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Paradoxes of domestic gambling: lotteries exist, but without licenses

2023 is coming to an end, and it is possible to begin summing up the results of the third full year of reforming the gambling market in Ukraine. The legalization of the gambling business was resumed in August 2020, but the first months after the adoption of the Law of Ukraine "On State Regulation of Activities Regarding the Organization and Conduct of Gambling" were densely filled with the government's policy-making activities, so full-fledged gambling economic activities began in a few months.

A lot has been done over the years: national regulator, the Commission for Regulation of Gambling and Lotteries began its operation, 6,112 permits and licenses were issued to legal market organizers, the principles of responsible gaming were developed and implemented, the Register of Persons with Restricted Access to Gambling Establishments and/or Participation in Gambling was established and first entries has been entered into it, more than UAH 4.2 billion revenue was received by the state budget only from license fees, etc.

However, there are still many problems that have been neglected by the vast majority of society and those in power for many years in a row. In particular, this is the problem of continuing the operation of lotteries as an independent separate business area. According to the legislation, lotteries are not gambling! The effective Law of Ukraine "On State Lotteries in Ukraine", which regulates the activities of ...privately-owned commercial lotteries (there is such a paradox in our country), defines the lottery area as "a set of social relations formed in the process of conducting lotteries." And the lottery is defined as "a mass game, regardless of its name, the conditions of which provide for the drawing of a prize fund between its participants and the victory in which is random in nature, and the territory of it holding extends beyond the boundaries of one building."

For 10 years in a row, since the entry into force of the aforementioned law in 2013, the state has not received any license payments from lotteries. Because they are not provided at all! For example, there is a reference in the law to another Law of Ukraine "On Licensing of Economic Activities Types", which should have regulated this issue, but Article 7 of this Law stipulates that licensing conditions are defined in the Law "On State Lotteries in Ukraine". Such an almost football-like "interpassing" led to the fact that not a single hryvnia has been received from the lottery operators as payment for licenses.

Oddly enough, even before the appearance of the relevant law in Ukraine, lotteries did not have the status of gambling as well. Even before the legislative ban of gambling in May 2009, their activities were regulated by separate regulatory acts. This allowed lottery operators to work smoothly from 2009 to 2020 and actively use the opportunities they received to organize other gambling, disguising them as lottery activities.

And this time, the MPs propose to enshrine a similar imitation on the legislative level. For example, draft law No. 10101 "On Introducing Amendments to Certain Laws of Ukraine Regarding the Improvement of Legislation in the Sphere of Organization and Conduct of Gambling and State Lotteries" proposes to enable lottery operators to actually conduct bookmaking activities (toto lotteries) with a single lottery license, organize the activities of slot machine halls (without limitation of the number and linking to hotels) and online casinos (without limitation of the number of distributor websites).

As a result, the activities of all legal gambling organizers, who conscientiously pay license fees for each type of activity separately and are forced to comply with strict regulations regarding advertising, location of establishments, compliance with the standards of responsible gaming, etc., will become economically meaningless: they will simply be killed by legally established unfair competition.

Therefore, it is necessary to recognize lotteries as gambling at the legislative level, as is the case all over the world, as well as in the EU, accession to which we aspire so much. We should establish clear, unambiguous and equal rules for conducting business activities for all subjects of the gambling market without exceptions and opportunities to conduct the organization of several types of gambling business under the "umbrella" of a single lottery license.


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