B2B License for Gambling Service Providers in Ukraine – Interview with Denys Hryshchenko for LoginCasino
The Managing Partner of Solex Group explained the legal aspects of obtaining a license to provide services in the gambling sector, the requirements applicable to companies, and the cost of the license. He also shared his views on how the introduction of this type of license could affect Ukraine's gambling market.
Denys, which companies are required to obtain a B2B license in the gambling sector? How much does 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, although unofficially, referred to as a B2B license and is required for developers supplying gambling software for its subsequent commercial use. By contrast, a B2C license relates to the direct organization and conduct of gambling activities.
A B2B license is issued for a term of five years and requires payment of a license fee equivalent to 300 minimum wages (UAH 1.8 million).
Do the licensing conditions impose any specific requirements on the applicant company?
Compared to gambling operators, the licensing requirements applicable to companies supplying gambling software are less stringent. First of all, a B2B license can only be obtained by a company that is a resident of Ukraine.
Under 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 subject to applicable sanctions, must not be residents of states carrying out armed aggression against Ukraine, must have no criminal record, and must have an impeccable business reputation.
Unlike the requirements applicable to B2C licenses, applicants for a B2B license are not subject to specific requirements regarding types of economic activity (KVEDs) or minimum share capital. The license fee is also significantly lower than that payable by a gambling operator.
How common is the licensing of gambling service providers internationally?
Licensing of gambling software providers is common in many jurisdictions with developed and regulated gambling markets. Such licensing regimes exist, for example, in Malta, Curaçao, Romania, and the Isle of Man. The rationale behind regulating software providers is primarily the high-risk nature of the gambling industry, which means that not only gambling operators themselves but also certain services and technologies used by them may be subject to regulatory oversight.
How is the relationship between an operator and its software provider regulated?
First of all, it is worth noting that the license specifically covers the supply of software used in the gambling sector. From a legal perspective, this is a relatively standard arrangement involving the development and subsequent commercialization of software.
The transfer or licensing of the relevant intellectual property rights is therefore governed by agreements concluded between the software developer and the gambling operator in relation to the relevant software.
What documents need to be submitted to KRAIL to obtain a B2B license? Do you foresee any potential difficulties in the licensing process?
To obtain a B2B license, an applicant must submit a package of documents to KRAIL, including an application for the license, certified copies of its constitutional documents, a document confirming the authority of the applicant's representative, identification documents relating to the director, accountant, and founders, and detailed information on the applicant's ownership structure, including disclosure of its ultimate beneficial owners.
The Commission decides whether to issue or refuse a license within 15 days from the date on which the license application is accepted.
As already mentioned, the requirements for obtaining a B2B license are less stringent than those applicable to a B2C license, which is reflected even in the list of documents required as part of the application. However, this does not mean that the process is free from potential difficulties.
When applying for any regulatory license, it is important to prepare the required documentation correctly and comprehensively, as the quality and completeness of the application package may directly affect the licensing process.
In your opinion, what impact will the introduction of this license have on the relevant IT sector?
Overall, the IT industry is one of the most dynamically developing sectors of the Ukrainian economy. A significant number of Ukrainian IT companies are directly or indirectly involved in developing software for the gambling industry.
However, prior to the adoption of the Law and the relevant licensing requirements, these companies were primarily focused on foreign markets and were unable to operate legally within the regulated Ukrainian gambling market. The situation has now changed, and such companies have gained the opportunity to offer their services domestically. Given the overall legalization of gambling and the number of licenses already issued, there will undoubtedly be demand for the services of B2B providers.
Will this license encourage foreign companies to establish representative offices in Ukraine?
Absolutely. There are many well-known international companies developing specialized software for gambling operators. Following the adoption of the Law, such foreign providers have gained the opportunity to enter the Ukrainian market, which is developing rapidly.
The B2B licensing framework creates opportunities for foreign providers to enter the Ukrainian market. Therefore, we can expect more international gambling software companies to establish a local presence in Ukraine over time.
