1 History of and overall attitudes to gambling
1.1 How prevalent are different types of gambling in your jurisdiction? For example, does the current law reflect: (a) Religious or moral objections to gambling? (b) A permissive approach which also seeks to address the social consequences of gambling? and (c) The promotion of gambling as an ‘export' industry?
During 30 years of Ukrainian independence, the national policy towards gambling has radically changed three times.
Before the Law on Prohibition of Gambling Business in Ukraine entered into force in June 2009, business entities could legally engage in gambling upon obtaining a licence and specific state certificates (so-called ‘trading patents'). But in June 2009, gambling was prohibited in Ukraine for an 11-year period. This legislative ban was explained by social deviations such as an increase in the number of gambling addicts, illegal access to gambling by minors and the impoverishment of gamblers. The prohibition applied to both gambling companies and gamblers, outlawing all activities in this field.
Notably, the ban was meant to be temporary. It should have expired with the enactment of a law establishing special gambling zones. However, this law was never adopted. Instead, on 13 August 2020, the Law on the State Regulation of Gambling Activity (‘Gambling Law') entered into force, which legalised gambling within the entire Ukrainian territory – as it previously was up to June 2009.
To minimise the negative social consequences of gambling, business entities and their employees must comply with responsible gaming principles. These include:
- gamblers' age restrictions;
- measures to prevent gambling addiction; and
- (self-)restrictions on gambling.
2 Legal and regulatory framework
2.1 Which legislative and regulatory provisions govern gambling in your jurisdiction?
The legislative framework includes several layers, as follows:
- resolutions of the Cabinet of Ministers of Ukraine; and
- decisions of the supervisory authority, the Gambling and Lottery Commission.
The principal regulatory act is the Gambling Law, which:
- sets out rules for both business entities and gamblers; and
- defines the main licensing terms and the commission's powers.
Under the Gambling Law, lotteries do not constitute a type of gambling. Thus, lotteries are regulated by a separate act – the Law on State Lotteries in Ukraine.
Other important legislative instruments in the sphere of gambling include:
- licensing terms, approved by Resolution 300 of the Cabinet of Ministers of Ukraine dated 31 March 2021, which relate to applicants that wish to provide gambling software to business entities engaged in this sphere;
- licensing terms, approved by Resolution 1341 of the Cabinet of Ministers of Ukraine dated 21 December 2020, which relate to applicants that wish to engage in other types of gambling (e.g., casinos, poker, betting); and
- the Responsible Gaming Principles approved by Gambling and Lottery Commission Decision 483 dated 11 August 2021.
As gambling organisers are reporting entities, the Law on Preventing and Counteracting the Legalisation (Laundering) of the Proceeds of Crime, Terrorism Financing and Financing Proliferation of Weapons of Mass Destruction also applies.
2.2 Which bodies are responsible for regulating and enforcing the applicable laws and regulations? What powers do they have?
The Gambling and Lottery Commission:
- issues gambling licences;
- conducts inspections of gambling enterprises; and
- imposes fines if it detects a violation of licence terms or other requirements of the gambling legislation.
2.3 What is the regulators' general approach in regulating the gambling sector?
Although it is a relatively new authority, the Gambling and Lottery Commission has demonstrated its willingness to support the gambling market and contribute to its safe development.
Over the past two years, the commission has:
- issued over 100 licences;
- improved a dozen regulatory acts in this sphere; and
- established a dialogue with the main market players.
3 Definitions and scope of gambling
3.1 How is ‘gambling' defined in your jurisdiction?
The Gambling Law defines ‘gambling' as any game with the following characteristics:
- There is a bet (whether monetary or a virtual substitute);
- There is a chance to receive a prize; and
- The winning odds are completely or partially random.
If a game does not involve at least one of these features, it may not be regarded as gambling.
