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Anton Kuchukhidze: Canadian gambling case. Lessons for Ukraine

While some Ukrainian “experts” like to talk about gambling regulations being enhanced everywhere, other interesting developments in this area are taking place all around the world. That is, in addition to regulations, there are both legalization and development.

The gambling sector is unique in terms of research methodology, namely, the methodology for studying international experience which is very diverse: there are no uniform international standards or guidelines establishing specific rules to develop this business in a given country. And though regulations are being enhanced in Latvia, Spain and Britain, this is not to say that everything must be overregulated.

A couple of weeks ago, an important event took place in Canada. On 27 August 2021, the law on legalization of sports betting came into force. As you can see, some countries have more regulation, while in others, both markets and various types of gambling begin to operate.

What do Canada and Ukraine have in common? A few facts:

(1) Since 2015, there have been several attempts to legalize sports betting in Canada, and only in 2021 the reform was implemented – just like the gambling saga that took place in Ukraine.

(2) The prohibition of betting failed to close the market. The annual volume of this gambling sector alone amounted to $14 billion outside the legal framework. That is, Canadians bet $ 10 billion on illegal internal online resources, and $ 4 billion was the volume of the so-called grey segment – Canadian players that spent their money on foreign legal websites. Today, all government bodies expect these funds to remain in the country and be taxed.

(3) Social aspect. Once betting is legalized, “Canadians will be able to participate in sports betting in a regulated and secure environment,” said Attorney General David Lametti.

Newly legalized Canadian betting sector faces the same issues today as does Ukrainian gambling business. The tax issues faced by bookmakers are being actively discussed among Canadian experts. In the Canadian discourse, there is even a joke: “The key is not to become Pennsylvania.” Who can forget, for instance, what Dan Shapiro said in 2018, when he served as Vice President of Business Development Department at William Hill, a British gambling company: “Considering that in Pennsylvania the total tax amount is 36%, and the license costs $ 10 million, I believe that in the US there are states of greater interest to us.”

“Not to become Pennsylvania” is now the task of the Canadian provinces. Since Canada is a federal state, it will be just like in the US: each province will have different license fees. For example, the website of the Ontario regulator (Alcohol and Gaming Commission of Ontario) provides no specific information on betting, but rather general statements: a license for an online gambling website costs $ 100,000. If the local government fails to change this situation, this province, in fact, can follow its own path.

“Not to become Pennsylvania” is a slogan that also works well for Ukraine. Looking at the licensed companies’ register, we see only one legal bookmaker in the country. This, of course, is not what Ukraine hoped for. And the adoption of draft law 2713-д may become a panacea for the country to increase the number of betting companies, since it can help regulate the issue of betting licenses and taxes for all gambling sectors, so we can finally stop being Pennsylvania. There are a number of betting companies waiting for a triple license fee to be removed, as well as for an adequate GGR, and not the current 18%, when the taxation of gambling operators and players can sometimes exceed 70%.

Furthermore, the Canadian case may be illustrative for our country in terms of the gambling winnings tax which is 0%. Of course, I understand that the Verkhovna Rada is unlikely to agree to a zero tax rate for everyone, but it is possible to fight for an increase in the gambling winnings tax threshold from 8 to 10, 15 or 20 minimum wages. Another positive signal for foreign companies could be the exemption of non-residents from tax on winnings. But again, all these questions are a subject for discussion at working groups that might be established in relation to draft law 2713-д.

Anton Kuchukhidze, Chairman of the Ukrainian Gambling Council, exclusively for the “Ukrainian News”.


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