+38 (067) 578 3477
+38 (068) 644 0387


Legalization of gambling business in Ukraine is one of the key relevant tasks of the Ukrainian Gaming Industry Association (UGIA). Irina Sergiyenko, President of UGIA, told about the model for the formation of the Ukrainian gambling legislation, experience of legal regulation in the world practices and key components of an effective legislative base. The expert also shared her views on how the process of the industry unshadowing must go and outlined the prospects for the industry legalization.

On November 16, 2016, Kiev hosted a press conference dedicated to the presentation of the Ukrainian Gaming Industry Association, of which you are the President. Could you tell us where the Organization's history began?

The Organization's history began with the people, as it should happen when it comes to institutions of civil society. All of us, the founders, have been involved for several years in the development and discussion of legislative initiatives aimed to legalize the gambling market, have a sufficiently deep understanding of what is happening in the market right now, and we are convinced that the problem of gambling market legalization must be positively addressed to without any delay.

There is also an understanding of the causes that prevent the solution of this problem on the level of the Verkhovna Rada of Ukraine, and the development of effective and competent legislative decisions. And one of these reasons would be, in our opinion, the lack of authoritative impartial public institutions, which would bring together experts, representatives of business, society, and players, and could participate in the dialogue with the state with the unified platform with a single consolidated expert position, if I may say so, the "voice of the industry".

In such a way, we came to the idea of foundation of the Ukrainian Gaming Industry Association. The first steps have been made. Representatives of the global gambling market, including lottery and betting companies, soft-developers, companies specializing in testing and certification of software and hardware, as well as representatives of the local market have already demonstrated their confidence in us and expressed their readiness to cooperate. As you know, this year our Association signed a cooperation agreement with the All-Ukrainian Union for Bookmaking Development (AUUBD). And we have no plans to stop.

UGIA is now actively cooperating with the All-Ukrainian Union for Bookmaking Development and Gaming Laboratories International. What are the results of this partnership at this stage?

Currently we receive advisory, information and expert assistance and support from its representatives, share information. Also, in the near future, we plan a very interesting joint project that can radically affect the process of accelerating the dialogue with the authorities, but so far I cannot tell you more about it.

UGIA goal is to promote the legalization of gambling business in Ukraine. What tasks do the members of the Association set for themselves?

Legalization of gambling business in Ukraine is really one of the key relevant tasks of the Ukrainian Gaming Industry Association (UGIA). In the context of this task, we see the need to consolidate the efforts of the authorities, business, expert community, other public institutions with a view to develop effective and reasonable legislative solutions. Each of the participants, experts, representatives of the Organization does its fair bit in this work, taking into account their competence, knowledge, the degree of involvement in the political processes of the country, personal credibility in the eyes of the society.

What difficulties does UGIA face?

Talking about difficulties means, in fact, complaining. And complaining is the waste of time. Time must be spent to overcome difficulties.

Gambling business exists in Ukraine despite a law banning gambling activities adopted on May 15, 2009. How, in your opinion, must the process of unshadowing of the gambling business go?

First and foremost, we need to rely on creating an enabling favourable environment for the business development. To ensure that the business agrees to come out of the shadow, the fiscal load must be relevant, the requirements to gaming operators must be reasonable and achievable. The state must also guarantee stability of legislation, establishing the rules of gambling in the market, including the fiscal load.

At the same time, it is necessary to establish effective mechanisms to combat illegal business, in order to prevent unfair competition in the market and the use of business for money-laundering purposes at the international level.

What are the key components of an effective legislative framework for the gambling business?

In relation to its concept, legislation must ideally contain simple and unambiguous answers to the following questions: what are the requirements to a gambling operator (casinos, lotteries, poker, bingo, betting, etc.)? How much does it cost to get the license? What kinds of taxes must be paid, how much and what is the procedure? What is allowed and what is not in the process of implementing the activity? What happens if you break the rules? Does the state guarantee the stability of the legislation governing the industry and how does it guarantee it?

This is important. If we adopt the law like "a chance in a thousand", which we has done already more than once, we should not expect a foreign investment inflow and unshadowing.