3.2 What different types of activities are defined in the gambling legislation and what specific requirements apply to each? Please consider: (a) Betting (fixed odds/pool and spread)/betting on lotteries; (b) Gaming (house and ring games); (c) Lotteries/scratch cards and (d) The interface with financial products (if relevant).
The Gambling Law provides for the organisation and conduct of the following types of gambling:
- table games (e.g., roulette and dice games);
- poker, including poker tournaments and cash games;
- slot machines; and
Lotteries do not constitute gambling and instead are regulated by the Law on State Lotteries in Ukraine. This law does not limit the types of lotteries that may be conducted; for example, licensed entities may issue scratch cards or organise lotteries on the outcome of sport events.
Notably, the Gambling Law prohibits certain types of betting, such as betting on:
- the outcome of virtual games and other events; and
- events whose outcome is defined at random.
3.3 What are the main mechanisms and features of the control of gambling in your jurisdiction? What are the consequences of breach of the regulations, both for operators and for players?
The Gambling and Lottery Commission oversees compliance with the gambling regulations by:
- requesting information on the activities of gambling organisers (including their financial metrics);
- generally monitoring the gambling sector and issuing reports on its findings;
- conducting inspections; and
- if necessary, reporting the detection of illegal gambling to law enforcement bodies.
If business entities violate the gambling regulations, the commission will impose a fine of between $6,000 and $240,000. In some cases, the commission may withdraw a gambling licence. In the meantime, players bear no liability for participating in illegal or unlawful gambling. However, their access to gambling facilities may be restricted upon the court's decision or the application of relatives to the Gambling and Lottery Commission.
4 Issues of jurisdiction
4.1 What approach do the courts take to the issue of jurisdiction? Where an operator which is physically outside the jurisdiction offers services to individuals within the jurisdiction, is such gambling treated as taking place offshore and outside the control of the authorities? If not, what triggers establish when such gambling is subject to the laws and control of your jurisdiction?
See please question 4.2.
4.2 Can foreign operators provide remote gambling services in your jurisdiction without obtaining a licence? Can licensed domestic operators provide services overseas?
Generally, the activities of a foreign gambling operator that has no physical presence in Ukraine will fall outside the scope of Ukrainian law. Meanwhile, the Ukrainian authorities may find that Ukrainian law applies to any gambling services available from the territory of Ukraine.
For example, it is quite common for law enforcement bodies to seek to block websites of foreign gambling operators which may be accessed by Ukrainian players. In addition, the Gambling and Lottery Commission may send a request to a foreign gambling operator (or a Ukrainian internet provider) demanding that Ukrainian players be blocked from accessing its platforms.
Neither law nor court practice provides a list of triggers which may result in the purported extension of Ukrainian law to foreign gambling operators. However, in our experience, such triggers may include the following:
- a Ukrainian language interface;
- the lack of a specific notice that the gambling operator does not offer services to users from Ukraine;
- a marketing campaign aimed at Ukrainian citizens; and
- potentially, even the mere possibility for Ukrainian players to access the relevant website.
In addition, the Gambling Law provides that only resident legal entities which have obtained a respective online gambling licence may be regarded as gambling operators.
Given this provision and the approach of the law enforcement bodies, even remote gambling services offered to Ukrainian players by foreign operators which have not obtained a licence may be treated as prohibited.
As regards Ukrainian operators, there is no explicit prohibition on providing gambling services overseas. Thus, subject to the rules of a specific foreign jurisdiction, licensed domestic entities may arguably operate abroad. However, certain domestic regulations may complicate this from a technical standpoint (e.g., a requirement to operate only on websites in the ‘.ua' domain; a prohibition on locating gambling equipment and processing data outside Ukraine).
5 Remote versus non-remote gambling
5.1 Does the gambling regime in your jurisdiction distinguish between remote and non-remote gambling? If so, how are these defined?
The Ukrainian gambling legislation provides for a unified approach to the regulation of both physical and online gambling. However, online gambling has several distinguishing features, which are important to consider.
