Gambling Business in Ukraine Comes out: What’s Next?

On 14 July, the Ukrainian’s Parliament (Verkhovna Rada) issued the Law “On State Regulation of Activities Concerning the Organisation and Conducting of Gambling,” which authorises gambling in the state. Legalization of gambling has so far been an acute public problem, as both opponents and supporters have made strong arguments in their favour. Finally, we have a relevant legislative act, but will it satisfy society?

The authors of the Law justify their initiative with several main factors. At first, we are behind the world experience, which shows that the gambling business is a good source of income for the state and provides a new jobs. On the way to the European Union, Ukraine must take into account such experience and bring its own legislation closer to international standards.

Secondly, it is a way to bring the gambling business out of the shadows, which means to protect not only the interests of the state, but also players who have been deprived of their rights till today. Thirdly, law enforcement must have reliable information about both gambling business entities and the players themselves, especially those who suffer from gambling addiction. The Law is aimed at forming a civilised gambling market in the state, which will be controlled and transparent.

So, from now on, casinos, bookmaker’s offices, slot machines and gambling on the Internet are included in the sphere of gambling. The statutory fund of gambling business organisers must be at least 30 million hryvnias, which ensures the guarantee of players’ winnings. Gaming equipment must not be older than 2019. In addition, it is forbidden to use equipment that provides the mechanical setting of the percentage of winnings.

Citizens over the age of 18 will have access to gambling, and those suffering from gambling addiction (ludomania) will be mentioned in a special register. Interesting is the fact that the initiative may come from relatives, who should file a lawsuit. With that, casinos can be located only in buildings and areas of five-star hotels with the appropriate number of rooms.

One of the advantages is comprehensive measures to control the gambling market, as there are high corruption risks in this area. The introduction of an online monitoring system is progressive. This means that the authorities will be able to control the organisers of gambling on the Internet. Previously, the lack of such a system led to uncontrolled online space and systemic violations of players’ rights. In addition, no one paid taxes. Now, the recipient of income from gambling will be the Fund for Support of Medicine, Sports and Culture. The new Law prescribes very carefully the licensing procedure and the amount of the license fee, which is differentiated, depending on the type of gambling.

Pitfalls

However, the Law also has a number of disadvantages. In particular, the gambling license is issued for 5 years, and gambling business owners are given state guarantees that the license will not be reduced. In our opinion, this is a hasty decision, because it is unknown how the gambling market will be formed and whether there will be additional unforeseen risks. It would be more appropriate to provide the validity of the first license for one year, and then introduce the practice of issuing permits for subsequent years.

It seems suspicious that the law provides the creation of as many as seven new state registers, six of which are public and one closed. The question arises: why, and how much money from the budget will be allocated for the maintenance of such registers? The authors noted that the adoption of the Law will not require additional costs from the budget, but this is not the case: registers will be created and maintained for our taxes.

In addition, the Law states that a player can be a person who has reached 18 years of age. But, I doubt that at this age a person has a stable income and a stable psychological resistance to gambling addiction. This will create a lot of risks for young people. It would be advisable to increase the age threshold to 21 years.

And the last thing that worries human rights activists is the lack of public control over the gambling market. This “control,” if you analyse the law, is only the right of citizens to report violations, which is clearly not enough. This position of the legislator may indicate a desire to limit the institutions of civil society in the full monitoring of the gambling market, which will create an elite closure of this sector of the economy. Such a model can strengthen corruption and abuse by gambling owners, which means that there is a high risk of human rights violations.

Victor Filatov, analyst of the CO “Human Rights Group “SICH”