Q&A: Parimatch on the potential of the Ukrainian regulated market

When Ukraine began its flirtation with legalised gambling regulation in October, the Ukrainian government said it would implement a bold timescale to commence licensing of prospective operators in January 2020.

However, launching a new gambling market and regulatory model is always subject to delays, and so it proved in Ukraine. The process has seen 10 different versions of the same draft legislation debated, amended and dismissed before yesterday’s successful parliamentary vote.

There is still a long way to go, but the path is somewhat clearer now. International sports betting firm Parimatch has long lobbied for regulation in its founding country. Now this has moved a step closer, EGR Compliance discusses the potential next steps with partner Maksym Liashko.

EGR Compliance: Do you think the licensing fees will put off operators?

Maksym Liashko (ML): This cost of licenses is justified and fair, if there are favourable reforms for operators to the GGR tax or income tax. However, at the moment there is a situation where the Supreme Council and MPs are considering a bill on the legalisation of gambling with very high licence costs regardless of changes to the tax code in connection with the legalisation of the industry. If everything remains as it is (high cost of licences together with introducing GGR tax and the 19% income tax at the same time), then we will have an unfairly punitive tax system for gambling businesses. We hope that now that the first stage has passed and the political will to legalise the market is clear, the groups of deputies which are currently working on the bill will consider it along with a change in the tax code.

EGR Compliance: Have the actions of the Ukrainian president in closing illegal land-based outlets served to push things forward?

ML: Yes. We believe that, indirectly, this had a positive effect on the decision making.

EGR Compliance: When do you expect the market to open?

ML: We expect this to happen in the next three to four months, when the first licences will be issued to operators. According to Ukrainian law, consideration of this bill in the second reading should take place within 30 days following yesterday’s parliamentary vote. Following that it will take about one to one-and-a-half months to form a new Commission. Then it will be necessary to give operators time to be able to apply for a licence.

EGR Compliance: What sort of tax rate do you think operators can expect?

ML: Regarding taxes, we hope that in the future these issues will be considered together (answer in the first question) and we will see a balanced position. If the high cost of the licences remains, then there will most likely be no tax on the GGR or income tax. We are waiting for the position of the state on this issue.

EGR Compliance: Does Parimatch plan to apply for a licence?

ML: Yes, of course. Parimatch is planning to apply for licence. The Ukrainian market is of high priority for us. We were originally founded in Ukraine so it is very important for us to have the licence here.

EGR Compliance: Do you have any estimates on the potential of the Ukrainian market once operations begin?

ML: We estimate that maximum turnover per month for the whole Ukrainian market for all gambling products would vary from $20m to $40m (very optimistic). Thus, we expect general GGR to vary around from $1.5-2.5m per month when the market will be fully open and operational.

EGR Compliance: What is happening with the development of a regulator for the market?

ML: According to the bill, a regulatory body should be created which is likely to be accountable to the Cabinet of Ministers. Before the second reading, the situation may change though.

Maksym Liashko, partner, Parimatch