Anticipating legalized gambling, Hilton Kyiv plans to open 2 casinos

U.S. hospitality giant Hilton has announced its plans to open two casinos in premises of its Kyiv hotel, anticipating Ukraine’s parliament approval of legislation to legalize gambling.

The co-owner of the hotel’s Ukrainian branch, who has also co-founded the 1+1 Media Group, Boris Fuchsman, plans to invest $30 million in the project, he told the Ukrainian media outlet The Page on Feb. 26.

The project’s start date remains unknown amid ongoing efforts to legalize gambling in hotels.

Construction of gambling halls would operate in a gray area. A draft bill legalizing gambling in hotels has to undergo a few more steps before it comes into effect: while it was passed in the first reading on Jan. 16, parliament still has to vote for it in the second reading before Ukraine’s president signs it.

While it is legal for the hotel owners to prepare the halls, they won’t be able to purchase gambling-related equipment until the law passes. When contacted by the Kyiv Post, a spokesperson of Hilton Kyiv refused to comment.

Gambling in Ukraine was banned in 2009 and “under the current law, everything connected to gambling is illegal,” Kateryna Rekiianova, an associate of Asters law firm told the Kyiv Post on Feb. 28. She confirmed that high-end casinos currently operating in central hotels such as the Dnipro hotel work illegally, without expanding on why they remain open.

Betting on law to pass

After 10 years of outlawed gambling in the country, Ukraine’s President Volodymyr Zelensky has pushed for legalizing gambling in Ukraine: he ordered a new gambling bill in September 2019 and supported it in December when parliament votes for it in the first reading. As a result, 260 lawmakers voted for the draft law.

Experts believe a law legalizing gambling could be signed in the spring of 2020.

Ukraine’s Prime Minister Oleksiy Honcharuk echoed Zelensky’s support for the bill. The easiest way to eliminate the vast network of underground illegal gambling spots would be to legalize the activity, which could also bring over $120 million in tax revenues to the state budget, Honcharuk said during a briefing in November 2019.

Meanwhile, the head of the parliament’s committee on finance, taxation and customs policy, Danylo Hetmantsev estimates the tax revenue could be as high a $190 million.

Gambling in hotels

According to the draft, casinos will be only be permitted in five-star hotels in designated tourist areas.

The government’s ambition is to ensure that “gambling will be conducted exclusively on the territory of hotels” while removing “gambling halls and slot machines from streets,” Honcharuk said.

In Kyiv, only hotels with more than 200 rooms will be eligible, while in smaller cities such as Odesa, Kharkiv, Dnipro, and Lviv, hotels will be allowed to install casinos if they have at least 120 rooms.

The draft law also targets the 5,300 slots parlors that also operate in a legal grey zone. The government plans to cap the nationwide number of slot machines at 40k, with a maximum of 250 machines in any one venue.

Halls with slot machines will also be permitted, provided they’re not located near schools, churches, hospitals, residential apartments, and public buildings. The government is also proposing the creation of a new gambling regulatory body featuring a chairman and six commissioners whose work will be overseen by the Cabinet of Ministers.

After an initial vote on the law failed in December 2019, Zelensky unleashed law enforcement on illegal gaming operators that worked in Ukraine masked as lottery offices. The president publicly blamed them for “not playing by transparent rules.”

As a result, Ukrainian law enforcement shut down over 900 facilities across the country in a little more than a month, including many ‘lottery’ operations that derived most of their revenue from slot machines.

Overall, there were around 5,300 illegal gambling establishments in Ukraine, including lotteries, bookmakers and casinos, according to experts.