Gambling 2021 A practical cross-border insight into law Seventh Edition

Featuring contributions from:

Appleby (Isle of Man) LLC KG Law Firm Nestor Nestor Diculescu Kingston Petersen Ballard Spahr LLP Legal Gaming Nishith Desai Associates Brandl Talos Lewis Roca Rothgerber Christie LLP Nordic Gambling DLA Piper Hungary LOYRA Abogados Rato, Ling, Lei & Cortés – Advogados e Notários Gabnys Law Firm Ludmer Law Senet Gaming Legal Group Luiz Gomes & Associados Sirius Legal GTG Advocates in collaboration with Mazanti-Andersen Advokatpartnerselskab Sports & Gaming Lawyers Afilexion Alliance Melchers Law Firm Taft Stettinius & Hollister LLP Herzog Fox & Neeman Law Office MF Estudio – Abogados TripleOKLaw LLP Ifrah Law PLLC Miller Thomson LLP WH Partners International Masters of MME Legal | Tax | Compliance Wiggin LLP Kalff Katz & Franssen Nagashima Ohno & Tsunematsu Table of Contents

Introductory Chapter

The Future of Gaming Law in an Uncertain World 1 Marc Ellinger, International Masters of Gaming Law

Expert Chapter

The Legal Ambiguity of Crypto Payments Within the Gaming Industry: 3 A Plea for a Crypto Directive Bas Jongmans & Xavier Rico, Gaming Legal Group

Q&A Chapters

Argentina Israel 7 MF Estudio – Abogados: Tomás Enrique García Botta 111 Herzog Fox & Neeman Law Office: Liran Barak

Australia Japan 11 Senet: Julian Hoskins & Anne Tucker 116 Nagashima Ohno & Tsunematsu: Masayuki Fukuda

Austria Kenya 21 Brandl Talos: Thomas Talos & Nicholas Aquilina 123 TripleOKLaw LLP: John M. Ohaga & Michelle C. Koske

Belgium Latvia 28 Sirius Legal: Bart Van den Brande 129 Gabnys Law Firm: Andrius Gabnys

Brazil Lithuania 34 Ludmer Law: Eduardo Ludmer 136 Gabnys Law Firm: Andrius Gabnys

Canada Macau 39 Miller Thomson LLP: Danielle Bush 142 Rato, Ling, Lei & Cortés – Advogados e Notários: Pedro Cortés & Óscar Alberto Madureira Czech Republic 47 WH Partners: Robert Skalina Malta 149 GTG Advocates in collaboration with Afilexion Alliance: Denmark Reuben Portanier & Dr. Terence Cassar 55 Mazanti-Andersen Advokatpartnerselskab: Nina Henningsen Netherlands 155 Kalff Katz & Franssen: Dr. Alan Littler & Erik van Hoorn Estonia 62 Gabnys Law Firm: Andrius Gabnys Poland 162 WH Partners: Ewa Lejman-Widz & Kamila Spalińska Finland 68 Legal Gaming: Minna Ripatti Portugal 169 Luiz Gomes & Associados: Gonçalo Afonso Proença Germany 73 Melchers Law Firm: Dr. Joerg Hofmann & Romania Dr. Matthias Spitz 175 Nestor Nestor Diculescu Kingston Petersen: Alina Tace & Lucian Barbu Greece 81 KG Law Firm: John C. Kyriakides & John Broupis Spain 184 LOYRA Abogados: Patricia Lalanda Ordóñez & Hungary Fernando A. Martín Martín 87 DLA Piper Hungary: Viktor Radics, Attila Jákói, Dániel Élő & András Nemescsói Sweden 191 Nordic Gambling: Maria McDonald India 93 Nishith Desai Associates: Gowree Gokhale, Ranjana Switzerland Adhikari, Tanisha Khanna & Inika Serah Charles 199 MME Legal | Tax | Compliance: Dr. Andreas Glarner

Isle of Man 104 Appleby (Isle of Man) LLC: Claire Milne & Sophie 204 Sports & Gaming Lawyers: Iryna Sergienko & Corkish Robert Khorolskyy Table of Contents

Q&A Chapters Continued

United Kingdom USA – New Jersey 212 Wiggin LLP: Jason Chess & Chris Elliott 236 Ifrah Law PLLC: Jeff Ifrah & Whitney Fore

USA – California USA – New York 218 Ifrah Law PLLC: Jeff Ifrah & Whitney Fore 241 Ifrah Law PLLC: Jeff Ifrah & Whitney Fore

USA – Illinois USA – Pennsylvania 222 Taft Stettinius & Hollister LLP: Paul T. Jenson & 245 Ballard Spahr LLP: Michael D. Fabius & Adrian R. King, Jr. Erin Lynch Cordier

