here is an opinion that the current state of Ukrainian gaming market is rather similar to Russian market. Do you agree with that?
Gaming market in Ukraine shows the same trends that prevailed in 2006 in Russia before gambling regulation law was promulgated. At the present time, there is no law governing the conduct of gambling in Ukraine, only a project of such one. It has resulted in the situation where most market participants run shady business, while legal gaming operators having paid tens of millions UAH for the license and commercial patents bear losses due to unfair competition of too many illegal (without license or patent) businesses. Ukrainian Gaming Association estimates the share of illegal operators at 60-70%. These operators heavily contribute to the negative image of gaming.
What act is governing the conduct of gambling in Ukraine?
At the present time, there is no law governing the conduct of gambling in Ukraine. Gambling is regulated by licensing. There are 2 types of licenses: 1) creation and management of gaming venues, and 2) organization of gambling activities. First license are granted by regional government, second one – by the Ministry of Finance. On 1st of July, 2008, there were 173 valid licenses. 137 licenses were granted in 2006, 18 in 2007 and 18 in 2008 (during 8 months).
Using legal vacuum, some authorities are trying to implement additional regulations of gambling, lawlessly treat legal operators. Regions lack conditions of licensing management and operation of gaming venues and betting shops (on September 1, 2008, issued 22 of total 27). Moreover, among other problems on the market must be mentioned incapacity of authorities, related to gambling regulations, lack of equal rights for all gaming operators etc.
Could you reveal some state data for Ukrainian gaming market?
For evaluation of Ukrainian gaming market there are only 2 criteria to be considered, which are the number of granted commercial patents allowing to provide and manage gambling activities and of licenses to implement 2 practically identical economical activities – creation and operation of betting shops and gaming venues. The Ministry of Finance gives such licenses covering whole country, the license costs 150 thousand euro (over 1 million UAH) and is valid for 5 years. The license for 5 years allowing to provide and manage gambling activities on local territory (price is 255 UAH) can be granted by the board of ministers of the Crimea, regional and city (in Kiev and Sevastopol) authorities.
The number of commercial patents in gambling is rising by 18-22% every year. The increase of granted patents is shown in all regions, except Vinnitsa, Donetsk, Kirovogradskaya regions and Sevastopol. The biggest gaming operators are Alsart, Metro Jackpot, Igroservice, Ekstrema, Maxima.
Are Ukrainian legislators preparing any projects to regulate gambling in Ukraine?
The common law regulating gambling had several editions, but every time it met strong confrontation. In December, 2008 the Ministry had the law “Government regulation of gambling” registered in the parliament of Ukraine. The act restricts minimum space of gaming floor to 250 sq.m, increases the price of license to conduct gambling up to 400 thousand euro annually (current price is 150 thousand euro for 5 years). It suggests increasing the cost of commercial patent in three times. The market participants call the act ‘killing’ – there have never been such strict limitations in any branch legislation.
Do Ukrainian legislators support the idea of transferring gambling activities to special zones as it was implemented in Russia?
In 2008 representatives of different parties of the parliament of Ukraine offered similar initiatives. However, as the press indicates, at the present the most radical laws regarding gambling, especially the initiative to move gaming venues to special zones, don’t meet support. Various ways of restricting gambling and toughening State control have been discussed. Particularly tax laws, zone law (including moving gambling out of big cities), and strict demands for gaming operators (including floor space, the volume of net capital) are under strong consideration. The Ukrainian press referring to international experience promotes the idea of establishing legislation acts that’d force small and middle operators to go out of business, as big companies are considered to more likely run legal business and it’s easier to keep them under control.
What position does the press hold covering gambling?
The Ukrainian press maintains negative image of gaming, based on stereotypes and prejudice. Recently it tends to represent gambling as demonic matter. This is just as it had happened in Russia in 2005-2006 before the legislation of gambling was issued. In 2008 the Ukrainian press started focusing on problems of gambling. The amount of publications regarding problems of gambling business development had risen sharply in a very short period of time. At the same time there’d been an increase in publications discussing specific gambling issues, such as lack of clear regulation, control of tax contributions to state and local budgets, addiction to gambling. Higher attention of the press to the mentioned issues was caused by a number of bills aiming at restricting gambling in Ukraine, which were presented to the parliament of Ukraine.
Are you going to present Alsart products to Ukrainian market?
Alsart name is quite well-known in Ukraine; what is more, our company is among the most active players on Ukrainian market. We have a representative office and production facilities in Kiev. Slot shops Bomba, Unicum, A-club, ‘1 000 000’ have our gaming equipment on their floors.