B2B License for Gambling Service Providers in Ukraine – Interview with Denys Hryshchenko for LoginCasino
The Managing Partner of Solex Group explained, from a legal perspective, the specifics of the procedure for obtaining a license to provide services in the gambling business, the requirements for companies, and the cost of the license. The expert also shared his assessment of the introduction of this type of license on Ukraine's gambling market.
Denys, which companies exactly fall into the category of those required to obtain a B2B license in the gambling sector? How much will such a license cost?
Pursuant to Article 2 of the Law of Ukraine "On State Regulation of Activities Related to the Organization and Conduct of Gambling" (hereinafter — the Law), business entities that supply and/or provide software directly used in the organization and conduct of gambling are required to obtain the relevant license. This type of license is traditionally (unofficially) referred to as B2B, and must be obtained by developers of gambling software for its subsequent commercialization. Accordingly, a B2C license relates to the direct organization of gambling activities.
Such a license is issued for a term of 5 years and requires payment of a license fee in the amount of 300 minimum wages (UAH 1.8 million).
Do the licensing conditions provide for any special requirements with respect to the applicant company?
Unlike organizers (or operators) of gambling activities, the licensing requirements for companies providing software supply services are less strict. First of all, a B2B license can only be obtained by a company that is a resident of Ukraine. According to the licensing requirements for gambling software developers, adopted by the Cabinet of Ministers on March 31 of this year, an applicant for a B2B license and its officials must not be included in sanctions lists, must not be residents of states carrying out armed aggression against Ukraine, must have no criminal record, and must have an impeccable business reputation.
Compared to the licensing requirements for B2C licenses, there are no requirements for applicants seeking a B2B license regarding types of economic activity (KVEDs) or a minimum amount of share capital. Accordingly, the license fee is significantly lower than the fee to be paid by a future operator.
How widespread is the practice of licensing companies providing services in the gambling business worldwide?
Licensing the activities of gambling software providers is a mandatory requirement in any country where the gambling industry is developed in one way or another. For example, such licenses are widespread in countries such as Malta, Curaçao, Romania, or the Isle of Man. The requirement to license providers specifically stems primarily from the fact that the gambling business is high-risk in nature, so even the development of gambling software must take place under state oversight.
How exactly will the relationship between an operator and the company providing services to it be regulated?
First of all, it is worth noting that licensing is specifically required for the activity of supplying software in the gambling sector. Accordingly, from a legal standpoint, we have a classic situation involving the development and subsequent commercialization of software code. Accordingly, the transfer of ownership or other property rights takes place under license agreements concluded between the software developer and the operator itself with respect to specific code.
What documents need to be submitted to KRAIL to obtain such a license? Do you foresee any potential difficulties in the licensing process?
To obtain a B2B license, the applicant must submit to KRAIL a package of documents that includes: an application for obtaining the license; certified copies of the founding documents; a document confirming the authority of the applicant's representative; identification documents of the director, accountant, and founders; detailed information on the applicant's ownership structure, with disclosure of the ultimate beneficial owners. The Commission decides whether to issue or refuse the license within 15 days from the date the license application is accepted.
As already mentioned, the requirements for obtaining a B2B license are less strict compared to a B2C license, which can be seen even in the list of documents required for obtaining the license. However, this does not mean that licensing has no potential pitfalls. When it comes to obtaining licenses, it is very important to correctly prepare the required package of documents. How correctly the documents are prepared directly affects the entire process.
In your opinion, what impact will such a license have on the relevant IT sector?
Overall, the IT industry in Ukraine is one of the most dynamically developing sectors of the economy. Among domestic IT companies, a fairly large number are directly or indirectly engaged in developing software for gambling. However, before the adoption of the Law and its licensing requirements, all these companies were mostly oriented toward the Western market and were unable to legally operate in Ukraine. Now the situation has changed, and such companies have gained the ability to operate in the domestic market. And given the overall legalization of gambling and the number of licenses already issued, there will undoubtedly be demand for the services of B2B providers.
Does this license encourage the opening of new representative offices of foreign companies in Ukraine?
Absolutely. There are many well-known companies worldwide engaged in developing specialized software for gambling operators. Thanks to the adopted Law, such foreign providers have gained the ability to enter the Ukrainian market, which today is developing very dynamically. The adopted licensing requirements for the B2B sector provide an opportunity for foreign companies to enter Ukraine. Therefore, the opening of representative offices of foreign companies in Ukraine is only a matter of time.