USA – Nevada 230 Lewis Roca Rothgerber Christie LLP: Karl F. Rutledge & Glenn J. Light 204 Chapter 32 Ukraine Ukraine

Iryna Sergienko

Sports & Gaming Lawyers Robert Khorolskyy

Who 12 Relevant Authorities and Legislation Who regulates regulates it Relevant Product it in digital in land-based 1.1 Which entities regulate what type of gambling and form? social/skill gaming activity in your jurisdiction? form? Commission (is formally not Lotteries considered gambling). Who Who regulates “Social” regulates it Relevant Product it in digital gaming with no in land-based form? prize in money Is not considered gambling. form? Social/ or money’s gaming Skill worth (including slots Commission (as of 16 October arrange- Skill games and casino 2020, the composition of which ments and compe- table games has not yet been appointed). titions with Are not considered gambling. such as no element of & blackjack) chance Commission ( tour- naments Commission 1.2 Specify: (i) the law and regulation that applies Gaming may only be to the Relevant Products in your jurisdiction; and (ii) (sports poker is Poker conducted in – in broad terms – whether it permits or prohibits the not considered ; sports offer of Relevant Products to persons located in your gambling). poker is not jurisdiction. considered gambling). Law No. 768-IX of 14 July 2020 on the State regulation of activities Is not mentioned in the Gambling regarding the organisation and conduct of gambling (“Gambling Law, but can be covered by the Law”) governs all the Relevant Products, except lotteries. definition of “” under the Lotteries are not considered gambling and are governed by Law Lotteries Law. No. 5204-VI of 6 September 2012 on the State lotteries in Ukraine (“Lotteries Law”) and, in respect of licensing, also by Law No. Betting Commission. 222-VIII of 2 March 2015 on licensing of economic activities. Sports/horse The only secondary regulation adopted to date is the race betting Regulation of the Cabinet of Ministers of Ukraine No. 891 of (if regulated 23 September 2020 on establishment of the Commission for the Regulated as betting. separately to Regulation of Gambling and Lotteries (“Commission”) and other forms of approval of its constituting act. betting) Other key regulations will be approved by the Cabinet of It is prohibited to bet on a Ministers of Ukraine, in particular the licensing conditions for Fantasy betting Betting “virtual game”, i.e. an aggregate each Relevant Product, the procedures for the application of (payment to of virtual events created with financial sanctions to the operators, and the framework act of back a ‘league’ the aid of gaming equipment the State system of online monitoring. The rest of the regu- or ‘portfolio’ or mechanical and technical lations will be approved by the Commission, including on the selection over a means, the outcome of which is certification of gaming equipment, principles of responsible period of time, not known in advance and the gaming and the procedures for responding to reports on the for example outcome of which cannot be infringements of gambling legislation. in relation to influenced either by a player or Taxes and taxation rules in relation to gambling and lotteries sport or shares) by the operator. are governed solely by the Tax Code of Ukraine.

