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"The main stupefaction is the Verkhovna Rada", - Anton Kuchukhidze on the launch of the gambling market in Ukraine

The first operators who applied for licenses received refusals from the Commission. The reasons are different, mainly incorrectly filled papers or lack of information about the company. But even obtaining an official license will not give operators the opportunity to work right now. Anton Kuchukhidze, exclusively for gamingpost.net, told how to resolve the issue of equipment certification without the participation of the Verkhovna Rada. And is it possible to legally protect a business from a lockdown. Details are in the interview.
  • Gambling legalization
  • 2021-01-25 14:26:02
  • 236
"The main stupefaction is the Verkhovna Rada", - Anton Kuchukhidze on the launch of the gambling market in Ukraine

Ukrainian operators have already started to apply for licenses. When market will start working?

The Commission has actually started accepting applications for licenses. And this is a significant plus if we compare how much there was opposition, how many shadow workers, various groups of lottery players in the Verkhovna Rada worked against the acception of a special law. Today we are on a completely different level and this is worth appreciating. Because if there was no such opposition, then, of course, I would say: "Faster! Why do we delay?" But when there is an understanding of this opposition, how strong it was in all directions. Starting from individual ministries, deputies in the session hall, it doesn't matter, I believe that today this is a positive result.

What needs to be done to launch the gambling market as soon as possible?

It is necessary to normalize the legal framework. This is a tax bill. The tax system and the nonsense that was made in 2016 when tax rates were accepted, but there was no special law and the market was not legalized - these tax rates are actually high now. And if you do not accept 2713d, it is simply not profitable to work.

What kind of taxes should be changed?

There is a tax on winnings. In most European jurisdictions, there is no such tax. If there is, then it is much less, but not 18 percent. If we take Georgia, the tax on winnings there ranges from 1 to 5 percent. If we take neighboring Belarus - there are 4 percent. If we take, for example, such a developed jurisdiction as Italy - there is zero tax on winnings. Although there are certain types of drawings that are taxed. Take Canada - zero percent. All jurisdictions that want to be competitive have zero tax on their winnings. Therefore, it is obvious that it needs to be canceled, it must be equal to zero.

Are there such high taxes in other countries?

There are critics who say - there are high taxes in Europe. Including on GGR. They are correct only in one part, that there is a high GGR, but they do not explain all the subtleties why there is a high GGR. If we take, for example, the same Italy, which in 2019 became the leader in Europe in terms of tax payments to the country's budget - $21 billion. That critics do not say one sacred thing - a general license to conduct activities for the organization of gambling costs 226,4 thousand dollars. This is not $10 million, as in Kiev, to build a casino. There is a difference.

When can we expect the adoption of amendments to the tax code?

The problem is that 2713d is not accepted. The likelihood was that even in August they would vote, because this bill was on the agenda for the first reading in the session hall. But forever, by some miracle, due to technical subjective reasons, the Verkhovna Rada cannot reach this bill. Therefore, I still hope that the deputies will hear common sense, this is nonsense when you we the highest licenses and the highest taxes. Then where is the profit for the business? What are the benefits for Business to do, build hotels, build casinos? What is the benefit if both are high? All those in power in Ukraine understand that without changes to the tax code, no investor will calculate the economics of the process.

Can the gambling market earn money without certification? After all, there are still no technical regulations and certification centers

Certification mostly hits the ground segment, because every table, chair, machine must be certified and confirmed. And now it is still a problem. And the problem is purely technical. The deputies did not vote, did not change the transition period. I believe that, given the principled character of this issue, the Verkhovna Rada can act as an effective and quick ally and accept a draft law on extending the transition period. Because without it, many questions may arise for the companies that will own the licenses. Because they won't be able to import equipment. Although there are other possibilities, it is not through changes in the basic law to do this. It is possible to develop an absolutely pure legal mechanism from the point of view of a regulatory legal act at the Cabinet level. And to resolve this issue from the position of postponement. What all Western investors say: "We do not like that your gambling business is very connected with politics." Political turbulence has a real impact on the normalization process of legislation and adoption of changes. Here, I believe, the main stupefaction is the Verkhovna Rada. Despite the fact that there is a mono-majority, but even in this mono-majority there were groups of deputies, whom opponents of legalization managed to lure away.

It turns out that the market will not work until the transition period is accepted? There is an opinion that the commission simply will not fine operators without certification.

I am sure that the commission will not violate the law, because the commission has a clear understanding of the pressure it is under. And what political pressure all future gambling operators will be under. If we want a faster mechanism, the Cabinet of Ministers and the Ministry of Justice can work it out. And during the transition period, it will be possible to start immediately. Now it's not even a question of waiting for the final certification centers and procedures. And the question is how quickly and through what mechanism it will be possible to resolve the issue of extending the transition period. Because during the transitional period there were no checks on this issue. Because a transitional period was envisaged so that both the state and business would prepare for certification. Today there is no such possibility. Therefore, the market launch speed will depend on who will react. The Cabinet of Ministers has such an opportunity to elegantly beat the situation with the transition period.

Are there risks in launching a gambling market during a pandemic?

First, you need to wait for the casino licenses in Ukraine to be obtained. When this happens for sure, I, as a supporter of legalization, would like it to be faster. It is also necessary to normalize legislation. I know that there are ready-made casinos in Ukraine, they practically have everything ready, they need a license so that they have the right to be certified, go through all the procedures and start. But other investors are not sure that there will be a ready-made casino. Accordingly, to build a casino - at best, a year, one and a half, two. To build the infrastructure for this. I think that in 2021 they will still find resistance (against COVID-19, ed.) And over time, firstly, this problem will be resolved. And secondly, those who will build a casino will not feel any problems with this. And I think that Ukraine should listen to the British example, when they just introduced the percentage of occupancy of the casino building.

Is it possible to legally protect a business from a lockdown? For example, to register in the law the possibility of deferring the payment of a license if the business is closed?

I am more of a technologist and political scientist. And I perfectly understand what problems any draft law may face in the Verkhovna Rada, given that the group of shadow workers works very closely, and the group of lottery players too. Who, one way or another, are not entirely satisfied with the form in which this bill was accepted. Therefore, in order not to suspend business once again under political turbulence, I would try to make fewer changes.

Interview exclusively for Gamingpost.net

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