If to speak in short and item by item, then:

1. All types of gambling (including online) must be legalized, clearly distinguished and regulated taking into account the special features of these activities, including profitability (marginality) and the level of social risks.

2. Fiscal load must be adequate and predictable. The business will not come out of the shadow, and foreign investors will not come to the market, if the fiscal load does not allow operators to work transparently and profitably.

3. Requirements to operators must be reasonable. It means that such requirements must not contribute to the monopolization of the market. Requirements to operators must be set solely to guarantee the stability and solvency of the market, i.e. taking into account the interests of the consumer.

4. Stability of legislation must be guaranteed for the business. Effective mechanisms to prevent unfair competition in the market must be foreseen. It must be at least uncomfortable to work illegally in the market, preferably – unprofitable, ideally – impossible. The world experience of regulation already offers such mechanisms. The task is complicated, but achievable.

5. Market control must be effective. We propose the introduction of a unified electronic centralized monitoring system of all bets and all payments, as is has already been done in many countries, including Belarus.

6. High standards of socially responsible game must be introduced for operators using the best practices available today.

7. It is logical to provide for the purposeful use of fiscal revenues from gambling for the development of culture and sports.

8. "7" is a lucky number. The rest is also important, but it is a question of details.

 Which country's experience do you think could be an example for the model of development of the Ukrainian gambling legislation?

It is absolutely necessary to study the international experience of legal regulation of the gambling business, both positive and negative, to develop legislative solutions for Ukraine. Such an approach would help avoid the mistakes made in other countries, and borrow the best from the world practice. In terms of practical value for the Ukrainian legislator, I would propose to pay attention to the experience of Georgia and Bulgaria. At the same time, I am all against copying the legal regulation model of another country. The legislative model of legal regulation of gambling business in Ukraine must take into account the realities of the Ukrainian market and the current level of development of the Ukrainian economy.

During a press conference on February 6 regarding the results of the work of the Ministry of Finance of Ukraine in 2016 and its plans for 2017, Oleksandr Danyliuk, the Minister of finance, appealed to legalize gambling business in the country. None of the attempts, and there were many of them, to legalize this industry in Ukraine was successful. What are the chances that gambling will come out of the shadow this year?

I suppose the probability of legalization of gambling in Ukraine has increased significantly, with signing by Ukraine of the cooperation agreement with the IMF. Legalization of gambling and amber extraction is one of the conditions for granting to Ukraine of further financial support (loans). As practice shows, the IMF is a very authoritative institute in Ukraine, and the authorities are unlikely to succeed in ignoring such commitments.

Along with this is not the time to relax and wait for a miracle. We should not underestimate the craftiness of the Ukrainian authorities, so much depends now on the position of the business (local operators and potential foreign investors). If the business, including potential foreign investors, become active and consolidate the efforts aimed to ensure ongoing dialogue with the state and society regarding the terms of legalization, then we have a real chance to use the accumulated foreign experience, taking into account local special features and foundation in the near future of a healthy competitive gambling market. If the business and society take a wait-and-see passive position, this will play into the hands of shadow business of separate authorities, which certainly cherish the hope to legalize their monopolistic position. Miracles do not happen. Let us come together and move forward.

Do you expect to develop a new or promote an existing draft law with some amendments?

Most draft laws, which propose unshadowing (legalization) of gambling, require improvement to a greater or lesser degree. There are too many pitfalls, subtle interests, ambiguities, loopholes. An effective law must be simple, understandable and contain unambiguous answers to the questions that will inevitably appear in the process of its enforcement.

What, in your opinion, are the prospects of legalization of gambling business in Ukraine?

I believe that it will happen in the near future for the reasons, which I have already mentioned. And it will happen according to one of the scenarios: under the rules of the "business of power", or under the regulations, which may be the result of a healthy civilized dialogue between the authorities, the society, representatives of local business, potential foreign investors, and with a broad involvement of the expert community.



The interview was conducted by Irina Shvydko (http://newsofgambling.com)