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Anti-money laundering requirements are established in Law All the gambling and lottery licences are only available to No. 361-IX of 6 December 2019 on preventing and countering Ukrainian legal entities. However, such Ukrainian compa- the legalisation (laundering) of the proceeds obtained by crim- nies can be directly founded or effectively controlled by foreign inal means, terrorist financing and the financing of the prolifer- (except Russian) companies or individuals. The Gambling Law ation of weapons of mass destruction (the “AML/CFT Law”). imposes numerous restrictions preventing Russian companies Law No. 270/96-VR of 3 July 1996 on advertising contains and individuals from owning or taking control over a Ukrainian restrictions on advertising of gambling and lotteries, and of the gambling operator. tradenames under which gambling services are provided. 2.2 Where Licences are available, please outline the 22 Application for a Licence and Licence structure of the relevant licensing regime. Restrictions The seeker of a gambling licence must be a Ukrainian company, 2.1 What regulatory licences, permits, authorisations inter alia: or other official approvals (collectively, “Licences”) are ■ with authorised capital of UAH (Ukrainian Hryvnia) 30 required for the lawful offer of the Relevant Products to million (equivalent to EUR 0.91 million) paid with funds persons located in your jurisdiction? from a confirmed source; ■ that is not owned or controlled by a Russian company or The Gambling Law provides for 11 gambling licences, which citizen (who cannot be its shareholder, executive, ultimate can be united in the following groups: beneficial owner) and does not own shares of any Russian (1) Seven “primary” licences for: company; and ■ Land-based casinos (ordinary licence and special ■ the shareholders of which are not companies registered in “investment licence”). a jurisdiction from the FATF list. ■ Land-based halls – each licence allows Every land-based gaming establishment must be situated the operation of up to 250 slot machines. within the territory of the respective “special gaming zone”: ■ Land-based and online betting. ■ Casinos. In Kyiv, a casino must be situated in a five-star ■ Land-based hippodrome pool betting – the licence hotel with a minimum of 150 rooms. In another settlement permits the operation of one betting shop and the – in a four/five-star hotel with a minimum of 100 rooms. A carrying out of pool betting on races taking place in casino may also be situated in a country recreation complex such hippodrome. of at least 10,000 m2 with a five-star hotel. A casino of over ■ gambling. 10,000 m2 may also be situated in a special territory, discre- ■ Online poker. tionary defined by the Cabinet of Ministers of Ukraine. (2) Three “secondary” licences for: Also, casinos can be operated under a special “investment ■ A gaming table or a roulette gaming table. licence”, issued in case of an investment gambling project ■ A slot machine. approved by the Cabinet of Ministers of Ukraine or in case ■ A betting shop. of the construction of a five-star hotel with at least 200 These licences can be obtained by the respective land-based rooms (in Kyiv) or 150 rooms (in another city). operator with a primary licence (i.e. a casino (licences for ■ Slot machine halls. In Kyiv, a hall must be situated in a tables and slot machines), a slot machine hall (licences for three/four/five-star hotel with a minimum of 50 rooms. slot machines), a betting operator or hippodrome (licences In another settlement – in a three/four/five-star hotel with for betting shops)). a minimum of 25 rooms. A hall may not be situated in a (3) One B2B gaming software supply licence. settlement with less than 10,000 inhabitants. In addition, the issuance of lottery licences is regulated by ■ Betting shops. In Kyiv, a shop must be situated in a three/ the Lotteries Law. four/five-star hotel with a minimum of 50 rooms. In another There are no limits on the number of available gambling licences, settlement – in a three/four/five-star hotel with a minimum whereas only three lottery operators can simultaneously operate. of 25 rooms. A hall may be situated in a hippodrome. The Gambling and Lotteries Laws do not prohibit the cumu- Every land-based gaming establishment must also have the lation of various licences by one company. However, it is unclear following minimum areas: now whether numerous legislative restrictions and limitations ■ A casino situated in a five-star hotel – at least 500 m2. on gambling and lottery activities can prevent such cumulation. ■ A slot machine hall – at least 300 m2. Lottery licences will only be issued following the results of ■ A betting shop – at least 50 m2. the tender conducted by the Commission. All gambling licences Every licence is personal and non-transferable: only an oper- can be issued by the Commission after consideration of an appli- ator that received a gambling licence can conduct the respective cation of the respective licence seeker. Relevant Product. Nevertheless, a lottery operator may distribute The Gambling Law does not grant any monopoly to any operator. lotteries through its distributors, which do not require any licence. The Lotteries Law provides for “the State monopoly for Managers and employees of the operator do not need to organisation of lotteries”, and in fact every Ukrainian lottery possess any licences. is a “State lottery”. However, a qualifying requirement of Ukrainian companies are permitted to supply the Ukrainian three years’ experience in conducting State lotteries under the or foreign operators with gambling software only after obtaining Lotteries Law means that only existing private Ukrainian lottery a special B2B licence. However, gambling and lottery opera- operators can qualify for the three available lottery licences. tors are not prohibited from using software from any Ukrainian When applying for a licence for a casino, slot machine hall non-licensed or foreign supplier of gambling software. or betting shop, the licence seeker must present a permission A gambling operator must ensure certification and inspection confirming that the premises to be used for gambling meet the of gaming equipment and its software by a certification entity, requirements of the Gambling Law. Such permission is granted included into the list approved by the Commission. by the Commission upon an application of the premises’ owner.

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Betting and lottery operators may conduct both land-based Also, in case of licences for a casino, slot machine hall or and under their licences. Moreover, betting betting shop, the permission confirming that the premises to operators may carry out only online gambling. An operator of be used for gambling meet the requirements of the Gambling online casino gambling or online poker is not required to collab- Law must be attached. Such permission is granted by the orate with any land-based providers. Commission upon an application of the premises’ owner. Application for a lottery licence must be filed to the Commission together with documents confirming that the 2.3 What is the process of applying for a Licence for a Relevant Product? applicant meets requirements of the Lotteries Law and the licencing conditions; in particular, confirmation that the appli- cant has three years’ experience of conducting State lotteries A Ukrainian company must file the Commission with an under the Lotteries Law. application for the respective licence (its form will be established Licence fees are defined in the Gambling/Lotteries Law by the licensing conditions) together with the documents, inter alia: and depend on the amount of the minimum monthly wage ■ constituent documents of the applicant; (“MMW”) established on 1 January of the year the licence was ■ confirmation of the source of funds used for formation of issued. The fees are paid by equal parts each year (except fees for the applicant’s authorised capital and an audit confirma- secondary licences, which are annual). tion that the capital has been formed in full; Until the launch of the State system of online monitoring, ■ certificates of clean criminal records for the applicant’s key a temporary coefficient (triple multiplier) will be applied to personnel, substantial shareholders, and ultimate benefi- the annual part of the licence fee in respect to some Relevant cial owners; Products (betting and online casino gambling) and to the annual ■ confirmation of the gaming equipment certification; and licence fee for each slot machine. ■ a document confirming the right of the applicant or its share- holder to use the .ua domain name, as well as information about the hosting provider and the domain name registrar (in case of an application for the online gambling licence).

