A few weeks ago, the National Security Council of Ukraine imposed sanctions on 120 individuals and 287 legal entities associated with the gambling sector of the terrorist-state. Ukraine’s leading brands were also listed, including PokerMatch and Parimatch.
These companies have suspended their Ukrainian businesses and officially stated that they are ready to work with the authorities to resolve this mistake.
The Ukrainian Gambling Council (UGC) Chairman Anton Kuchukhidze also stated the inclusion of companies such as PokerMatch and Parimatch was a mistake. SBC CIS spoke with him about the industry’s challenges a year after the start of a full-scale war in Ukraine and how the state is dealing with them.
Recent media discussions have focused on the issue of sanctioning PokerMatch and Parimatch. Could you please elaborate on the circumstances surrounding the sanctioning of these companies?
Considering the fact that both PokerMatch and Parimatch have done a lot directly for the Ukrainian army, internally displaced citizens, and those in need, it is plausible that a mistake had occurred in analyzing the circumstances. There were many employees of these companies who went to the front line as well, indicating real sentiments within these teams.
PokerMatch and Parimatch were quietly working to help the country without making any political statements. My understanding of this work is not about business, rather it is about these companies’ efforts to support the army and the nation.
I admit there is the possibility of random mistakes since these companies had franchises in Russia, which they revoked immediately after the start of the full-scale war. There was even an investigation of the situation by the British appropriate authorities. Somebody may have given false information, incompletely analyzed the franchise, or other things like that.
It is my belief that these two companies will try to rebuild their reputations and regain an honor to keep on working in Ukraine. In the current situation, they are doing their best.
What are the possible outcomes of these events? Would it be possible to lift the sanctions on PokerMatch and Parimatch soon?
It is difficult to estimate the chances. The process of working on supplying the appropriate evidence may take some time — a year or two, or perhaps sooner. What matters most is that companies are confident that they can prove their case. This is the most important message, in my opinion. They would’t have tried to restore their reputation if something was wrong.
Is it possible for other companies in the industry to be added to the sanctions list? There are already rumors that sanctions may affect Pin-Up. Does anyone else need to be concerned?
Pin-Up is a licensed gambling company in Ukraine. According to Ukraine’s legislation, companies with any connection to the Russian Federation cannot obtain a license. The Ukrainian regulator issued the license, which means it did not find any Russian trace.
In addition, I am aware that several waves of inspections were conducted by the law enforcement agencies of almost all gambling brands licensed in Ukraine. As a result, none of our Association members’ licenses were taken away, which confirms that no Russians were involved with these companies.
As far as I know, the search for similar Russian traces had been conducted throughout the entire Ukrainian economy almost from the day two since the full-scale war began. As this is a routine work, any problems would have already been discovered in other companies by now.
Last month marked one year of the start of the full-scale war. Where does the country stand currently, and what challenges do business representatives face?
The offline and online sectors both faced many problems during the year. For instance, the war completely eliminated casino tourism. As a result, the amount of funds earned decreased several times – for the offline segment it got down by 60-70%.
Furthermore, martial law has been enacted in the country, which prevents land-based casinos from working 24 hours a day. In other words, gambling establishments have reduced their working hours. Russin military was attacking our energy infrastructure, gambling halls had big problems ensuring their energy supply. Solving these technical problems required a lot of effort and funds.
The online sector is actually facing two problems. The first is the outflow of player traffic. Traffic dropped by more than 80% in the first month. That was a big problem for online companies. There has been some improvement in traffic since May, but it has not yet reached its peak. Another problem is power outages, which impact gameplay and payouts.
It is important to understand that the foundation of every business is people, and that the common threat for both offline and online businesses is primarily security conditions, rather than their absence due to constant shelling. Previously, you could put all your focus on work, now you can only afford to dedicate 40%-50% of focus towards the work.
There was much debate last year over the adoption of law 2713-d, which is intended to simplify gambling taxation. Does this project seem to be making progress?
Our Association and other licensed companies wrote an open letter to the government representatives on March 17, 2023. We stated in this letter that without the State Online Monitoring System and the adoption of the bill 2713-d, there would be no upcoming investments in the gambling sector. There will be no development in this area and maximum transparency will be maintained.
The only thing we demand is the normalization of terms and the way certain taxes are calculated, not benefits. The tax on winnings is now paid by players, for example. There are times when it comes to absurdity – players have to pay 19.5% tax upon withdrawal of their winnings. Naturally, this upsets the players, and they switch to illegal gambling sites.
Secondly, it is also important to define the term GGR, which in the current legislation is described as simply the entire total income and not the difference between the amount of money players wagered minus the amount that they won.
It should be noted once again that Western companies are still monitoring the situation with bill 2713-d despite the war and the issues the country is facing. Should the law pass, they would enter the Ukrainian market. Gaming businesses are ready to contribute to the development of socially responsible entrepreneurship and job creation in the country.
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