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Sergey Los. 5 questions – 5 answers

Sergey Los, chief engineer of company Galaxion (former Odrex), in the gambling business since 1999.

Exactly 12 years have passed since the ban on gaming in Ukraine (May 15, 2009).
How did you survive this period, what did you do?

I want to declare that our company never operated in grey or another illegal business. Before the ban of the gambling business in Ukraine, we had the sister company “Nevada” — one of the largest chains of arcades in Ukraine. But as soon as gambling had been banned in our country we ceased our operations. All slot machines were brought to a large hangar and kept there for a long time.
But we still had a production company — we were manufacturing equipment for gambling. This company went on working but of course not with the same output. Before the gambling business ban, we produced 700 slot machines and up to pneumatic roulettes per month, we had more than 350 employees. We were forced to cut down our staff because in any case, Ukraine was the main customer.
So, we reoriented onto foreign markets. In 2008 we started our cooperation with powerful partners in Georgia. We had about 100 slot machines, 3 large arcades in Tbilisi and some arcades in small towns, particularly in Kutaisi and Rustavi, We were supplying very many pneumatic roulettes while our roulette Mysterion was a number-one roulette in Georgia and it could be found practically in each arcade.
We were developing the system of online monitoring, constantly improving communications with players, bonus programs, cash backs, jackpots, etc. Today we are fully confident of our system and used to say that it is one of the best.
We sold also a great number of roulettes in the Czech Republic, Albania and Romania. We were selling all over Europe. Back in 2006, we took an interest in the market of Spain. But taking into consideration that this country has a very complicated certification process and serious requirements to software we started to ship our products there in about 2008–2009. We were certified practically in all cantons except for two or three of them which were too small and there was no sense in respect of profitability.
A couple of years ago in Spain, we set up the manufacture of our new product — roulette Galaxion and managed to produce about 10 of them before the coronavirus pandemia started. Unfortunately, all activities stopped. In 2010 we opened up Latin America. We set up two offices — in Peru and Columbia. We underwent certification in Peru and Panama so our roulettes appeared also in other countries, in particular in Bolivia and Guatemala.
We wanted to even try our strength in the USA. But we calculated a budget, evaluated risks and understood that this market was not practical for us — it is very expensive and strangers are not allowed to it. We had a project in Great Britain, two years our roulettes were in the center of London. But we could not develop the project due to the English complicated legislation. We worked in Ireland, underwent certification in Belarus. Some 15–20 our roulettes are operating there and we carry out their post-guarantee service,
In addition, our company has built an up-to-date medical house in Odessa and we started to produce various medical furniture. Thanks to it our production facilities were provided with work.

In your opinion, with the adoption of last year’s law on the legalization of gaming in Ukraine, will the situation improve, are you satisfied with the law as a whole?

We are very glad that there is a law. When somebody criticizes it, I offer this person to compare it with foreign analogs. I underwent certification in many countries and know the situation. Compared with the respective Spanish law ours is simply a “golden” one. The same is with British law. Our law took the monitoring and taxing systems from the Belarus law and the license system — from the Georgian one. Well, now it is not perfect, some changes should be made to let business work in a normal way. We would like to see decisive actions in this direction.

Have you monitored the gaming businesses in other countries, how the industry has evolved?

Frankly speaking, up to the latest moment, we did not believe that we should have this law. I read a relevant law in each country where we operated. They are all different. There is not a common international law that works everywhere. There are some generally accepted terms but even in two neighboring countries, they may be interpreted in different ways. Therefore we can borrow a foreign experience if it is acceptable for the Ukrainian realities.

Do you think the industry is being revived or reborn?

I would like to say that it takes a new life. We all understand that despite the 12 years ban the gambling business still existed. It went into grey schemes, in various uncountable lotteries but it did not pay any taxes. Today it has reformed and one should be glad of it. There are a lot of companies that are ready to play fairly and for these companies, their image is more important than doubtful incomes. Now they can work in a normal way. The country will get proper budget revenue and players — guaranteed protection. If in Spain a player is not satisfied with something, for example, he says that a machine calculated his winnings incorrectly, he is protected. And it becomes a problem for a casino — an inspection appears and checks slot machines and their software.
Today an online casino is thriving. One may start a web search and he will get references to Russian, Maltese and other sites. Ukrainian players are not protected there. Also, money goes to foreign operators and leaves the country. It is also a problem. This situation should be changed.

Have you already received a license to continue operating?

Up to this time, necessary changes have not been yet made in the Tax Code and it is impossible to work with the existing tax basis. Today the slot machines certification rules are still obscure. We did not decide whether we should operate or not because we simply are not able to calculate a budget. That is why like many other companies we wait. The business does not buy licenses because it cannot understand how to operate honestly. As soon as the situation becomes clear licenses will start selling.
At the same time, we offer our online system for the Ukrainian market. We think that the system will be selling well so we need a license B2B. We will buy this license for sure. But some questions arise. Just recently some terms of B2B were approved and for some reason, it is the Ukrainian online business service providers who have to pay for this license but foreign providers must not. I do not understand this logic. I think that the state has to take money from foreign companies for their right to work and earn money on our territory. They explained to me that it is required by the law. If it is true this clause of the law must be changed for sure.