Licence fee Temporary (for the licence duration, unless otherwise indicated) multiplier Expected in applied to the In 2020, in EUR 2021, in EUR annual part Relevant Product (rounded) (rounded) of the licence In MMWs (1 MMW = UAH (1 MMW = UAH fee or to the 4,723; 1 EUR = UAH 6,000; 1 EUR = annual licence 33.00) UAH 34.00) fee 60,000 (in 8.59 million/4.29 10.59 million/5.29 Casino Kyiv)/30,000 Not applicable. million. million. (another place). Casino “investment licence” Free. – – Not applicable. * Each roulette gaming table 175 (annual). 25,050 (annual). 30,900 (annual). Not applicable. * Each gaming table 90 (annual). 12,900 (annual). 15,900 (annual). Not applicable. * Each slot machine 6 (annual). 860 (annual). 1,060 (annual). 3. Slot machine hall 7,500. 1.07 million. 1.32 million. Not applicable. * Each slot machine 6 (annual). 860 (annual). 1,060 (annual). 3. Betting 30,000. 4.29 million. 5.29 million. 3. * Each betting shop 30 (annual). 4,300 (annual). 5,300 (annual). Not applicable. Hippodrome pool betting 1. 143. 175. Not applicable. Online casino gambling 6,500. 0.93 million. 1.15 million. 3. Online poker 5,000. 0.72 million. 0.88 million. Not applicable. Lottery 28,000. 4.01 million. 4.94 million. Not applicable. B2B gaming software supply 300. 42,900. 52,900. Not applicable.

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The Commission reviews a licence application, takes a deci- issued for 10 years. The B2B licence for gaming software supply sion in 15 working days, and notifies the applicant on its decision is also issued for a five-year term. in five working days. In case of a positive decision, the applicant Each secondary gambling licence (for a gaming table, a pays a licence fee for the first year in 10 working days, and then slot machine and a betting shop) is issued for the duration of the Commission issues a licence. The negative decision must be the respective primary gambling licence held by a casino/slot adopted on the specific ground set out in the Gambling Law, machine hall/betting operator. must be motivated, and may be appealed to a court. A lottery licence is issued for 10 years. The lottery licence will be issued following results of the Renewal of the licences is not provided for in the Gambling/ tender conducted by the Commission. The tender procedure Lotteries Law. has not been established yet. It will probably be governed by While the Gambling Law prohibits reduction of the licence’s the Cabinet of Ministers of Ukraine in the licensing conditions. duration or suspension of the licence, a gambling licence can be annulled by the Commission, including on the following grounds: ■ detection of inaccurate information in the documents 2.4 Are any restrictions placed upon licensees in your jurisdiction? submitted by a gambling operator for obtaining a licence; ■ delay in payment of the licence fee over two months; ■ a gambling operator’s failure to connect its online system A gambling operator can conduct gambling only under one or gaming equipment to the State system of online brand. monitoring; A gambling operator must keep a special banking deposit or ■ non-admission of the Commission’s inspection; banking guarantee ensuring payment of winnings in the amount ■ repeated infringement during the calendar year of the of 7,200 MMWs (UAH 43.2 million; EUR 1.31 million). requirements of the Gambling Law, the AML/CFT Law A gambling operator must use its online system (platform) for and/or licensing conditions; or conducting gambling, which: ■ failure to pay a fine imposed by the Commission for a ■ ensures real-time recording of all transactions and violation of the legislation. payments with respect to players and protection of the data Such annulment may be appealed to the court only. from unauthorised interference; Lottery licences may be suspended or annulled in accordance ■ ensures its technical means are located as well as informa- with the provisions of the Law on licensing of economic activities. tion in it is processed solely on the territory of Ukraine; ■ is connected to the State system of online monitoring; and ■ is certified and inspected by the certification entity, 2.6 By Relevant Product, what are the key limits on included into the list approved by the Commission. providing services to customers? Please include in this answer any material promotion and advertising Every piece of gaming equipment must be connected, directly restrictions. or through the online system (platform), to the State system of online monitoring, administered by the Commission, and transfer data to it in real time. Considering that the majority of Ukrainians take a negative A gambling operator must ensure certification and inspection stance on gambling and, as such, do not have any gambling of its gaming equipment and its software by a certification entity experience or have only experienced illegal gambling, it may be approved by the Commission. the case that a significant number of Ukrainians will decide to A casino must hire at least 50 employees. A casino located in be included in the Register of persons with restricted access to a city with over 500,000 inhabitants must use a minimum of 10 gaming establishments and/or participation in gambling. gaming tables (including two roulette gaming tables) and 50 slot In some regions, the public and politicians will probably machines. Any other casino must use a minimum of five gaming actively oppose the opening or functioning of land-based tables (including one roulette gaming table) and 20 slot machines. gaming establishments. A casino operated under the “investment licence” must hire Since all land-based gaming establishments must be situ- at least 250 employees, use a minimum of 20 gaming tables ated in hotels, serious doubts arise about whether there will be (including four roulette gaming tables) and 250 slot machines, enough appropriate premises for gaming establishments, espe- and an eatery. cially outside Kyiv. A slot machine hall must use a minimum of 50 slot machines. Only a licensed operator is permitted to advertise gambling or Slot machines displayed in a hall must not be visible from outside order such advertising. of the building. Advertising of gambling or a gambling trademark is prohibited: The premises of each land-based gaming establishment must ■ on any kind of television (including cable, satellite, IP, be equipped with a security alarm and video surveillance systems. online, mobile) from 6 a.m. till 11 p.m.; Each lottery operator must use an electronic system (plat- ■ in print media and publications, except in specialised form) for acceptance of stakes ensuring real-time recording for gambling ones; every stake, use a minimum of 5,000 lottery terminals and have, ■ on transport, in metropolitan areas, outdoors, and on at the minimum, 5,000 distribution points. goods intended for persons under 21 years of age; and ■ in places where entertainment, sporting and other events are conducted for persons under 21 years of age. 2.5 Please give a summary of the following features Use of a gambling trademark is prohibited during the sponsoring of any Licences: (i) duration; (ii) vulnerability to review, of TV or radio broadcasting and events intended for persons under suspension or revocation. 21 years of age (except broadcasting of sporting events). The Law on adverting also establishes a number of restric- Generally, the duration of primary gambling licences (for tions and limitations on the content of gambling adverting. casinos, slot machine halls, betting, hippodrome pool betting, A player is entitled to limit his/her participation in online online casino gambling and online poker) is five years. As an gambling by establishing personal restrictions on the money exception, only a special casino “investment licence” may be limit he/she wishes to spend on gambling. This is the only

