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It is counterproductive to criticize the reform of the gambling market before its completion

More than two and a half years after the entry into force of Law No. 768-IX "On State Regulation of Activities Regarding the Organization and Conduct of Gambling", disputes about what the gambling market should be like and what the state and business should do for its operation have not subsided.

There is nothing surprising in this, as, like any reform, the process of legalizing the gambling market cannot instantly change everything. That is why, due to the understanding of the need for the gradual introduction of regulatory provisions, transitional provisions were stipulated in the law that regulated the terms of application of certain changes both in the operation of state institutions and licensed gambling business organizers for a sufficiently long time.

For example, two years from the effective date of the Law were provided for the putting into operation the State Online Monitoring System (SOMS), but by that time the government officials had to approve the relevant provision on technical regulations, and the legal gambling organizers had time to install the equipment required for SOMS operation.

It was also provided that during the first year of the market operation, the Parliament would adopt a number of amendments to the fiscal laws to organize the system of taxation of all market participants and harmonize the terminology, as there were certain discrepancies in the currently valid Tax Code and Law No. 768-IX.

However, the full-scale war made its corrections both in time frame of the development and adoption of regulatory legal acts, and in their implementation. As a result, the reform of the gambling market started in 2020 has not been completed.

This incompleteness, obviously, is the reason that we can see many critical statements about the gambling business in the media recently. However, the problem is not in the business itself, but in the conditions of its doing, which are still in a state of transformation due to the lack of adopted legislative and administrative acts.

Critics of domestic gambling overlook the fact that reform was started but not completed because of the war. Let me remind you that the process of bringing gambling out of the shadows was supposed to consist of two consecutive steps:

1) Legalization of gambling;

2) Systematization and regulation of the legislation.

The first step was implemented as early as 2020, but the second has not yet been completed. Accordingly, it is impossible to wait for adequate business operation in the conditions when:

- the old tax law remains in force, which contains an absolutely illiterate definition of Gross Gaming Revenue (GGR), because GGR is, first of all, the difference between the money received and paid by gambling organizers, rather than the entire revenue, because a casino never keeps all the money;

- according to the effective legislation, the state taxes the entire winnings of a player, even UAH 100, at the rate of 19.5%, which provokes the player to turn to the black market organizer.

The reform should be completed in order to enable the legal gambling market to operate for the benefit of the state and help it in times of war. By the way, since 24 February 2022, legal gambling organizers have sent more than UAH 1 billion to help the Armed Forces and temporarily displaced persons.

Therefore, in order for the market to work normally and to increase the amount of revenues to the state budget, it is necessary just to adopt draft law No. 2713-d and introduce the SOMS.


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