Source: LoginCasino
The Managing Partner of Solex Group explained the legal aspects of obtaining a license to provide services in the gambling sector, the requirements applicable to companies, and the cost of the license. He also shared his views on how the introduction of this type of license could affect Ukraine's gambling market.
Denys, which companies are required to obtain a B2B license in the gambling sector? How much does 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, although unofficially, referred to as a B2B license and is required for developers supplying gambling software for its subsequent commercial use. By contrast, a B2C license relates to the direct organization and conduct of gambling activities.
A B2B license is issued for a term of five years and requires payment of a license fee equivalent to 300 minimum wages (UAH 1.8 million).
Do the licensing conditions impose any specific requirements on the applicant company?
Compared to gambling operators, the licensing requirements applicable to companies supplying gambling software are less stringent. First of all, a B2B license can only be obtained by a company that is a resident of Ukraine.
Under 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 subject to applicable sanctions, must not be residents of states carrying out armed aggression against Ukraine, must have no criminal record, and must have an impeccable business reputation.
Unlike the requirements applicable to B2C licenses, applicants for a B2B license are not subject to specific requirements regarding types of economic activity (KVEDs) or minimum share capital. The license fee is also significantly lower than that payable by a gambling operator.
How common is the licensing of gambling service providers internationally?
Licensing of gambling software providers is common in many jurisdictions with developed and regulated gambling markets. Such licensing regimes exist, for example, in Malta, Curaçao, Romania, and the Isle of Man. The rationale behind regulating software providers is primarily the high-risk nature of the gambling industry, which means that not only gambling operators themselves but also certain services and technologies used by them may be subject to regulatory oversight.
How is the relationship between an operator and its software provider regulated?
First of all, it is worth noting that the license specifically covers the supply of software used in the gambling sector. From a legal perspective, this is a relatively standard arrangement involving the development and subsequent commercialization of software.
The transfer or licensing of the relevant intellectual property rights is therefore governed by agreements concluded between the software developer and the gambling operator in relation to the relevant software.
What documents need to be submitted to KRAIL to obtain a B2B license? Do you foresee any potential difficulties in the licensing process?
To obtain a B2B license, an applicant must submit a package of documents to KRAIL, including an application for the license, certified copies of its constitutional documents, a document confirming the authority of the applicant's representative, identification documents relating to the director, accountant, and founders, and detailed information on the applicant's ownership structure, including disclosure of its ultimate beneficial owners.
The Commission decides whether to issue or refuse a license within 15 days from the date on which the license application is accepted.
As already mentioned, the requirements for obtaining a B2B license are less stringent than those applicable to a B2C license, which is reflected even in the list of documents required as part of the application. However, this does not mean that the process is free from potential difficulties.
When applying for any regulatory license, it is important to prepare the required documentation correctly and comprehensively, as the quality and completeness of the application package may directly affect the licensing process.
In your opinion, what impact will the introduction of this license have on the relevant IT sector?
Overall, the IT industry is one of the most dynamically developing sectors of the Ukrainian economy. A significant number of Ukrainian IT companies are directly or indirectly involved in developing software for the gambling industry.
However, prior to the adoption of the Law and the relevant licensing requirements, these companies were primarily focused on foreign markets and were unable to operate legally within the regulated Ukrainian gambling market. The situation has now changed, and such companies have gained the opportunity to offer their services domestically. Given the overall legalization of gambling and the number of licenses already issued, there will undoubtedly be demand for the services of B2B providers.
Will this license encourage foreign companies to establish representative offices in Ukraine?
Absolutely. There are many well-known international companies developing specialized software for gambling operators. Following the adoption of the Law, such foreign providers have gained the opportunity to enter the Ukrainian market, which is developing rapidly.
The B2B licensing framework creates opportunities for foreign providers to enter the Ukrainian market. Therefore, we can expect more international gambling software companies to establish a local presence in Ukraine over time.
Source: LoginCasino