First, a gambling operator must obtain a separate licence for online gambling. For instance, a legal entity that wishes to host poker and online poker games must obtain two licences:
- a licence for the conduct of gambling at casinos; and
- a licence for online poker.
The same applies to other types of casino games (e.g., slot machines). By contrast, to conduct offline and online betting, a gambling operator needs just one betting licence, which covers both types of gambling services.
Second, to conduct any type of online gambling, an operator must have a certified online system. The latter is regarded as gambling equipment, which fixes all bets, makes all pay-outs and collects other information on the gambling process. Like other equipment, it must be connected to the State Online Monitoring System – essentially, a state-owned software system designed to monitor all gambling activity in Ukraine in real time.
5.2 Are there any restrictions on the media through which gambling can be provided (eg, internet/mobile telephony)?
The gambling legislation does not restrict the media through which gambling can be provided. Players may access gambling platforms both through the Internet and through mobile apps.
6.1 What types of licences are available? Please consider: (a) Operators; (b) Activities (if relevant); (c) Premises; (d) Key individuals (if relevant) and (e) Equipment (if relevant).
There are generally two types of licences:
- licences for specific gambling activities; and
- licences for specific gambling equipment.
The licences for specific gambling activities include the following:
- a casino licence, which also covers offline poker;
- an online casino licence;
- an online poker licence;
- a betting licence, which covers both physical and online betting;
- a racecourse betting licence, which allows physical pool betting for racecourse owners at a single betting point;
- a slot machine licence, which allows the placement of slot machines in designated premises in hotels;
- a gambling services licence, aimed at entities that wish to supply gambling software to gambling operators; and
- an investment licence, which allows an investor which has built a five-star 200-room hotel (for Kyiv) or a 150-room hotel (for other cities) to freely engage in casino activity on the hotel premises.
Separately, a gambling operator must obtain:
- a licence for each poker table/roulette wheel to perform activities under a casino licence;
- a licence for each slot machine to perform activities under a slot machine licence; and
- a licence for a betting point to perform activities under a betting licence.
Other gambling equipment must be certified, at the expense of either the gambling operator or the manufacturer.
6.2 Which bodies award and oversee such licences?
The Gambling and Lottery Commission is authorised to award licences and to oversee the compliance of gambling operators with the licence terms.
6.3 What are the key features of such licences (eg, term/renewal/any limit on overall numbers/change of control)?
All gambling licences, except an investment licence, are issued for a five-year term. An investment licence is granted for a 10-year term.
Ukrainian law does not provide for automatic licence renewal. Upon the expiry of the licence term, a gambling operator must apply to the Gambling and Lottery Commission once again.
The Gambling Law does not limit the number of licences which may be owned by one entity. However, a general ‘one licence, one brand' restriction applies. Thus, for example, if an online poker operator owns four online poker brands, it must obtain a licence for each of them.
The gambling legislation contains no specific provisions on change of control. However, both the licence terms and the Gambling Law require the ultimate beneficial owners of gambling operators to have no criminal record. In addition, Russian residents may not be shareholders or ultimate beneficial owners of gambling businesses. If these restrictions are violated due to a change of control, the licence may be withdrawn.
6.4 What are the substantive requirements to obtain a licence (eg, company established in the jurisdiction/physical presence/capitalisation?)
Gambling operators must be resident legal entities which:
- conduct gambling activity in the territory of Ukraine; and
- have a minimum authorised capital of UAH 30 million.
Banks and other financial institutions, as well as non-profit organisations, are prohibited from engaging in gambling.
There is no explicit provision that requires gambling operators to have a physical presence in Ukraine. However, the following requirements would suggest that some kind of physical presence is inevitable:
- the requirement to locate gambling equipment (including online gambling systems) in the territory of Ukraine;
- the requirement that gambling equipment be certified by the designated Ukrainian certification entities; and
- the requirement to organise gambling activity only in specific areas in the Ukrainian territory (in the case of physical gambling only).
