Located in Eastern Europe, Ukraine is a unitary republic with an estimated population of 43.9 million people as of 2021. It ranks as the second biggest country in Europe in terms of geographical area and covers over 603,000 square kilometers, the Crimea peninsula included. The country has many of the traits of a major economy, including plenty of fertile farmlands, an adequate education system, a well-educated workforce, and a developed industrial sector.
Despite this, Ukraine remains a developing country with a stagnant economy, plagued by high rates of poverty and rampant corruption. It topped the list of the poorest European countries in 2020, with a gross domestic product per capita of US$3,727. Ukraine has had a turbulent relationship with gambling over the last decade, largely due to the tragic events that occurred in a Dnipro gaming hall, when a fire killed nine and severely injured eleven people.
The accident caused the Ukrainian Parliament to prohibit both gambling businesses and gambling participation in 2009. The ban remained in place until July 2020 when current president Volodymyr Zelenskyy approved new legislation that decriminalized gambling and opened the industry to private operators. Ukrainian gambling laws are relatively flexible and cover a broad range of landbased and remote activities.
The Ukrainian Commission for the Regulation of Gambling and Lotteries has the mandate to oversee both terrestrial and online gambling in the country. The local regulatory framework and the requirements on licensees in Ukraine are quite stringent. Each license application undergoes a thorough review by the regulatory authority, which can easily refuse permits to applicants who have not met all licensing conditions.
Laws That Govern the Ukrainian Gambling Industry
Gambling activities in the country were illegal from 2009 to 2020 under the provisions of the Law On Prohibition of Gambling Businesses in Ukraine. The legislation passed after a fire started in the Metro Jack Pot slot-machine parlor, located in the city of Dnipro (formerly Dnipropetrovsk). The fire commenced in one of the slot machines on the premises and quickly spread. The slot parlor itself was inside a five-floor apartment complex. Nine people died in the accident (including two staff members) and eleven more suffered severe damages.
Licensing Requirements and Tax Rates in Ukraine
The 2020 legislation provides for seven main types of gambling licenses and three secondary ones. The primary licenses are for landbased casino gaming, landbased slot parlors, landbased sports betting, online betting, landbased hippodrome pool wagering, online casino gaming, and online poker.
Landbased holders of main licenses must also receive secondary licenses for betting shops, gaming tables, or slot machines. Software companies can apply for business-to-business software supply permits. Ukrainian law does not impose any restrictions on the maximum number of gambling licenses. Furthermore, the same company can accumulate several licenses for different gambling services.
Another condition stipulates that only legal entities from Ukraine can apply for gambling permits. However, said entities can be funded or controlled by companies from outside the country as long as they are not Russian. Firms registered in jurisdictions on the FATF (Financial Action Task Force) blacklist cannot apply at all.
Requirements Imposed on Landbased Gambling Licensees
Applicants for landbased licenses must also obtain permission that confirms the premises they intend to use for operation fulfill all requirements set forth by Ukrainian laws. Landbased gambling premises can only be located in designated places. For instance, casinos in the capital Kyiv can only operate on the premises of five-star hotels that have at least 150 rooms.
The minimum required floor space of such casinos should be 500 sq. meters or more. The casino floor should be separated from the non-gaming areas. The gaming venues in other major cities like Dnipro or Odessa can operate in hotels with four or five stars and at least 100 rooms. Casinos can open doors in larger recreation resorts outside Ukrainian cities, but only if the resorts cover the minimum area requirements of 10,000 sq. meters and house five-star hotels.
Certain requirements are in place for the equipment used in landbased casinos. Venues in cities with a population of over half a million must have at least ten gaming tables and fifty certified slot machines. In cities with fewer inhabitants, the casino should have at least five gaming tables and twenty slots.
Landbased gambling venues must have a minimum of fifty employees aged 21 years old or higher. Management and staff members are not required to apply for special permits as is the case in countries like the UK. The rules of all available games, their winning odds, and licensing information should be available in both English and Ukrainian.
Similarly, licensed slot parlors in the capital can operate in hotels with three to five stars and at least fifty rooms. The same applies to licensed betting shops, although they can also be located in designated hippodromes. Slot parlors must occupy at least 300 sq. meters, while the minimum area of betting shops is 50 sq. meters.
License Fees and Duration
Upon application, interested Ukrainian companies must submit their documents to the local regulator for evaluation. Each applicant must confirm their source of funds. A company’s owners, significant shareholders, and key personnel members should all present certificates to prove they have no previous criminal records.
The Ukrainian regulator requires around fifteen business days to reach a decision and informs applicants within five days afterward. The approved companies must pay their licensing fees for their first year of operation within ten business days. Rejected applicants can appeal the regulator’s decision in court.
