A violation committed by the organizer of a draw that has features of a lottery shall result in the application of appropriate sanctions

The court upheld the position of the supervisory authority regarding the legitimacy of the decision taken by the Commission for Regulation of Gambling and Lotteries to take into account the established facts of violations by the defendant of the requirements of paragraph 2 of part 1, part 3 of Article 15 and part 1 of Article 24 of the Law of Ukraine "On State Regulation of Activities on Organization and Conduct of Gambling" in its further activities.

The exercise by the tax authority of the powers granted to it under subparagraph 20.1.4 of the Tax Code relates directly to its application to the court for the imposition of sanctions related to the prohibition of organizing and conducting gambling in Ukraine.

Part 1 of Article 3 of the Law of Ukraine "On State Lotteries in Ukraine" dated 06.09.2012 No. 5204-VI (hereinafter - the Law No. 5204-VI) stipulates that the principle of state monopoly on lotteries is to prohibit the introduction and conduct of any lotteries in Ukraine, except for state lotteries conducted by lottery operators who have received the right to conduct them in accordance with the procedure established by this Law.

According to part 2 of Article 14 of the Law No. 5204-VI, entities that organize or conduct games on the territory of Ukraine that meet the definition of a lottery, unless such a game is conducted by a person who has received the status of a state lottery operator, are subject to financial sanctions in the form of a fine of sixteen thousand minimum wages with confiscation of gambling equipment, and the profit (income) from such a game is subject to transfer to the State Budget of Ukraine.

In view of the above, the panel of judges believes that the key feature of a "lottery" is its payment. At the same time, as the court of first instance appropriately emphasized, the method of accepting money for participation in such a game is not decisive for the conclusion that the game that was held is a lottery.

According to the panel of judges, the deposit amount of at least UAH 400 is actually equal to 1 lottery ticket and it is such a ticket that entitles the participant to receive a prize, and the terms of the draw do not provide that the amount deposited is not a payment for participation in the draw.

It should also be taken into account that there are no signs of "free of charge" conduct of the respective draw by the defendant, since in any case, the terms of the draw provide for the participant to deposit funds and receive the respective lottery ticket despite the further movement of these funds in the player's account.

Therefore, the fact of paid acquisition of the right to participate in the draw by the participant is directly confirmed by the terms of such draw, and it follows that the defendant conducted a draw (game) that meets the characteristics of a lottery, namely 1) the game conducted by the defendant was massive; 2) it provided for a prize (winning) fund between its participants; 3) the victory in the game (drawing) was random; 4) the territory of the game (drawing) extended beyond the boundaries of one building (structure); 5) it was paid for, i.e., participants in the drawing (game) had to pay money and receive a corresponding lottery ticket. In fact, the defendant sold property - "lottery tickets" in the game (draw) for a deposit of UAH 400 per lottery ticket by the participant of the draw (game), i.e., conducted a lottery without obtaining a license (which meets the definition of a lottery, without a license, which is the basis for imposing financial sanctions).

The violation committed by the defendant (conducting a game (drawing) that has the features of a lottery) corresponds to the elements of the violation defined in Article 14(2) of Law No. 5204-VI and entails the application of appropriate sanctions.

Therefore, the Sixth Administrative Court of Appeal of 24.07.2024 in case No. 320/4809/23 dismissed the defendant's appeal; the decision of the Kyiv District Administrative Court of 19.01.2024 was upheld.