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Overview of gambling software regulation in Ukraine
Author: Yuriy Kotliarov, Sergiy Tsyba, Maria Bokach
Source: Lexology, 6 August 2020

On 14 July 2020, the Parliament of Ukraine adopted the Law "On State Regulation of Activities on Organizing and Conducting Gambling" (the "Gambling Law"), which introduces state regulation of gambling in Ukraine.

The Gambling Law sets up licenses for the following types of gambling activities: organization and operation of casinos (onsite and online); organization and operation of sports betting (onsite and online); organization and operation of slot machines rooms; issuance and operation of lotteries; organization and operation of online poker games (the " gambling operating license").

In addition, the Gambling Law specifies a separate license for provision of services in gambling sphere. This license is narrow in scope and gives right to provide a gambling software only (the "gambling software license"). It does not cover the provision of facilities for gambling. Therefore, any business that provides facilities for gambling has to obtain a gambling operating license even when it holds a gambling software license.

 

What is gambling software?

According to the Gambling Law a gambling software is a computer software designed for use in the connection with remote gambling (including online gambling) and solely in connection with a gaming machine used by a gambling operator in the provision of facilities for gambling.

The Gambling Law defines "online" and "offline" systems which are used by gambling operators to provide gambling activities.

Both systems consists of a range of hardware and software that:

(i)              provides gambling facilities to an unlimited number of players;

(ii)             accepts and records gambling transactions;

(iii)           determines the result, calculates and allocates any wins to the customer’s account

Every online system or slot machine must include random number generator to ensure a random nature of the prize.

 

Who needs a gambling software license?

According to the Gambling Law any commercial undertaking, a resident of Ukraine, has to obtain a gambling software license, if it provides/supplies a gambling software directly used for determining the result of a game, including but not limiting to case, when it provides a gambling to Ukrainian Internet gambling operators  or to non-resident operators with foreign operating gambling license.

The language of the Gambling law is vague enough to provide definite criteria for determining with reasonable certainty about who exactly has to obtain a gambling software license.   

For example, it is not clear who in the supply chain must obtain a license. Whether it is only a final supplier or all other suppliers in the chain? For example, must a company holding intellectual property rights in a software obtain a license, if a contracting supplier of a software is its affiliating company?  Moreover, it is not clear what "provision/supply" of a software means within the scope of the law.  Whether it means the provision of legal right to use software or giving actual access to a software, or both?

Nevertheless, the current version of the Gambling Law does not require a gambling software license for manufacturing, installing or adapting a gambling software.

Given the above, the Gambling Law does not provide clearly defined answer to the question who exactly needs to obtain a software gambling license.

 

Technical standards

All gambling software must meet software technical standards, if it is made available to customers via Internet under a gambling operating license.

In particular, online systems must:

(i)              be connected to the online monitoring system;

(ii)             ensure protection of data against loss, distortion, forgery, destruction, copying, unauthorized access;

(iii)           be tested in accordance with the testing strategy prescribed under the Gambling Law;

(iv)           be owned or otherwise legally used by a gambling operator.

 

License term and fee

A license is issued by the Commission on the Development and Regulation of Gambling Activity in Ukraine for a period of 5 (five) years. The license fee is equivalent to 300 (three hundred) minimum wages and set at EUR 46,000 for 5 years.

 

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