As for the license fees, they vary based on the minimum monthly wage the Ukrainian government has posted at the beginning of the respective year. The 2021 license fees imposed on online gambling operators amounted to ₴39 million for casino games, ₴30 million for online poker, and ₴180 million for betting shops. The primary permits for sports betting cover both landbased and online wagering.
Lottery licenses have a duration of ten years, while the primary permits for other gambling activities have a validity of five years. Law № 768-IX does not contain provisions concerning the renewal or extension of the gambling permits. Approved operators must apply for new licenses after their old ones expire.
The current legislation also disallows license suspension. However, the Ukrainian regulatory body has the right to invalidate permits on several grounds. For example, this could happen in cases of delayed licensing fee payments or if an operator has submitted false information in their license application documents. Companies with invalidated permits have the option to appeal the regulator’s decision in court.
Gambling Taxes in Ukraine
Gambling taxation in the country falls under the scope of the Ukrainian Tax Code. Under its provisions, gambling companies are subject to tax rates of 18% imposed on their gross gaming revenue plus corporate income taxes (again 18%). Slot games are taxed at a rate of 10% on their gross revenue. Additionally, the gaming companies’ employees have 1.5% withheld from their salaries in the form of a temporary military tax.
As for lottery operators, they are taxed at higher rates of 30% on their gross revenue in addition to the 18% corporate income tax. Players’ profits resulting from gambling and lottery participation are free from value-added taxes (VAT). However, the Ukrainian Tax Code requires gambling operators to deduct 18% of their customers’ winnings as personal income tax, along with 1.5% in the form of military taxes.
Social Responsibility and Gambling Restrictions in Ukraine
Under Law № 768-IX, authorized gambling operators must honor their social responsibility obligations, starting with the compulsory verification of each customer’s age and identity. The operators’ employees must periodically undergo special training on responsible gambling and addiction prevention. All gaming venues, mobile apps, and gaming sites must prominently display information regarding the games’ rules and responsible gaming.
Restrictions on Gambling Advertising and Promotions
Article 22-1 of Law № 270/96-VR imposes various restrictions on marketing activities related to lotteries, betting, and gambling, in general. The article strictly prohibits gambling advertisements on radio and television between 6 am and 11 pm. The ban applies to all kinds of signal transmission, including cable, satellite, and online television/radio.
AML Policies and Payment Restrictions
Participants in the Ukrainian gambling market must operate in compliance with Law № 361-IX of December 2019, also known as the Law on Anti-Money Laundering. The legislation calls for the financial monitoring of all licensed gambling businesses. It requires them to perform customer due diligence checks for all transactions exceeding ₴55,000 (approx. $2,040). The operators can postpone or refuse the payments of winnings on grounds of the anti-money laundering (AML) requirements.
Sanctions for Violations of Ukraine’s Gambling Law
Organizing and running unauthorized gambling is liable for punishment under Ukraine’s Criminal Code. Those guilty of this violation will suffer fines ranging from ₴170,000 to ₴850,000 (approx. $6,300 to $31,600). Authorized operators risk sanctions for violations like using non-certified gaming equipment such as roulette tables and slot machines.
Those caught red-handed in tampering with the gaming equipment incur fines amounting to 1,000 minimum monthly wages, or approximately ₴6 million (around $223,000). The sanctions for underage gambling are equally severe. Operators who admit minors inside their premises or allow them to gamble are subject to a ₴3 million fine. The implication of underage individuals into gambling is punishable with three to seven years in prison.
People who produce and distribute unauthorized gambling marketing materials are liable for fines of up to ₴1.8 million. Ukrainian nationals involved in non-licensed gambling activities might incur administrative fines of ₴25 to ₴425. They will also have their stakes forfeited. With that said, players rarely face prosecution as the local authorities mainly focus on sanctioning violating operators.
Speaking of which, the country’s regulatory authority typically requests offshore online operators and hosting providers to restrict Ukrainian residents from accessing their websites. Payment companies, banks, and other financial institutions within Ukraine cannot facilitate transactions to gambling sites without local licenses. Local players can find a list of licensed online gambling providers on the Ukraine Gambling Commission’s website.
The 2020 legislation adopted by the Ukrainian government paved the way for the development of a properly regulated gambling industry in the country. With adequate regulations in place, local gamblers can enjoy higher levels of player protection, fairness, and security. Although some people opposed the legalization at first, many embraced it due to the numerous economic opportunities it offers.
The most important quantitative merits of legal gambling in Ukraine are the workplaces it creates and the additional tax revenue the state collects. Ukraine may attract more interest on behalf of gambling companies if the newly proposed Bill № 2713-D becomes a law. It aims to standardize the gambling taxes across all verticals and reduce them from the current rates of 18% to 10% based on GGR. So far, the Verkhovna Rada has approved the bill on first reading only.