The Ukrainian Ministry of Finance recently presented draft legislation to fully regulate casinos, sports betting, and online gaming in the country. Gambling has been prohibited in Ukraine since it was outlawed in 2009. As with other historical prohibitions, social risks were introduced including illegal operations, a growth in crime, corruption, and the loss of potential tax revenues. One only has to look at the birth of organized crime in the United States during alcohol prohibition to imagine the corollaries.
The new draft law for gaming regulation was proposed after extensive debate and input from business representatives at conferences and gaming summits. One of the participants in the discussion was Storm International, purveyors of casinos and VIP clubs in eastern Europe including Storm Casinos, Shangri La and X.O. Club brands.
Darren Keane, CEO of Storm International released a statement in October affirming the company’s intention to invest in Ukraine if there were proper legislation. Mr. Keane has now furthered the company’s position, lauding benefits of the new draft law but also noting some of the legislation’s weaker points. Among other things, he noted that there are too few four and five star hotels with more than 200 rooms in the country and that the provision was too restrictive.
He also made note that limiting casinos to hotels would restrict the number of gaming positions available to players. This, he said, would in turn limit the amount of taxes payable as well as restrict customary casino amenities such as restaurants, relaxation areas and concert facilities. He brought attention to the “catch-22” in the conditions saying, “Without additional services it will also be difficult to reach the 250 minimum requirement of staff.”
Mr. Keane was very specific in his observations of the license fee issue and taxation laid out in the draft law saying, “The proposed yearly license fee is a fair price that should be paid yearly in the local currency. Failure to do so should mean immediate closure. The proposed annual table and slot taxes are acceptable numbers and are in line with neighboring countries tax codes. These should be paid on a monthly or quarterly basis to give the operator the flexibility of adding or removing equipment.”
Mr. Keane was not too impressed with the licensing fees drafted for online casino operations: “When you compare it to both Armenia and Georgia, two developed gaming markets, the 1.5 million Euro proposed in Ukraine dwarfs them by a 7 to 1 ratio. It does seem too high a price to pay to enter that market.”
A company spokesperson said in a release on Tuesday that, “In general Storm International welcomes this new law as it will bring the legality back to gaming in the Ukraine and hopefully put a stop to the criminal elements that operate the illegal casinos at present.”