Source: https://logincasino.com.ua/interview/denis-grishenko-licenzuvannya-b2b-v-napryami-gralnogo-biznesu-prizvede-do-zbilshennya-kilkosti-predstavnictv-inozemnih-kompanii-v-ukraiyni65622.html
The Managing Partner of Solex Group explained, from a legal perspective, the specifics of the procedure for obtaining a license to provide services in the gambling business, the requirements for companies, and the cost of the license. The expert also shared his assessment of the introduction of this type of license on Ukraine's gambling market.
Denys, which companies exactly fall into the category of those required to obtain a B2B license in the gambling sector? How much will such a license cost?
Pursuant to Article 2 of the Law of Ukraine "On State Regulation of Activities Related to the Organization and Conduct of Gambling" (hereinafter — the Law), business entities that supply and/or provide software directly used in the organization and conduct of gambling are required to obtain the relevant license. This type of license is traditionally (unofficially) referred to as B2B, and must be obtained by developers of gambling software for its subsequent commercialization. Accordingly, a B2C license relates to the direct organization of gambling activities.
Such a license is issued for a term of 5 years and requires payment of a license fee in the amount of 300 minimum wages (UAH 1.8 million).
Do the licensing conditions provide for any special requirements with respect to the applicant company?
Unlike organizers (or operators) of gambling activities, the licensing requirements for companies providing software supply services are less strict. First of all, a B2B license can only be obtained by a company that is a resident of Ukraine. According to the licensing requirements for gambling software developers, adopted by the Cabinet of Ministers on March 31 of this year, an applicant for a B2B license and its officials must not be included in sanctions lists, must not be residents of states carrying out armed aggression against Ukraine, must have no criminal record, and must have an impeccable business reputation.
Compared to the licensing requirements for B2C licenses, there are no requirements for applicants seeking a B2B license regarding types of economic activity (KVEDs) or a minimum amount of share capital. Accordingly, the license fee is significantly lower than the fee to be paid by a future operator.
How widespread is the practice of licensing companies providing services in the gambling business worldwide?
Licensing the activities of gambling software providers is a mandatory requirement in any country where the gambling industry is developed in one way or another. For example, such licenses are widespread in countries such as Malta, Curaçao, Romania, or the Isle of Man. The requirement to license providers specifically stems primarily from the fact that the gambling business is high-risk in nature, so even the development of gambling software must take place under state oversight.
How exactly will the relationship between an operator and the company providing services to it be regulated?
First of all, it is worth noting that licensing is specifically required for the activity of supplying software in the gambling sector. Accordingly, from a legal standpoint, we have a classic situation involving the development and subsequent commercialization of software code. Accordingly, the transfer of ownership or other property rights takes place under license agreements concluded between the software developer and the operator itself with respect to specific code.
What documents need to be submitted to KRAIL to obtain such a license? Do you foresee any potential difficulties in the licensing process?
To obtain a B2B license, the applicant must submit to KRAIL a package of documents that includes: an application for obtaining the license; certified copies of the founding documents; a document confirming the authority of the applicant's representative; identification documents of the director, accountant, and founders; detailed information on the applicant's ownership structure, with disclosure of the ultimate beneficial owners. The Commission decides whether to issue or refuse the license within 15 days from the date the license application is accepted.
As already mentioned, the requirements for obtaining a B2B license are less strict compared to a B2C license, which can be seen even in the list of documents required for obtaining the license. However, this does not mean that licensing has no potential pitfalls. When it comes to obtaining licenses, it is very important to correctly prepare the required package of documents. How correctly the documents are prepared directly affects the entire process.
In your opinion, what impact will such a license have on the relevant IT sector?
Overall, the IT industry in Ukraine is one of the most dynamically developing sectors of the economy. Among domestic IT companies, a fairly large number are directly or indirectly engaged in developing software for gambling. However, before the adoption of the Law and its licensing requirements, all these companies were mostly oriented toward the Western market and were unable to legally operate in Ukraine. Now the situation has changed, and such companies have gained the ability to operate in the domestic market. And given the overall legalization of gambling and the number of licenses already issued, there will undoubtedly be demand for the services of B2B providers.
Does this license encourage the opening of new representative offices of foreign companies in Ukraine?
Absolutely. There are many well-known companies worldwide engaged in developing specialized software for gambling operators. Thanks to the adopted Law, such foreign providers have gained the ability to enter the Ukrainian market, which today is developing very dynamically. The adopted licensing requirements for the B2B sector provide an opportunity for foreign companies to enter Ukraine. Therefore, the opening of representative offices of foreign companies in Ukraine is only a matter of time.
Source: https://logincasino.com.ua/interview/denis-grishenko-licenzuvannya-b2b-v-napryami-gralnogo-biznesu-prizvede-do-zbilshennya-kilkosti-predstavnictv-inozemnih-kompanii-v-ukraiyni65622.html