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Lack Of Professional Approach To Legalization Of Gambling

George Miller

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Lack Of Professional Approach To Legalization Of Gambling
Reading Time: 6 minutes

 

The necessity of legalization of gambling in Ukraine has been the topic of interest for a long time. The new government, at the initiative of President Zelensky, has been trying to do this for almost a year now. Experts gave hundreds of comments about this process, journalists wrote dozens of articles, and deputies held many meetings of various working groups. In general, the relevant bill has undergone a number of changes and for a long time has been evolving step by step to an increasingly acceptable form: the general opinion of the market is that the law should be the same for everyone, everyone is ready to certain compromises, and even a high fixed cost of licenses is considered acceptable when the tax on gross gaming revenue (GGR) is abolished. But today the improvement of the bill hit up against the interests of the lottery pool of deputies, who are trying in every possible way to maintain the monopoly position of the lotteries and the associated gray schemes of work of other types of gambling. For this reason, the bill 2258-d on second reading runs the risk of entering the session hall with a number of fundamental problems that will simply nullify the positive effect of the legalization of gambling in Ukraine.

The motivation of the deputies from the lottery circle is obvious, they simply work off the corrupt rent of their patrons. But the motives of the deputies close to President Zelensky are not clear. In case of collapse of legalization or failure to get the expected results, this initiative will turn into a pile of stones that will be thrown at the President by both the opposition and other enemies without hesitation. Especially considering the fact that the President took this issue under his personal control.

Two main factors have caused the current unfavorable situation regarding the legalization of gambling in Ukraine: 1) the subjectivity of certain influence groups (strongly represented by the lottery pool of deputies), and 2) an exclusively theoretical understanding of the mechanism of work and specific features of the gambling business, which can be observed in the statements made by the head of the relevant committee, Daniil Getmantsev. Thus, instead of a broad discussion with future gambling operators, which could contribute to the development of a realistic draft law, we get a substitute for lottery “wishlist”, and an ordinary incompetence.

It will take more than one article to describe all the mistakes of legalization of gambling “in the Ukrainian style”. But nevertheless, the most striking moments can be singled out, without the resolution of which all the previous work will go down the drain.

So, the biggest problem is that the work on the relevant law is carried out without regulating the tax aspect of the organization of gambling. This approach may result in gambling operators paying taxes of 50-60% of profits for doing business legally. In this case, legalization will remain only on paper, as well as the long-awaited income to the treasury. Therefore, it is now extremely important to start a broad discussion on the tax burden for the gambling business. Since the budget of Ukraine needs fast money, and setting up an online monitoring system to track gross gaming revenue (GGR) requires considerable amount of time and specialist training, it would be logical to keep high license fees, but abolish the GGR tax. To understand the numbers, we want to remind you that for one license for 5 years, gambling operators in Ukraine will have to pay (ed. – take into account currency rate fluctuations): a casino – from $5.8 million to $20 million, depending on the number of rooms in the hotel; bookmakers – more than $21 million; lottery distributors – $14.7 million; gambling rooms – $145 thousand; online casinos – $2.4 million. At the same time, legislators plan to establish the GGR tax in the range of 18-25%, in spite of the bill 2713-3, which abolishes the tax on gross gaming revenue (GGR).

In general, world experience provides a choice between two options – either a high license fee or a GGR tax. More precisely, with a GGR tax a license fee may be levied, but then its amount is set at a very low level. In fact, a high fixed license fee is a tax on gross revenue paid in advance. Here are some examples from world experience.

In Britain, for example, a one-time fee for applying for a gambling license is €5,730, and a staff/ management license is about £330. The head of a gambling establishment is also obliged to pay an annual fee to ensure that his current license continues to be valid. The annual license fee depends on the gross turnover of the company. Gambling in England is subject to two taxes: 15% tax on total gaming revenue, and 18% income tax.

In the Netherlands, taxation on the organization and conduct of gambling is also quite high. Casino operators must pay a 29-percent gross revenue tax on games. In addition, they must also contribute 1.5% to the development of the gambling association and 0.25% to the fund against drug addiction.

Swedish casinos are obliged to pay a tax of 18% of their total gaming revenue. For doing business in the country you also need to purchase a license. It can cost from 6 to 70 thousand euros.

