Ukraine government proposes dissolving gambling regulator

Fedrorov – who also is Ukraine’s minister for digital transformation – proposed the draft law due to 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, with the committee’s meetings only valid if five members are present, which is necessary for an application for a licence to offer games of chance to be approved by the body.

However, as a result of the country’s invasion by armed forces of the Russian Federation on 24 February 2022, president Volodymyr Zelenskyy signed the decree “On the introduction of martial law in Ukraine” that resulted in some members of the Commission being mobilised into military service.

This made it impossible to continue KRAIL meetings and therefore caused pauses and delays to a large amount of the normal work undertaken by the regulator; including on the issuance of licences.

“Blocking the work of KRAIL leads to complete instability of the market, as well as loss of revenues to the budget,” said the ministry. “The current format of KRAIL is imperfect and needs to be reformed.”

Ukraine proposes to amend gambling law

The draft law proposes to resolve this issue by revising “the principles of the formation and functioning of KRAIL”, by transforming the organisation from a collegial body into a more centralised executive.

The goal of transforming the regulator from a committee to an executive structure is to improve governance by making a single individual responsible for the regulation of Ukraine’s gambling.

The new organisation would be “responsible for the formation and implementation of state policy in the field of organising and conducting gambling and lotteries” – which the ministry believes required the introduction of new primary legislation.

Under the new regime, applications for gambling licences are to be largely automated. The ministry argues that this would make for new budgetary savings, as well as mean that licensees will be able to obtain them much faster.

“[Automating the licensing process] will make corruption schemes impossible and ensure stable revenues to the budget from market players,” said the ministry in a statement.

The ministry also made clear that the mitigation of corruption – which is characterised as endemic in the licensing process – was a secondary goal of the law.

“Licensing is one of the most corrupt processes in gambling,” said the ministry. “[KRAIL] is responsible for this.”

KRAIL head criticises law

In media comments published by KRAIL, the chairman of the organisation, Ivan Rudy, responded to the draft law with confusion, making clear that the regulator was not informed prior to the ministry submitting the legislation to the Rada.

“To be honest, I didn’t understand what this story was for, what the final efficiency was. After reviewing the main theses, I saw that the proposed changes are, in fact, current legislation,” said Rudy. “I didn’t understand what we are changing.”

Rudy admitted that the problem with the lack of members of the Commission was an issue, but laid the blame for that on central government, claiming that KRAIL had been writing letters to cabinet for two months with a request to nominate an additional one or two members to the body.

Rudy also queried the wisdom of the introduction of an automated process, highlighting the relatively small number of licence applications received by KRAIL.

“How many new licenses do we expect to receive? About 36 have been issued in three years for operating rights, as well as a large number of licences for gaming equipment.

“Why waste money and create an automation product for something that has a finite small numerical significance, relatively speaking,” said Rudy.