6.5 What are the formal and documentary requirements to obtain a licence?
The standard package of documents includes:
- a specific application, which is usually filed by the applicant's director;
- the company charter and other incorporation documents;
- an extract from the business/court register (if the applicant's founder is a foreigner/non-resident);
- the applicant's financial statements and those of its founders;
- documentation confirming the powers of the applicant's director;
- certification that the ultimate beneficial owners, founders and management have no criminal records;
- documentation confirming title to the relevant premises, if the application is for a casino or slot machine licence (e.g., sale and purchase agreement or lease agreement); and
- documentation confirming title to a domain name, if the application is for an online gambling licence (e.g., sale and purchase agreement or agreement for the use of a domain name).
This list is not exhaustive and other documentation may be required for a specific type of licence.
6.6 What is the typical timetable for obtaining a licence?
Normally, it takes between 16 business days and one month to obtain a licence.
Once the Gambling and Lottery Commission has issued a decision to grant a licence, the applicant has 10 business days to pay the fees for the first year of the licence.
6.7 What costs are typically incurred in obtaining a licence?
To obtain a licence, an applicant may incur:
- licence fees, which may include fees for obtaining both an activity licence and an equipment licence;
- equipment certification costs;
- bank deposit or guarantee costs;
- notary fees for the preparation of notarised copies of documents;
- auditors' fees for the preparation of financial statements;
- apostille/legalisation costs if the applicant's founders are non-residents; and
- other expenses (e.g., postal services).
The main cost is the licence fee, which varies in amount depending on the type of licence:
- A casino licence costs UAH 390 million if the casino is established in Kyiv or UAH 195 million if the casino is established in another city. In addition, each poker table, roulette and slot machine in the casino must have its own separate licence. The costs are as follows:
- UAH 1,137,500 for each roulette wheel;
- UAH 585,000 for each poker table; and
- UAH 39,000 for each slot machine.
- An online casino licence costs UAH 42.25 million.
- A betting licence costs UAH 195 million. For each betting point, the licensee must also pay UAH 195,000 annually.
- A racecourse betting licence costs UAH 6,500.
- A slot machine licence costs UAH 48.75 million, plus UAH 39,000 for each slot machine.
- An online poker licence costs UAH 32.5 million.
- A gambling services licence costs UAH 1.95 million.
Once the Gambling and Lottery Commission has issued a positive decision to grant a licence, the licensee must pay one-fifth of the respective licence cost within 10 business days.
A fixed-sum bank deposit (guarantee) of UAH 48.75 million must also be made to secure pay-outs to players.
7 Ongoing compliance
7.1 What are the operator's rights and obligations under the licence?
A detailed list of obligations is set out in the specific licence terms. The gambling operator's main obligations are as follows:
- to comply with the gambling regulations;
- to pay licence fees in a timely manner;
- to comply with the Responsible Gaming Principles;
- to certify and inspect gambling equipment;
- to refrain from any interference with the gambling process;
- to review players' complaints;
- to refund payments to persons (or their representatives) who were not authorised to play;
- to make pay-outs to gamblers in a timely manner; and
- to locate gambling equipment and premises in designated gambling zones.
The state, in turn, guarantees to gambling operators that until their licences expire:
- the term of the licence may not be shortened; and
- no additional licences/permits will be required.
7.2 Can licences be transferred? If so, how? What restrictions apply?
Ukrainian law does not allow for the transfer of licences.
7.3 What requirements and restrictions apply to the different types of gambling facilities in your jurisdiction?
Pursuant to the licence terms, casinos, gambling rooms and bookmaking points may be placed only in designated gambling zones, which are as follows:
- for casinos – four or five-star 100 to 150-room hotels, country hotel complexes and special territorial gambling zones established by decision of the Cabinet of Ministers of Ukraine;
- for gambling rooms – three, four or five-star 25 to 50-room hotels; and
- for bookmaking points – three, four or five-star 25 to 50-room hotels and racecourses.
