion UAH annually.
In addition, the prospect of creating gambling zones on the territory of Ukraine was discussed. It was planned that there would be four of them, one of which was to be located in the steppe part of the Crimea, the second gambling zone – on the border with the European Union, the third one – in the Luhansk Oblast. The precise location of the fourth gambling zone was not announced. However, people were skeptical about the success of such an ambitious initiative. First, foreign operators are unlikely to start their business in Ukraine because of the absence of appropriate infrastructure and unstable economic situation in the country. Ukrainian gambling industry requires massive investments, and the country does not have this money. Second and the most important problem is the absence of new gambling regulation, which would allow gambling on the territory of Ukraine.
New President – New Rules?
Since Volodymyr Zelensky took the position of the President of Ukraine, the gambling legalization issue has received a new impetus. The Servant of the People political party’s main representative said that every citizen of the country is a free person and has the right to independently decide how to manage his income. The Head of State is planning to address the issue of gambling business legalization in Ukraine in the near future.
However, as of today, there are no specifics on this matter yet. The previous statements did not lead to any progress regarding this problem.
And now let’s consider the views of Ukrainian political parties’ representatives. Indeed, elections to the Verkhovna Rada will soon be held, and the parties’ attitude towards the gambling business is important for the people voting for the candidates.
According to opinion polls, the party Servant of the People can get about 45% of the electoral vote. Its position on the gambling business in Ukraine is already familiar to society. However, the legislation adoption will require the support of other political forces.
For example, the representatives of the political party “Opposition Platform – For Life” do not have a clear position on this issue. According to the people’s deputy Yuriy Pavlenko, the gambling business legalization is necessary for Ukraine. However, the deputy is convinced that everything must be done right. He supports the creation of gambling zones throughout the country, as well as the permission for casinos placement in the territory of four and five-star hotels. The expert agrees that a complete ban on gambling in the country does not lead to anything good – the number of underground casinos has only increased since 2009.
The representatives of such parties as “Batkivshchyna” and “European Solidarity” have not yet decided on their position regarding this issue.
Experts say that the new gambling legislation development requires particular attention. It should take into account all the loopholes that may allow underground casinos to continue their operation. In addition, the regulation should protect vulnerable sections of society. Moreover, the state must ensure equal conditions of competition in this market (without monopoly).
Mykola Khavronyuk, Scientific Development Director at the Centre for Political and Legal Reforms, noted that the law must specify the gambling operation rules, as well as the responsibility for their violation by gambling operators. Another important aspect is the gambling business taxation – it is necessary to make sure that corruption is excluded and the taxes go to the national budget. Khavronyuk also reminded that Article 203-2 of the Criminal Code of Ukraine “Gambling Business Operation” should be abolished.
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Legalization Will Not Cause Addiction
Considering the experience of other countries where the gambling business is legal and regulated by the government, it can be concluded that in the 21st century there are many ways to protect players from gambling addiction.
First of all, people must have a passport to enter the territory of any gambling establishment. This is necessary to make sure that the person is of age and is not included in the register of gamblers. Every legal casino should have this record. A person has the right to report on his/her gambling problems and ask to limit access to gambling establishments.
In addition, every casino that values its reputation should have a manager who monitors the situation in the hall. If he notices that a player constantly raises the stakes and is not planning to stop, he will come up and try to look into the issue.
Actually, the current situation when unregulated underground casinos continue to flourish throughout the country is much more dangerous than when legal casinos operate according to the regulation.
Meanwhile, the citizens are looking forward to changes in this field, because in that case, illegal gambling establishments will finally disappear from the streets of Ukrainian cities.
As mentioned earlier, All-in Gaming Summit Ukraine 2020, which is scheduled for June, has already opened call for speakers.
Read more: Online Gambling in Eastern Europe – Part 1
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