In Malta, the gaming tax makes up 5% of the revenue generated from certain gaming services during the relevant tax period. The tax on gaming devices in Malta varies from 12.5% to 30% for different types of licenses. Malta gambling management requires a company applying for a gaming service license to have a minimum share capital from 40 thousand euros to 100 thousand euros, depending on the type of gambling establishment in terms of profitability.

In France, the rules for calculating tax rates are as follows: the gambling turnover tax is 8.5%, and income tax is additionally paid at the standard rate of 28%.

In addition to taxes, all casinos also pay certain fixed fees. So, the budgets of municipalities on a daily basis receive 12 euros from the first roulette that opens and 6 euros from each subsequent roulette that opens.

Thus, the tax on GGR is usually used in those countries where there is no license fee or it is symbolic. In most countries where gambling is legalized, the authorities understand that gambling brings sufficient revenues to the budget, but it requires an adequate tax base.

To introduce the GGR tax, an optimal monitoring system is needed. It shouldn’t be overloaded, the way our parliamentarians do this, striving to stuff everything possible and impossible into monitoring. This approach is an evidence of a superficial and purely theoretical knowledge of the authors of such ideas. For the GGR tax, the most important thing is to control the entry and exit of funds.  For example, if 2 million UAH was brought during quarter, and 1.8 million UAH was given away as wins, then out of 200 thousand the GGR tax will be calculated. Everything is extremely simple. It is better to transmit information in the online monitoring system in non-personalized form and in a package, rather than in real time format and with all the data about the player, because otherwise, any halting will lead to an interruption in the operator’s work or to an unintentional violation of the law. But until such a simple and effective system is offered, it is better to use a high license rate and not charge the GGR tax.

If the gambling business is nipped in the bud, then the budget will not get any money. Therefore, the philosophy of the attitude to this type of business needs to be changed, it is necessary to create an adequate tax base and equal conditions for all operators. In response, the state will receive both substantial revenues to the budget and substantial amount of money for charity. Historically, gambling money goes to support social projects. For example, in France, theaters were built on taxes from the organizers of gambling establishments, and a famous opera house was built in Baden-Baden (Germany) on the tax revenues from the gambling industry. In the Netherlands, the representatives of the gambling industry sponsor the football championship, and in Canada – the annual stage of Formula 1 auto racing. In the USA, casinos finance basketball and hockey clubs.

In many countries, the distribution of tax revenues from the gambling business goes under special budget items. In Denmark, 65% goes directly to the Ministry of Culture and is directed to the development of sports and cultural life. In Finland, profits from lotteries and casinos are directed through the Ministry of Education to finance the development of national culture, and state revenues from betting on horse races are used to stimulate the development of national horse breeding and to conduct equestrian competitions.

For centuries, the authorities of various states have been convinced that human passions, including excitement, can’t be eradicated and prohibited, and therefore the only adequate solution is to find a reasonable compromise between the state, business and player. Many European countries have accepted such a philosophy a long time ago, and it’s time for Ukraine to finally take this path by creating a competitive market that will: a) be attractive to foreign investors; b) create hundreds of thousands of well-paid jobs, and c) replenish the budget with tax payments.

Eastern Europe

FeedConstruct signs exclusive deal with The Ukrainian Association of Football

George Miller

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FeedConstruct signs exclusive deal with The Ukrainian Association of Football
Reading Time: 1 minute

 

The sports data feed provider receives exclusive rights to collect and distribute video streamings and Fast Betting Data from the matches of the Ukrainian Association of Football.

The partnership grants FeedConstruct the coverage of 800+ annual events held throughout competitions like Ukrainian Premier League, Cup, Women’s and Youth Leagues and others. Advocating for competitions’ integrity, the data feed provider will deliver accurate data collected by its network of scouts and video streamings, which will find major appeal among the supporters and fans of the Association.

“The most important features of sports competitions are transparency and openness. Sports, in particular football, thrills with its unpredictability, genuine emotions and excitement! The Ukrainian Association of Football pays increasing attention to the guiding principles of fair play and ethics in organization of the football competitions at every level. And it’s a great pity that unethical practices of some parties jeopardize fair game score and hurt the image of the footballing bodies! That is why I’m pleased to announce start of cooperation between the Ukrainian Association of Football and FeedConstruct initiated by Mr. Francesco Baranca, President of Ethic Committee of the Ukrainian Association of Football.