In addition, designated gambling zones must be located away from educational, cultural or medical institutions, and from residential areas.
8 Penalties and sanctions
8.1 What penalties and sanctions are available to the authorities for breach of the gambling legislation?
Articles 58 and 59 of the Gambling Law provide for the following penalties for violations:
- Unsanctioned alterations to gaming equipment are subject to a fine of up to UAH 6.5 million.
- The admission of persons under 21 years old to online gambling services is subject to a fine of up to UAH 3.25 million.
- The acceptance of a bet by non-certified gaming equipment or equipment which is not connected to the State Online Monitoring System is subject to a fine of up to UAH 6.5 million.
- The placement of ads in unauthorised locations and other breaches of the provisions on the advertising of online gambling are subject to a fine of up to UAH 1.95 million.
- The use of unlicensed gambling equipment is subject to a fine of between UAH 156,000 and UAH 4.55 million for each instance of such use.
In addition, under the Criminal Code, illegal gambling (i.e., gambling without a licence) is punishable by:
- a fine of between UAH 170,000 and UAH 680,000; and
- a ban on holding certain positions or practising certain professions for up to one year.
If an offence of illegal gambling is committed by an individual who was previously convicted of gambling without licence or by a group of accomplices upon prior conspiracy, the penalties are increased as follows:
- a fine of between UAH 680,000 and UAH 850,000; and
- a ban on holding certain positions or practising certain professions for up to three years.
9 Advertising and marketing of gambling
9.1 What requirements and restrictions apply to the advertising and marketing of physical and remote gambling in your jurisdiction? Do these vary depending on the type or location of the activity, or the medium through which it is carried out?
According to the Law on Advertising (‘Advertising Law'), gambling may not be advertised on television (including all types, such as Internet Protocol television, online and mobile television) or on radio between 6:00 am and 11:00 pm. This prohibition also covers all publications, except those that specialise in gambling.
The Advertising Law also imposes the following restrictions on gambling advertising:
- Outdoor advertising (on external parts of buildings or on special constructions, such as billboards) and advertising in public places (e.g., the underground) network is prohibited.
- Gambling ads must not be placed on goods aimed primarily at an audience aged under 21.
- Persons who are under 21 or who look as though they were under 21 must not be depicted in gambling ads.
- Gambling ads must not create an impression that winning a prize is easy.
- Each ad must contain a visible warning (at least 15% of the ad size) that gambling may cause ludomania.
- All gambling ads must include information on the operator's licence.
These rules apply to all types of gambling.
10 Consumer protection
10.1 What social responsibility obligations apply to land-based and remote gambling operators in your jurisdiction? Do these vary depending on the type or location of the activity, or the medium through which it is carried out?
All gambling operators must comply with the Responsible Gaming Principles, which include:
- an age-identification obligation, aimed at the protection of minors;
- restrictions on game participation, imposed in certain cases on individual players;
- non-encouragement of players to lose in a game, which prohibits gambling operators from giving prizes or any kind of reward for a player's losses;
- measures to prevent gambling addiction, which oblige a gambling operator to place on its premises/website information on:
- responsible gaming principles;
- the rules of certain games;
- the symptoms of ludomania; and
- contact information for medical centres and other establishments where the addicted can receive professional medical and psychological help;
- legislative self-control and self-limitation mechanisms, which allow players to self-restrict their access to gambling establishments and platforms, and to limit their bets; and
- measures to promote awareness among gambling staff of the social consequences of gambling through ongoing internal training dedicated to the prevention of gambling addiction and responsible gaming principles.
10.2 What other general consumer protection requirements are of relevance for gambling operators in your jurisdiction?
No other consumer protection requirements relevant to gambling have been developed thus far.
11 Financial crime
11.1 How does the gambling regime interface with money laundering/terrorist financing/proceeds of crime legislation in your jurisdiction?
