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Gambling is “in-law”

On the 13th of August 2020 the Law of Ukraine “On State Regulation of Organizing and Conducting Gambling” came into force. It starts the market of gambling services which from now on becomes legal. We are discussing peculiarities of the law and its introduction with Mr. Artem Kuzmenko, a Partner of the law firm “Eterna Law”.

How would you characterize the mission of this specialized law?

For a long time gambling was banned in Ukraine. However, quite a large grey and black market were formed beyond the legal territory. Budgets of all levels did not get any revenue from these activities. And the persons who played in such establishments were not protected from misconducts of operators. Adoption of the law solves these problems: the state starts to get money from license fees and in the future after the market started — revenues from taxes. The law’s social orientation is also important. It guarantees the application of the regulated principles of responsible gaming which are used in a worldwide practice to protect a player.

How was the law being adopted? Were the representatives of the gambling business invited to participate in its drafting?

The process of the law drafting and its implementation was rather difficult and it was going on for more than one and a half years. It is a socially sensitive topic. In Ukraine like all over the world there exist various views of gambling. Besides we had not the proper expertise to pass normative legal acts of such level. People’s deputies had to listen to all parties. The business was also invited to discuss a draft at the stage when it was passing the Committees of the Verkhovna Rada (Parliament). The discussion was a public one and all those who so desired could participate in this process.

Does the law answer peculiarities and requirements of the gambling business adequately? Can it ensure its further progress?

The law is strong enough to start the market but it might be a bit difficult to speak about its development. I have already mentioned that the process of its adoption was not easy, so it includes some clauses which hamper the progress of the gambling business in modern realities. To remove such obstacles the Law should be modified. It will certainly be done since the right of use will appear and the practice of regulation in this sphere will be gained. The legislation must be improved to regulate the gambling business adequately in one or the other period.

Which activities does the law regulate? How precisely does it stipulate the terms of gambling business formation and management?

Today the law regulates the main types of gambling business existing in the world. Namely, they are a land-based casino, Internet casino, book-makers, arcades and online poker. Besides, we have a separate state law on lotteries. The law is in force and also has been modified to harmonize it with the law on gambling.
The law is quite integrated. It specifies in detail the conditions of the gambling business operation. These are the requirements to premises, public activities, gambling equipment, its certification, as well as the questions of the state control of this sphere.

How does the law regulate the activities of Internet casinos? Does it restrict access to such games for those under age, mentally unbalanced, etc.?

The law provides for protectors not to allow gambling the persons who have certain limitations. We are speaking about general limitations specified by the law and also about those regarding certain individuals. Especially, there are age limits: persons under 21 years are not allowed to gamble. To put in force this function there is a gamble access control on the Internet. With the help of technics available today it is possible up to one hundred percent to identify the real age of either customer thus enabling an operator to admit or bar him from entry.
Speaking about other groups, there exist approaches to self-restrictions. One can restrict oneself without any assistance and an entry for this person will be banned. A person with gamble abuse can be restricted by a court decision according to the claim of his near relatives. The law stipulates all tools to restrict access to gambling facilities for persons who are sick or suffer from gambling addiction.

Which limitations for the gambling industry are stipulated by the law? Are they all justified from your point of view?

There are many such limitations. To some extent, it happened because during the drafting period there was a lack of information for people’s deputies on the functioning of various gambling control mechanisms in other countries. But these approaches may influence negatively the progress of gambling. If the gambling houses properly regulated and controlled do not open due to numerous bans, their places will be occupied by the illegals. And it may be a problem since de-facto the market has been legalized but it is not profitable because of numerous bans. So the law will not operate as it is required and the market can be partially illegal.

Which restrictions are you speaking about?

For example, there is a ban to place currency exchange bureaus in gambling halls. Many foreign operators think that it is a wrong decision since the law, first of all, directs onto a tourist potential. If foreign tourists come to play in a casino they have to exchange foreign currency into grivnas. So these bureaus will be situated near casinos and de-facto it does not change anything when we are speaking about players” protection but simply makes management an awkward one.
There is a ban to put arcades closer than 500 meters from educational institutions. And these arcades should not be seen from a street. The law stipulates the requirements to a minimal area of gambling halls.
This requirement of 500 meters to educational institutions seriously restricts the number of possible locations for gambling halls because it is difficult to find a hotel, especially downtown, with no educational institutions situated nearby. We are speaking not only about schools, kindergartens but also about musical schools and private kindergartens. These bans and limitations have nothing with child protection since children have already been banned from entry into a gambling house but they may have a negative influence on the market as a whole and create prerequisites for its illegal part.

Does this rule apply to higher education institutions?

Yes, it concerns higher education institutions, private included, and any study or hobby group. The law does not regulate the problem of what happens if an educational institution opens when a gambling hall has already been set up. Let’s say the investments into a gambling house make some million dollars and in a fortnight a music school appears nearby. The law does not specify any priority, it simply bans. It makes opportunities for dishonest citizens to manipulate and abuse this requirement. As a result, it will influence the investment potential of the trade.
Does the law implementation require adopting normative legal bylaws?
Basic normative legal bills have been already passed. The law logic does not require many such bills but only those required to put the market in operation quickly, to start protecting players and to fill the budget.

The law has only come into force but the market already offered the Verkhovna Rada certain amendments to it. How did legislators react?

The progress in either sphere stimulates to modification of laws. And the said law is not exclusion. The proposed amendments concern both improvements of the payers’ protection and correction of the technical errors made when the law was being passed. There are proposals directed to correct some active legislative restrictions which are ineffective and do not make it possible for the market to progress appropriately.
Today the Verkhovna Rada does not start to examine them since the subject of regulation is rather complex or maybe there is not due understanding of the necessity to make such amendments. Especially it applies to the tax legislation: the taxes are rather high, they should be corrected. Today all the market is practically awaiting revision of tax rates to start working with full force.

How is the Ukrainian law comparing with the respective laws of other countries?

When speaking about excessive restrictions specified by the law it is stricter. As to effective regulations the approaches are more liberal. There are a lot of facilitated procedures, for example, the procedure to obtain a license, etc.
In general, our law does not copy the laws of other countries. It may be similar to them only in some sections. As to the license fee and its payment procedure it is like Georgian law. When we are speaking about the players” protection it resembles the Maltese or British law. The working group used the best groundwork in this sphere in various countries.