The legalization of gambling in Ukraine was a real odyssey. In October 2019, the first law was introduced in the Ukrainian Parliament, and President Volodymyr Zelensky called for the approval of the law until December 1. Subsequently, several other laws were introduced, which were consolidated into a single bill.
At the initial vote on the bill, it was approved and sent to a committee for review. With the vote in parliament, President Zelensky ordered a series of raids that closed 152 illegal gambling units and confiscated $ 2 million worth of gambling machines and equipment.
The bill states that the government will issue 20 licenses for casinos in 5-star hotels, 80 licenses for retail sports betting shops, 10 licenses for the provision of online gambling services, and 160 licenses for the hall. of slots. Licenses will be awarded through an electronic auction and will be valid for five years.
The Ukrainian Parliament adopted draft no. 2285-d on gambling in January 2020 with 260 votes. Thus, with the entry into force of the law, entrepreneurs can start a casino or a betting company and take advantage of this new opportunity in the business of casinos and sports gambling.
Gambling Consulting Expert provides legal, administrative, and financial advice to gambling operators to register a company, purchase a gambling license, comply with regulations, launch and expand online casino projects and sports betting.
Land-Based Casinos, Slot Machine Halls, and Retail Betting Shops
Under the approved legislation, 20 licenses will be issued for land-based casinos. They will only work in 5-star hotels with at least 200 rooms (in Kiev) or 150 rooms (in the rest of the country). Currently, there are over 60 5-star hotels in Ukraine. Areas specially prepared for gambling must have at least 500 square meters.
Slot-ready spaces will be allowed in hotels with 3 or more stars with at least 200 rooms (in Kiev), or 150 rooms (in the rest of the country). The annual fee for slot machine rooms is 30 million UAH (about € 1.2 million).
The government has prepared 80 licenses for the retail sports betting shops. Holders of these licenses will be able to open up to 10 locations. 32 licenses will be granted to retailers in Kiev, 16 to the retailers in Odessa, Kharkov, Dnipro, and Lviv, and 32 in the other cities. Licensees in the betting shops will have to provide a bank guarantee or capital reserves of at least 7200 minimum wages, or 30 million UAH (about € 1.2 million).
Obtaining a land casino license comes with a major handicap, namely, it requires the construction of a hotel complex. The construction costs of a casino are high because they include land, permits, planning, and construction.
Also, the unnecessary equipment of a casino is extremely expensive. New slot equipment can cost between € 11,000 and € 22,000, so some casinos choose to rent their slots, which also allows them to spin what games they offer on the floor of the gaming room. In most leasing situations, the casino owner will share a large percentage of the profit with the slot machine supplier.
In addition to the above, land-based casinos also require a significant number of employees: lawyers, PR experts, marketers, accountants, security experts, and dealers. It also requires a significant marketing budget.
And as a last resort, licensees will have to consider the costs of hotel staff, including reception, maintenance, and cleaning staff, as well as chefs, waiters, and boys, if there is an attached restaurant, which will be most likely the case. There are also daily costs to consider, such as maintenance, repairs, and electricity and water bills.
To apply for a license, land-based casino operators will need to hold capital reserves or a bank guarantee of UAH 30 million (approximately EUR 1.2 million). The auction for casino licenses in Kiev will start from 37 million UAH (about 1.4 million EUR) per year, and the auction for licenses for casinos in other cities will start from 25 million UAH (about 1 million euros) per year . The licenses will be valid for five years.
One of the eliminatory conditions for being able to apply for a gambling license is that the operators have a legal address in Ukraine. Companies will need to provide tax, payment, and accounting information, as well as the identity of shareholders and the final beneficiary of the business.
To adapt tax legislation to the new conditions, a separate bill has been introduced in Parliament to reduce the gambling tax from 18% to 10%.
Online Gambling Businesses
In connection with online gambling licenses, the government is expected to provide 10 licenses to digital gambling and betting service providers. Licensed operators will be able to play both sports gambling and casino games.
Online casino licenses will be awarded through electronic auction and the starting price is UAH 25 million (approx. €1 million) per year.
Opening an online casino comes with its own expense. Thus, operators need to address the costs of website development by adding games from a variety of different vendors and adding payment systems. Online casinos also require software support and a significant amount of marketing.
To be competitive, online casinos must feature a variety of high-quality slots and other games. Developers often charge a monthly fee and an additional percentage of revenue. The same goes for payment services. Online casinos need to offer a variety of payment methods to ensure that their players can always make deposits.
In order to apply for and obtain an online gambling license, interested commercial companies will need to be registered in Ukraine and will need to submit an application, legal address, tax information, payment information, accounting information, information about their shareholders, and information about the final beneficiary of the business.
Another mandatory condition in the licensing process is the obligation to provide documents specifying the domain name of the online casino or betting site. The software used by the operators will have to be connected to an online monitoring system, operate in accordance with international standards and certifications, and comply with the technical documents.
For now, the tax scheme for online gambling businesses is the same as the one for land-based casinos.
To launch an online casino, it is mandatory to go through several stages, starting with obtaining investors or other financing options, developing software, integrating the games and the payment systems. The process can be accelerated by cooperating with consulting services providers in incorporating companies and obtaining a gambling license, as well as with software developers and aggregators who specialize in the rapid and efficient launch of online casino projects. The right consultant can manage the licensing process and documents, register the business, obtain the software and integrate the games and payment services, reducing costs and shortening the deadline.
Both licenses have their own costs. Some of them seem parallel, like the need to pay marketing, financial, and legal staff.
Ultimately, however, the stipulation that casinos must be located in 5-star hotels, and slot machine halls in 3-, 4-, and 5-star hotels creates a massive barrier to entry for entrepreneurs. Starting and running an online casino already requires less investment than running a land-based one, but one a sizable hotel is thrown into the mix the contrast increases dramatically.
There are many different factors to take into account, but getting an online casino up and running often costs between €500,000 and €2 million. This is a far cry from the tens or hundreds of millions of dollars required for a land-based casino and attached hotel.
One distinct advantage of online casinos is the option to outsource significant amounts of the labor involved, such as software development and customer service. The auction for the online license will also begin UAH 12 million (approx. €500,000) per year lower than that of the offline casino.
One critical difference between opening an online casino business and an offline casino in Ukraine is the time required. Building a new hotel and casino, or adding casino space to an existing hotel, is a substantial time commitment that can last months or even years. An online casino, on the other hand, can sometimes be up and running in three months or less. An online casino can start earning returns on its investment long before an offline casino has even opened its doors.
There are so many things to consider when starting a gambling business in Ukraine, however, the main one should be the starting cost. While for a land-based casino a company will need tens or hundreds of millions of euros, starting an online casino will cost between €500,000 and €2 million.
Another difference is the time required to start the business. While the construction of a hotel and casino can late months or even years, the online casino can be set up and running in three months or less. The online casino will start earning money long before the land-based one has opened its doors.
The legalization and regulation of the gaming market in Ukraine is estimated to bring €189 million in taxes and will bring a big blow to the black market with an estimated €1 billion in revenue annually.
Gambling Consulting Expert offers consultancy services and complete package solutions for gambling license acquisition that include:
- Gambling jurisdiction and business advisory
- Gambling business corporate structure incorporation
- Opening bank accounts
- Gambling license application
- White Label or TurnKey Software Solution