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provision in the Gambling Law on game limits, and it will take irrevocable application (restriction for up to 36 months, as some time to see how it will be implemented in practice. defined in the application, but at least six months); The Gambling Law requires operators to refuse to grant to ■ by the Commission on its discretion, following the appli- players any bonuses, presents or any other promotions, if such cation filed by the person’s close family members (restric- granting depends on them losing in the respective gambling. tion for up to six months); or The Gambling Law prohibits betting on a “virtual game”, i.e. ■ upon a court judgment, following the application filed by an aggregate of virtual events created with the aid of gaming the person’s close family members (restriction for six to 36 equipment or mechanical and technical means, the outcome months, as defined by the court). of which is not known in advance and the outcome of which cannot be influenced either by a player or by the operator. 2.9 How do any AML, financial services regulations Since bingo is almost unknown to Ukrainians, failure to or payment restrictions restrict or impact on entities mention it as a kind of gambling or lottery can effectively block supplying gambling? Does your jurisdiction permit its development in Ukraine. virtual currencies to be used for gambling and are they In respect of poker, it is difficult to predict to which extent separately regulated? sports poker (which is not considered gambling) will be used for avoidance of licensing under the Gambling Law. Stakes may be made in money (only in UAH) or with the use of the UAH’s gaming substitutes (e.g. a coin-like badge, chip, 2.7 What are the tax and other compulsory levies? token, electronic card). In land-based gaming establishments, all the monetary transactions and payments with the participation of players, The taxation of gambling and lotteries is governed solely by the including exchange of the UAH’s gaming substitutes, must be Tax Code of Ukraine. conducted through the cashier desk with the use of the registrars The gambling operator must pay 18% GGR tax (or 10% turn- of payment transactions. Also, any banking or credit institution, over tax on revenues received with the use of slot machines) and pawnshop, ATM or currency exchange may not be placed in a general 18% corporate income tax. land-based gaming establishment. The lottery operator must pay 30% GGR tax and general 18% Stakes in land-based casinos may be made only by the UAH’s corporate income tax. gaming substitutes (gambling tokens, etc.), equipped with a Payment of stakes and winnings in both gambling and special tool (chip) enabling the determination of its face value lotteries is not subject to VAT. and location of the respective casino. Winnings are subject to 18% personal income tax and 1.5% It is prohibited to gamble on credit or subsequent payment. military tax, which must be withheld by the gambling or lottery The operators cannot grant loans to players. Use of debit or operator acting as “tax agent”. credit cards is allowed only with the payment authorisation. Winnings may be in monetary or material form and must 2.8 What are the broad social responsibility be paid within 30 days after the player’s request (or, in case of requirements? betting, 10 working days from the determination of the winner). Winnings can be paid in cash only at the cashier desk and Responsible gaming is a founding principle of the organisa- within the limit of UAH 50,000 (equivalent to EUR 1,500), tion and conduct of gambling in Ukraine. In addition to the while the rest must be paid in cashless form. At the request of requirements of the Gambling Law, the “principles of respon- a player, all of the winnings must be paid in cashless form. In sible gaming”, legally binding for the operators, will be estab- online gambling, all payments from/to players must be cashless. lished by the Commission. It is prohibited to offer players, both free and as a prize, any The social responsibility obligations of the operators include: alcoholic beverages and tobacco products. ■ obligatory identification and verification of the identity The Lotteries Law prohibits payment of a lottery ticket or a and age of players and visitors; stake on credit or subsequent payment. Use of debit or credit ■ prohibition of involvement in gambling of underage cards is allowed only with the payment authorisation. Winnings persons, persons with marked gambling addiction, and can be paid in cash at the cashier desk of the lottery operator persons with restricted access to gambling; or through the lottery’s distributor. At the request of a player, ■ periodical trainings for the operator’s personnel on respon- winnings must be paid in cashless form. Other conditions of sible gaming and prevention of gambling addiction; and payments can be established by the lottery rules. ■ obligatory placement in the gaming establishment, Under the Gambling Law, the banks and payment systems, website or mobile application of information on the oper- operating in Ukraine, must refuse to make payments to ator, gambling rules, responsible gaming and gambling non-licenced operators. addiction, and medical institutions for the treatment of The latest version of the Ukrainian AML/CFT Law was gambling addiction. adopted with the aim to transpose EU AML Directive No. A player must reach 18 years of age to participate in a lottery 2015/849 and EU Regulation No. 2015/847 on information on and 21 years of age to gamble in any other Relevant Product. the payer accompanying transfers of funds according to Ukraine’s The latter limitation also applies to visitors and employees of the obligations under the EU-Ukraine Association Agreement. land-based gaming establishments. Under the AML/CFT Law, the gambling/lottery opera- A person’s access to gambling will be restricted after his/her tors are the subjects of primary financial monitoring and must inclusion in the non-public Register of persons with restricted conduct customer due diligence (“CDD”) in case of suspicious access to gaming establishments and/or participation in transactions or transactions over UAH 55,000 (equivalent to gambling, administered by the Commission. EUR 1,660), which involve cash payment, PEPs, and transfers A person is included in the Register: to/from a jurisdiction from the FATF list. Compliance with the ■ by the operator or the Commission, not later than the next AML/CFT Law requirements is a ground for the operator to day after the player filed, personally or online, his/her refuse or delay payment of a winning or the return of a stake.

