Tightening control over the gambling business
On April 24, 2024, the Verkhovna Rada of Ukraine adopted in the first reading Bill 9256-d “On amendments to certain legislative acts of Ukraine in order to combat gambling addiction ( gambling addiction ) and improve state regulation of activities related to the organization and conduct of gambling and lotteries” (hereinafter - Bill).
As the authors explain, the Bill was developed with the aim of improving the existing system of state regulation of activities related to the organization and conduct of gambling, as well as with the aim of limiting aggressive advertising of gambling, increasing the possibility of protecting potentially vulnerable categories of the population by introducing a new basis for inclusion in the Register of persons for whom access to gambling establishments and/or participation in gambling is restricted, as well as increasing the payment discipline of licensees in timely payment of all mandatory payments.
The current version of the Law of Ukraine “On state regulation of activities related to the organization and conduct of gambling” (hereinafter referred to as the Law) establishes that the state regulatory body in the field of organization and conduct of gambling is the Commission for the Regulation of Gambling and Lotteries (Authorized Body); The bill proposes to establish that the Authorized Body is the central executive body implementing state policy in the field of organizing and conducting gambling. Moreover, the rules on the composition and structure of the Commission for the Regulation of Gambling and Lotteries (hereinafter referred to as the Commission) are proposed to be excluded, and the powers of the Commission will be distributed between the central executive body, ensuring the formation of state policy in the field of organizing and conducting gambling, and between the central executive body authorities implementing state policy in the field of organizing and conducting gambling.
Thus, the Bill provides for the liquidation of the Commission and the transfer of part of the powers to the relevant ministry, which in turn will be involved in the formation of state policy in the field of organizing and conducting gambling and to the body that will implement state policy in the field of organizing and conducting gambling.
As the authors of the Draft Law explain, this distribution of powers will be able to increase the efficiency of licensing processes and state supervision in this area by separating the functions of adopting normative legal acts and ensuring their implementation.
Also, in order to prevent and overcome gambling addiction, it is provided that the requirements for combating severe gambling addiction ( ludomania ) will be established by the Cabinet of Ministers of Ukraine, and for the period of validity of the legal regime of martial law, restriction of the participation of military personnel in visiting gambling establishments and participation in gambling will be carried out by their inclusion in the Register of persons who have restricted access to gambling establishments and/or participation in gambling.
If the current version of the Law, in the case of admission to gambling of persons whose participation in such games is prohibited, obligated gambling organizers to pay compensation in the amount of ten times the amount of loss to such persons, then the Bill additionally establishes an obligation for gambling organizers to pay such persons compensation in the amount of , equivalent to half the total amount of penalties imposed by the central executive body implementing state policy in the field of organizing and conducting gambling in connection with the violation.
Attention should be paid to the tightening of requirements for gambling advertising.
Thus, advertising of gambling, advertising of trademarks, other objects of intellectual property rights under which the activities of organizing and conducting gambling are carried out, as well as other designations under which gambling is carried out are prohibited:
1) in any audiovisual and auditory media, regardless of the technology of their distribution;
2) in online media;
3) in all print media (except for specialized publications dedicated to gambling);
4) in sports, medical, scientific, popular science, educational, socio-political, reference, literary and artistic publications, publications for children and youth and other publications (except for specialized publications dedicated to gambling);
5) means of internal advertising;
6) in transport, including on vehicles and equipment;
7) through advertising measures;
8) means of outdoor advertising;
9) in places where mass events of a political, educational, religious nature, sporting events and sports competitions, entertainment events are held;
10) on the Internet, including on platforms for general access to video and on platforms for general access to information;
11) offering or providing any direct or indirect reimbursement of expenses for access to gambling establishments and/or participation in gambling;
12) placement of an image or mention of gambling, trademarks, other objects of intellectual property rights under which the activities of organizing and conducting gambling are carried out, as well as other designations under which gambling is carried out, on any goods (items) except for placement on goods (subjects) related to the organization and conduct of gambling;
13) sending messages to an indefinite number of persons by mail, e-mail, or mobile communications.
In addition, gambling advertising is prohibited from:
1) participation of persons under 21 years of age, including as photo models;
2) participation of volunteers and/or military personnel, as well as persons whose appearance imitates the appearance of military personnel;
3) participation of popular persons or direct or indirect approval of gambling by popular persons, as well as the use of images and mentions of names of popular people,
4) heroes of film, television and animated films, authoritative organizations;
5) participation of athletes, doctors and other professional medical workers, as well as persons whose appearance imitates the appearance of athletes, doctors;
6) the use of topics related to containing and repelling armed aggression of the Russian Federation during the period of martial law, as well as any patriotic appeals and/or symbols aimed at ensuring state sovereignty, security and defense, patriotic education or any other means in order to create a misleading impression of the connection between participation in gambling and rebuffing the armed aggression of the Russian Federation.
The bill also provides for a ban on sponsorship for business entities that have a license to operate in the field of organizing and conducting gambling and a ban on the use of trademarks of such entities during sponsorship.
If a gambling organizer violates legislation in the field of gambling advertising, the Bill provides for an increase in the penalty from 300 to 600 minimum wages (from 2,130,000 to 4,260,000 million hryvnia), and repeated violation is grounds for revocation of the gambling organizer’s license. games.
To summarize, although the authors of the Draft Law believe that such changes to the Law will improve the existing system of state regulation of activities related to the organization and conduct of gambling, limit aggressive advertising of gambling and increase the ability to protect potentially vulnerable categories of the population, however, when preparing the Draft Law, it was not taken into account that In 2023 alone, the gambling business paid taxes to the state budget in the amount of more than 10 billion hryvnia, and strict restrictions on advertising of gambling will give an impetus to reducing revenues to the budget of Ukraine. In addition, instead of one body regulating the gambling and lottery market, two executive authorities will be created, which will increase the financial burden on the state budget of Ukraine.
During the armed aggression of the Russian Federation, the state must create favorable and comfortable conditions for doing business in order to attract as much investment as possible, therefore the adoption of the bill in this particular wording could negatively affect the gambling market as a whole.
Senior Lawyer
Oleh Lyhin