Gambling operators are reporting entities under the Law on Preventing and Counteracting the Legalisation (Laundering) of the Proceeds of Crime, Terrorism Financing, and Financing Proliferation of Weapons of Mass Destruction. As such, they are subject to a range of obligations, including the following:
- Register with the State Financial Monitoring Service of Ukraine (a local financial intelligence unit);
- Appoint an employee with responsibility for primary financial monitoring;
- Check players to whom pay-outs must be made and their operations related to making or returning a bet if such operations meet a threshold of UAH 55,000 and involve:
- a person registered in the territory of a non-cooperative country according to the Financial Action Task Force;
- a politically exposed person; and/or
- a transfer abroad, including to countries on the Offshore List approved by the Cabinet of Ministers of Ukraine;
- Notify the State Financial Monitoring Service of Ukraine of suspicious or threshold operations;
- Provide documents and information on the request of the State Financial Monitoring Service of Ukraine; and
- Establish procedures aimed at the prevention of money laundering.
12 Non-gambling activities/social gambling
12.1 What specific activities, if any, are exempted from the gambling regime in your jurisdiction (eg, prize contests/sweepstakes/free prize draws/e-sports)?
According to the Gambling Law, the following activities are exempt from the gambling regime:
- art and sport contests, regardless of whether a prize is provided under the competition rules;
- billiards, bowling and other games which are played without the winning player(s) receiving a prize;
- machine games, such as claw cranes, where only material things, rather than money, are available as prizes;
- offline sport poker tournaments; and
12.2 How is ‘social gambling' defined in your jurisdiction and how is it regulated (if at all)?
Ukrainian law does not define ‘social gambling' and has no specific regulations on such.
13 Disputes and legal enforceability
13.1 Are gambling contracts enforceable as a matter of law?
Ukrainian law does not define a ‘gambling contract'.
13.2 In which forums are gambling disputes typically heard in your jurisdiction? What issues do such disputes typically involve?
Due to the relatively recent legalisation of gambling, no court practice on gambling contracts has developed thus far. We imagine that gambling-related disputes would primarily involve:
- disputes between gambling providers and the Gambling and Lottery Commission, which would be heard by the administrative courts; and
- disputes between gambling providers and players, which would be heard by the civil courts; and
- criminal proceedings relating to illegal gambling and other violations of the Gambling Law which the law enforcement authorities qualify as a criminal offence.
13.3 Have there been any recent cases of note?
See question 13.2.
14 Trends and predictions
14.1 How would you describe the current gambling landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?
As the Gambling Law only came into force in August 2020, the gambling sphere in Ukraine still lacks a well-developed regulatory basis. We expect that the legislative loopholes that remain should be addressed this year. Regulations whose adoption is anticipated include:
- a regulation on the State Online Monitoring System (SOMS), which will establish the SOMS and oblige all gambling operators to connect their gambling equipment to the SOMS;
- a regulation on the imposition of fines on gambling entities (in its absence, no fines have been imposed as yet on gambling operators in Ukraine);
- the Gambling and Lottery Commission's decision regulating on-site inspections of gambling facilities; and
- new licence terms for lottery organisations.
Another emerging trend is the arrival of foreign certification entities on the Ukrainian gambling market. This will help to ensure clear gaming conditions, enhanced protection of players' rights and increased transparency of the activities of gambling operators.
15 Tips and traps
15.1 What are your top tips for gambling operators in your jurisdiction and what potential sticking points would you highlight?
Entities that wish to conduct gambling business in Ukraine should carefully consider whether to provide services physically or online, balancing their expectations as regards the amount of investment required and the potential legal risks involved.
The gambling industry in Ukraine is still in its infancy, which means that all operators should anticipate and track new rules and requirements with which they must comply.
The potential traps for operators include financial monitoring issues and the sometimes overly aggressive approach of the law enforcement authorities.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.