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The State Service of the Financial Monitoring of Ukraine Each slot machine must be equipped with random number exercises oversight over the gambling and lottery operators in generators (“RNGs”) ensuring impossibility of predicting the respect of AML/CFT measures. outcome of a future game, based on the results of previous games. RNGs must work constantly, even when the slot machine is not 32 Online/Mobile/Digital/Electronic Media used for playing. Only slot machines without bill acceptors can be used. Debit 3.1 How does local law/regulation affect the provision or credit cards also cannot be used, since all the monetary trans- of the Relevant Products in online/mobile/digital/ actions and payments with respect to players, including with the electronic form, both from: (i) operators located inside use of banking cards, must be conducted through the cashier your jurisdiction; and (ii) operators located outside your desk. jurisdiction? RNGs and the random selection process must be protected from external influence; in particular, from electromagnetic or Provision of each Relevant Product online (which covers use of electrostatic interference and radio frequency interference. a mobile application) requires an operator to obtain the relevant All the gaming equipment, except gaming tables, must be licence (online casino gambling, betting, online poker, lotteries). connected to the State system of online monitoring directly or Solely the operators licensed under the Gambling/Lotteries through the operator’s online system (platform) for the conduct Law are permitted to provide the respective Relevant Product of gambling. on the territory of Ukraine, including online/through a mobile Certain mandatory information must be indicated on the application; any other conduct of gambling may be prosecuted as body of each slot machine, including: a criminal activity. The only exception is conduct of “inter-State ■ its manufacturer and year of production (slot machines lotteries”, which may be jointly organised by a Ukrainian lottery produced before 2019, as well as produced or supplied by a operator and a lottery operator licenced in another jurisdiction. Russian resident, are prohibited for use in Ukraine); The Gambling Law prohibits any distribution in Ukraine of ■ its production number (that allows everyone to retrieve, on the websites, mobile applications or other gaming equipment for the Commission’s website, data about the slot machine’s participation in gambling which provide access to servers or data- location and the licence of its operator); bases of persons who are not licenced operators under the Law. ■ data on modification and repair (if any); and The banks and payment systems, operating in Ukraine, must ■ total percentage of winnings (theoretical return to the refuse to make payments to non-licenced operators. player), which must be at least 90%. Upon request of the Commission, a non-licenced operator or In betting shops, it is prohibited to place equipment: a hosting provider must restrict access from/to the territory of ■ enabling a player to make a stake, check an outcome, or Ukraine to the website of non-licenced operators. receive winnings without participation of the operator’s The licensed online gambling operators are directly permitted employee; or to accept stakes from individuals located outside Ukraine, irre- ■ enabling access to, displaying or generating virtual events spective of their nationality. or games, including by means of a RNG, and to make The Lotteries Law contains only one provision on online stakes on such events or games. lotteries – that the rules on distribution and conduct of lotteries The Lotteries Law permits the distribution of lotteries through the Internet shall be governed by the licensing conditions. through the terminals, and each lottery operator must operate at least 5,000 terminals. Lottery terminals must be connected to the operator’s central electronic system (platform) and transmit 3.2 What other restrictions have an impact on Relevant Products supplied via online/mobile/digital/electronic data in real time. To prevent the terminals from being used means? as slot machines, the terminals must neither perform a lottery draw, nor display or translate a draw process. The Relevant Product must be provided to customers through the operator’s website with a domain name in the .ua zone, which has 42 Enforcement and Liability been notified to the Commission and included in the public Register of the licensed operators. The website may be operated solely under 4.1 Who is liable under local law/regulation? one brand used by the operator. The website must contain certain mandatory information in the Ukrainian language (other language The Criminal Code of Ukraine punishes, with a fine of UAH version(s) may be added at the operator’s discretion). 170,000–850,000 (equivalent to EUR 5,152–25,758), the The gambling operator must use its online system (platform) following crimes: for the conduct of gambling. Only a player him/herself may ■ organisation and conduct of gambling or lotteries without create a gaming account on such platform. the respective licence; or All payments from/to players must be cashless. ■ organisation and functioning of establishments for The online operators, except betting operators, are directly providing access to online gambling or lotteries. prohibited from providing gambling disguised as telecommuni- The licensed operator will be fined for: cation services or the lease of any devices/equipment providing ■ each conduct of betting in the non-licensed betting shop – access to the Internet (Internet café, Internet club, etc.). financial sanction of 160 MMWs (UAH 960,000; equiva- lent to EUR 29,091); 3.3 What terminal/machine-based gaming is permitted ■ each conduct of gambling with the non-licensed roulette and where? gaming table – financial sanction of 700 MMWs (UAH 4.2 million; equivalent to EUR 127,273); Roulette gaming tables can be placed and used for gambling ■ each conduct of gambling with the non-licensed gaming only in casinos. table – financial sanction of 350 MMWs (UAH 2.1 million; Slot machines can be placed and used for gambling in casinos and equivalent to EUR 63,636); and slot machine halls. Slot machines must be the operator’s property.

