Ukraine’s Path To Legalization Of Gambling Business

By: Natalia Pakhomovska, Partner, head of IP&T practice at Kyiv office of DLA Piper & Ivan Shatov, Associate, IP&T practice at Kyiv office of DLA Piper

More than 10 years in a row gambling in Ukraine is officially prohibited and any gamble except for national lotteries is recognized illegal. This means that organizing of gamble of any type in Ukraine entails legal liability unless it is a state lottery

which is organized by one of the licensed providers of state lotteries. The idea of prohibition of gambling in Ukraine has been floating around for several years before final prohibition which has been triggered by the tragic fire in one of casinos in Dnipropetrovsk city, where 9 people died. As a result, on 15 May 2009 Ukrainian parliament passed a Law of Ukraine “On Prohibition of Gambling in Ukraine” which is still in force.

Life after criminalization of gambling Though gambling is prohibited in Ukraine, local gambling providers kept their offline activity in a semi-legal way under the cover of state lotteries. More specifically, a “grey” scheme is the following: the entity which possesses Ukrainian lottery license (state lottery operator) registers state lottery with the name identical to the brand of betting provider or slot machine games provider and then enters with such provider into the services agreement implying that

the provider will organize such “lottery” for and on behalf of the entity holding a license as a contractor (state lottery provider). In fact, such entities provide their visitors with access to online casinos, slot machine games, online poker, betting services under the cover of state lotteries. Ukrainian government and police tolerate the above scheme and currently Ukrainian cities are full of offline points providing for slot machine games and betting points which imitate state lottery points.