Ukraine parliament votes to dissolve gambling regulator KRAIL

The move will likely result in a significant shift in the way Ukraine gambling is governed and regulated.

The vote took place today (24 April) in Ukraine’s parliament, the Verkhovna Rada. The vote follows the submission of draft law no 9256d. The bill proposed to liquidate KRAIL.

The impact of gambling on Ukraine’s wartime society has proven to be a point of debate in recent months. This follows a petition launched by a soldier of the 59th brigade, Pavlo Petrychenko, at the end of March.

The petition was published on the website of the president’s office in the last week of March. Within hours of it being launched, the petition collected a total of 26,041 signatures. Any petition with more than 25,000 signatories automatically requires presidential consideration.

The petition aimed to draw attention “to the harm that the gambling business causes to the Ukrainian army and Ukrainian society”.

Soon after, a plan for restrictions was announced during the Ukraine president’s evening address to the country’s citizens on 2 April. As a result, the president tasked authorities with preparing conditions to “tighten control” over the country’s online gambling industry. This, he said, was to “help protect the interests of society”.

Opposition to the Ukraine gambling regulator, KRAIL

There has been continued opposition to how Ukraine’s gambling industry has been regulated for more than a year.

In May 2023, Deputy Prime Minister Mykhailo Fedorov submitted a draft law proposing KRAIL be dissolved and replaced with a new executive body. Fedorov referenced the regulator’s ongoing failure to issue gambling licences in a timely manner.

KRAIL operates as a collegial body consisting of a chairman and six members. Meetings are only valid if five members are present, which is necessary for a licence application.

However, after the country’s invasion by the armed forces of Russia, some commission members were mobilised into military service. This made it impossible to continue KRAIL meetings and caused delays to regulatory work, including issuing licences.

Draft law no 9256d: Changing how Ukraine is regulated

The bill, which was backed by 272 lawmakers in today’s vote in the Rada, follows Deputy Prime Minister Fedorov’s original submission of the bill in 2023. The bill now has to pass a second reading and then be signed by the president before becoming law.

As well as dissolving Ukraine’s regulator, other measures also focus on further restricting gambling in Ukraine. This will include a ban on advertising, new tools to safeguard particularly vulnerable categories of the population, as well as further control measures.

While online gambling had officially been prohibited in Ukraine since 2009, it was re-regulated in July of 2020. According to a Telegram post by the chairman of the parliamentary finance committee, Danylo Hetmantsev, gambling businesses in Ukraine paid UAH2.2bn (£45.0m/€52.0m/$56.0m) in taxes for 2024. This follows UAH10.4bn for 2023.

The Ukrainian government has previously looked to clamp down on illegal gambling in the country. Earlier this year, the Economic Security Bureau of Ukraine seized UAH700m from an unnamed leading gambling operator over tax evasion. It is now expected to do so in a far more focused way than before.

What next for Ukraine gambling?

In a recent interview with iGB, Alina Plyushch, a partner at Kyiv-based law firm Sayenko Kharenko, looked to outline the situation as it currently stands.

On commenting on the need to better protect the military from the harmful effects of gambling, she explained: “Gambling, particularly online casino, is always a high-risk industry which is especially relevant during the war. 

“Even though some information is circulating in the media, it is quite difficult to calculate any specific numbers that reflect the real influence of online casinos on the situation in general.

“Since the Russian full-scale invasion, almost every draft law is a kind of dilemma as every change in the regulatory framework needs to be balanced to ensure the interests of both the army and the economy.”

The challenge, however, will be finding effective ways to ban online casinos in the country when necessary.

“We believe that it is not as difficult to ban people from physical casinos as it is to ban them from online casinos,” Plyushch added. “Restriction of access to online casinos requires a comprehensive consideration of potential ways of avoidance.”

Following KRAIL’s disbandment, the role of the regulator will now be transferred to the digital transformation ministry. This, as Plyushch predicted earlier in the month, will now become a reality.

Plyushch explained: “The most likely immediate action to be passed is disbandment of the current regulator and temporary transfer of its functions to the digital transformation ministry. This is pending a further government decision on the creation of a new regulator under the digital transformation ministry’s umbrella.

“Another possibility is that the digital transformation ministry keeps the functions of the industry’s regulator.”