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■ each conduct of gambling with the non-licensed slot Since 1 September 2019, Ukraine has participated in the machine – financial sanction of 24 MMWs (UAH 144,000; Council of Europe Convention on the Manipulation of Sports equivalent to EUR 4,364). Competitions (Macolin Convention). The Convention is partly Also, licensed operators will be punished with a financial implemented by Law No. 743-VIII of 3 November 2015 on sanction of 1,000 MMWs (UAH 6 million; equivalent to EUR prevention of influence of corruption offences on the results of 181,818) in case of unauthorised modification of gaming equip- official sports competitions. ment, failure to connect gaming equipment to the State system of online monitoring, or failure to carry out mandatory certifi- 4.4 Are gambling debts enforceable in your cation or inspection of gaming equipment. jurisdiction? The conduct of gambling with underage or other persons prohibited from gambling will be prosecuted as follows: ■ admission to a gaming establishment or to gambling of an A gambling contract between a player and a licenced operator underage, a self-restricted, or another person prohibited becomes valid and enforceable at the moment the stake is paid. from gambling – financial sanction on the operator of 500 Any gambling contract concluded by a person prohibited MMWs (UAH 3 million; equivalent to EUR 90,909); from gambling by the Gambling Law is void. ■ implication of persons under 18 years of age into gambling Since the Gambling and Lotteries Laws prohibit gambling or – imprisonment for three to seven years; and payment of a lottery ticket or a stake on credit or subsequent ■ acceptance of lottery stakes from persons under 18 years payment, gambling debts cannot arise for the player. of age – personal administrative fine of UAH 1,700–9,350; equivalent to EUR 15–283. 4.5 What appetite for and track record of enforcement Producers and distributors of illegal advertisements of does your local regulatory authority have? Have fines, gambling are liable for a financial sanction of 300 MMWs (UAH licence revocations or other sanctions been enforced in 1.8 million; equivalent to EUR 54,545). your jurisdiction? Financial sanctions are applied by the Commission, while criminal and administrative prosecutions are conducted by law The Commission and other authorities have not yet started their enforcement authorities. enforcement activities. A player may be prosecuted only for the participation in non-licensed gambling, which can result in an administrative 52 Anticipated Reforms fine of UAH 25–425 (equivalent to EUR 0.8–12.9) and forfei- ture of a stake. 5.1 What (if any) intended changes to the gambling law/regulations are being discussed currently? 4.2 What form does enforcement action take in your jurisdiction? The Gambling Law requires the Cabinet of Ministers of Ukraine to: The previous enforcement practices were relevant to the period ■ ensure the establishment and financing of the Commission before the gambling legalisation by the Gambling Law, which (until 14 October 2020); entered into force on 14 August 2020. ■ adopt the secondary legislation provided by the Law (until Traditionally, the Ukrainian authorities tend to enforce laws 14 November 2020); and through criminal prosecutions and administrative measures, ■ ensure the functioning of the State system of online often combined with accusations in tax evasion. monitoring. During the drafting process, it was emphasised that annul- The Ukrainian authorities have declared that legalisation ment of a gambling licence should be a key enforcement of gambling will be followed by reduction of tax pressure on instrument. gambling. The respective Bill No. 2713 on amendments to the Under the Gambling Law, the Commission should play an Tax Code of Ukraine is included the Parliament’s agenda for its important role in enforcement procedures. It will probably take adoption in the first reading. significant time for the Commission and its staff to grow their The Bill provides for the following changes in taxation: capacity to take effective enforcement measures, as they are set ■ gambling and lottery operators will pay 10% GGR tax and forth in the Gambling Law, against non-licenced operators, general 18% corporate income tax; and especially those located outside Ukraine. ■ winnings will be exempted from the personal income tax and the military tax. 4.3 Do other non-national laws impact upon liability and enforcement? Note Please note that the answers to all of the above questions are up International agreements of Ukraine in force are an integral to date as of 16 October 2020. part of the Ukrainian national legislation and have priority over national laws.

