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Ukraine – Draft limitations could hamper Ukraine business model

By - 8 December 2015

Whilst welcoming the Ukrainian Ministry of Finance’s draft gaming legislation, Eastern European gaming giant Storm International has suggested the bill has its limitations and could create an unworkable business model.

Darren Keane, CEO of Storm international, said: “In general Storm International welcomes this new law as it will bring the legality back to gaming in the Ukraine and hopefully put a stop to the criminal elements that operate the illegal casinos at present.”

After long debates held by the government and the parliament and a couple conferences where business representatives expressed their opinion on how the gaming business should be regulated, the new draft law was proposed. Storm International previously announced its interest in entering the Ukrainian market in case of the proper legislation. In the opinion of Storm’s directors, the current draft law has its benefits but also some weak points.

Mr. Keane said: “We do not believe that casinos should be only restricted to four and five star hotels with more than 200 rooms as there are too few hotels that match these criteria in the Ukraine. The size of the operations is also an issue. Limiting casinos only to hotels will first limit the maximum amount of tables and slots possible. This will in turn limit the amount of taxes payable on both areas and will give less space for casino restaurants, relaxation areas and concert facilities. Other issues will arise due to space and conformity of working within the given hotels such as car parking, independent kitchens and bars. Without additional services it will also be difficult to reach the 250 minimum requirement of staff.”

On the license fee issue and taxation Mr. Keane said: “The proposed yearly license fee is a fair price that should be paid yearly in the local currency. Failure to do so should mean immediate closure. The proposed annual table and slot taxes are acceptable numbers and are in line with neighbouring country’s tax codes. These should be paid on a monthly or quarterly basis to give the operator the flexibility of adding or removing equipment.”

However Mr. Keane was very surprised with the huge license fee for the online license: “When you compare it to both Armenia and Georgia, two developed gaming markets, the €1.5m proposed in Ukraine dwarfs them by a 7 to 1 ratio. It does seem too high a price to pay to enter that market.”

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