The partnership of the Ukrainian Association of Football and FeedConstruct foresees regulation of the matters relating to the transfer of the rights to Ukrainian Premier League, Cup competitions, Women and Youth Leagues matches live data transmission to betting companies. From now on all data will only be transmitted through FeedConstruct and the transmission process may be stopped in case Ethic Committee of the Ukrainian Association of Football notices suspicious betting activity.

“FeedConstruct is one of the best sports digital content providers. And with choice of such reliable and experienced partner we feel certain that Ukrainian football competitions transparence shall reach the highest level!” – pointed Yurii Zapisotskyi, Ukrainian Association of Football General Secretary.

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Eastern Europe

Enteractive’s (Re)Activation Cloud platform lands in Romania

George Miller

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Enteractive's (Re)Activation Cloud platform lands in Romania
Reading Time: 2 minutes

 

One-to-one CRM approach to benefit retention in CEE market     

Enteractive, the leader in player reactivation and retention, has announced the launch of their (Re)Activation Cloud™ plug-and-play platform for the fast-growing Romanian market, boosting conversions of lapsed or dormant players for operators in the country.  iGaming brands will benefit from Enteractive’s personalised approach to player engagement, helping to activate NRCs to NDCs, and to revive player accounts.

Enteractive started providing (Re)Activation Cloud solutions in this market in April 2020, and the company has found players to be open and receptive to one-to-one conversations.

There are already some fantastic stats pointing towards the potential value in the country’s iGaming sector, and of the player conversations conducted by Enteractive on behalf of clients, around 75% of those contacted were interested to chat, with just 1% opting out from further calls.

Responsible Gambling is also key to the Romanian market, and keeping players safe and engaged means strong health prospects for the future of the region’s iGaming market. Enteractive agents are trained in handling responsible gambling issues, and every call includes checks on player wellness in terms of their gambling experience and possible risks.

In initial calls the company found that just 1% of Romanian players contacted were concerned about gambling problems. Enteractive is the leading engagement and retention provider for the iGaming sector, connecting with players for one-to-one conversations through (Re)activation Cloud. Enteractive thereby plays an important role as a ‘first responder’ when it comes to operators’ Responsible Gambling efforts.

Bartek Michalek, Enteractive’s country manager for Romania, commented, “Our teams love working on the Romania market, reporting both high answering rates, reaching 50%, and long conversation duration that is 38% higher than average.  We speak to around 300 players each day and find them keen to listen as well as chat with us. The feedback we’ve had shows that players are more interested in no-nonsense, uncomplicated bonuses than convoluted offers which helps us achieve an impressive conversion rate!”

As leading iGaming brands eagerly enter this growing CEE market, Enteractive’s unique CRM platform offers a fresh approach to player reactivation and retention, helping to boost operators’ bottom line with oft-forgotten churned players. (Re)Activation Cloud™ is driven by human interaction and personalised conversations on behalf of brands, bringing empathy and a human touch to an industry dense with automated impersonal services.

Mikael Hansson, Enteractive founder and CEO, said: “Romania is a world of opportunity for our clients and the iGaming sector in general.  We’re excited to grow our team for this region, and results seen so far indicate that this Central European region will be a key destination for iGaming brands.”

Enteractive is already well established in many European markets, with clients such as Betsson, GiG, and Kindred enjoying increased conversion and retention through the (Re)Activation Cloud platform, delivering Retention-as-a-Service expertise and boosting player deposits and engagement.

Both GDPR and G4 compliant, with bespoke systems built for operator compliance and player protection, Enteractive has a reputation for exceeding client expectations and delivering increased revenue results through low risk performance-based models.

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Eastern Europe

Second Reading of Ukrainian Gambling Bill Postponed Again

Niji Narayan

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Second Reading of Ukrainian Gambling Bill Postponed Again
Reading Time: < 1 minute

 

The second reading of the Ukrainian gambling bill has been postponed again.

On June 19, according to the agenda of the Verkhovna Rada, the Ukrainian MPs were to begin consideration in the second reading of the bill “On state regulation of activities related to the organization and conduct of gambling.”

However, the plenary session ended and the bill on legalisation of gambling has not been considered.

It was planned that the consideration of the draft law №2285-D would begin on June 18, but later the date was postponed to June 19. However, MPs did not even start the reading of the bill due to lack of time.

Most likely, the second reading of the bill on the legalisation of gambling will be postponed to the next plenary week, which, according to the calendar of parliamentary sessions, should begin on June 30.

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