Gambling 2021 © Published and reproduced with kind permission by Global Legal Group Ltd, London Sports & Gaming Lawyers 211

Iryna Sergienko is an advocate and a recognised expert in gaming and sports law. She played a notable role in the legalisation of gambling in Ukraine since 2014, and is a regular participant and speaker at international gaming conferences, including ICE Totally Gaming. Iryna graduated from Yaroslav the Wise National Law University (Kharkiv, Ukraine) in 2001. She has led legal departments of leading Ukrainian companies in telecommunications, construction and real estate. In 2013, Iryna Sergienko joined, as a partner, the law firm Fomin, Sergienko & Partners (rebranded as Sports & Gaming Lawyers in 2019), repre- senting the interests of businesses in Ukraine and Eastern Europe, where she leads the gaming law practice. Iryna Sergienko is President of the Ukrainian Gaming Industry Association, a non-trade association of gaming experts, and a member of the Ethics and Fair Play Committee of the Ukrainian Football Association.

Sports & Gaming Lawyers Tel: +380 675 783 477 58 Poliova Str. Email: [email protected] Sofiyivska Borschagivka URL: www.sgl.com.ua Kyiv Region, 08131 Ukraine

Robert Khorolskyy is a partner at the law firm Sports & Gaming Lawyers, specialising in gambling and sports law. He received his Ph.D. in EU law from Yaroslav the Wise National Law University (Kharkiv, Ukraine) in 2001 and was a lecturer of public interna- tional law and EU law. After studies at the European law department of the College of Europe (Bruges, Belgium) in 2009, Robert collaborated with various law firms and research organisations, providing consultancy services on a wide range of issues in Ukrainian, European and international law. Since 2014, Robert Khorolskyy has provided legal support to gaming companies in post-Soviet countries and other jurisdictions. He is a co-author and co-editor of the publication “Legal regulation of gambling business: European experience, practices in post-Soviet countries, perspectives for Ukraine” (Kyiv, 2015), which significantly influenced Ukrainian expert and public discussions on gambling legalisation.

Sports & Gaming Lawyers Tel: +380 675 797 020 58 Poliova Str. Email: [email protected] Sofiyivska Borschagivka URL: www.sgl.com.ua Kyiv Region, 08131 Ukraine

Sports & Gaming Lawyers is a specialised Ukrainian law firm providing a full range of legal services in the field of gambling and sports. Our team consist of reputable Ukrainian lawyers with long-term practical experi- ence, who participated in all the developments on gambling legalisation in Ukraine and have a deep vision of the gambling market. We maintain high-quality standards for legal services and deliver an individual approach to the implementation of challenging projects. www.sgl.com.ua

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