In the ever-evolving landscape of Ukraine’s gambling industry, significant transformations are taking place on the road to recovery. While precise statistics remain elusive, it’s evident that the online sector is making a remarkable comeback, outpacing its land-based counterparts. A major driver of this shift is the ongoing process of land-based companies reclaiming licences lost due to financial hardships incurred during the wartime period.
When the conflict disrupted the nation, several land-based establishments found themselves unable to meet their licence obligations, resulting in a number of licence revocations. Nevertheless, today, approximately 70-80% of the land-based segment sees the prospects for recovery. Out of four legal casinos in Kyiv, just one remained operational. The shutdown of several casinos in the capital city has caused a decline in business due to both security concerns and the absence of tourist traffic.
Security remains a prevailing concern, compounded by the threat of attacks on the energy infrastructure, particularly during the winter, owing to the ongoing Russian-Ukrainian war. Despite these formidable challenges, the resilience of the regulatory processes has ensured the existence of at least one legal casino in Kyiv.
The evolving regulatory landscape involves daily submissions of documents to the commission, including by the representatives of the land-based segment. This process is gradually redefining the sector, and over time, the precise number of legal slot machine halls and casinos in Ukraine will become clearer. However, it’s important to note that at one point, around 70-80% of the land-based segment lost their licences and shut down their operations.
In contrast, the online casino sector, despite the ongoing war, presents a more optimistic outlook. Several new companies, including two online casinos and a betting company, have secured licences to operate in Ukraine. These newcomers started their preparations to launch in the country prior to the russian invasion, indicating a robust future for the online gambling industry.
The issue of market development in the country is significantly impeded by two key factors. First and foremost is the ongoing war, which has hindered economic growth in various sectors, including gambling. Second, even amid wartime, the industry could thrive if specific legislative measures, such as the adoption of tax bill 2713d, were implemented. Numerous foreign companies have expressed an interest in entering the Ukrainian market, regardless of the conflict. However, a lack of clear tax policies and ambiguous terminology in tax regulations, particularly regarding player winnings and gross gaming revenue, has deterred foreign investors.
Another systemic challenge the Ukrainian gambling industry faces is the urgent need to resolve the sanctions issue against Parimatch Ukraine. This critical matter has garnered significant public attention and concern, with over 25,000 people signing a petition to the President, appealing for the rectification of what is perceived as a mistake taken against the flagship of the Ukrainian gambling industry, a genuine people’s operator. The sanctions against Parimatch Ukraine have not only created a sense of unease within the industry but have also triggered a wave of support from citizens and stakeholders who see the company as a symbol of the sector’s potential. Addressing this issue is not only essential for restoring the industry’s integrity but also for recognizing the importance of responsible and productive operators within the Ukrainian gaming landscape.
The Ukrainian Gambling Council is committed to facilitating progress at all levels of government and the Verkhovna Rada of Ukraine. However, this mission is fraught with challenges, including political manipulations and the threat from the black market’s representatives, who exert influence within the parliament. These obstacles prevent lawmakers from gaining an accurate perspective on tax policy, creating obstacles for the industry’s regulation.
As for addiction issues, the legal gambling segment has enforced restrictions on citizen admissions for nearly three years. This suggests that, within the legal framework, problems related to addiction are minimal, as they primarily remain on an individual level. In stark contrast, there are thousands of illegal gambling halls and over a thousand illegal websites across the country. The absence of registration, state control, and a registry for those suffering from gambling addiction within the illegal sector precludes an accurate assessment of the scale of the issue.
In terms of tax revenues, the gambling business has contributed substantially to the state budget, with tax revenues totaling 6.65 billion UAH (approximately 18 million USD) for the first nine months of the year. There were 65 licences issued in 2023 in total.
The reluctance of foreign companies to invest in the Ukrainian market primarily stems from the lack of a clear and comprehensive systemic tax policy.
While gambling during wartime presents specific challenges, recovery efforts differ between regions. Frontline regions, as well as cities like Kyiv and Odesa, face substantial hurdles in the revival of the land-based segment. Conversely, Western regions, including Lviv and Rivne, have become more attractive to the gambling industry due to a consistent flow of tourists and a stable security situation relative to other areas.
The Ministry of Digital Transformation’s initiative to transform the process of applying and receiving a gambling licence has gained widespread acceptance, although it is acknowledged that digitalising this process alone will not address all the industry’s challenges. Effective market monitoring, collaboration with law enforcement agencies, and various regulatory functions are essential. Therefore, retaining an independent regulatory body, the Commission for the Regulation of Gambling and Lotteries (KRAIL), is essential to ensure the efficient functioning and regulation of the gambling industry.
KRAIL has consistently demonstrated its effectiveness since 2021, not only maintaining financial balance but also ensuring strict control of licensees. The Commission’s effectiveness, coupled with the absence of corruption, has solidified its reputation as a reliable regulatory body. Furthermore, KRAIL is actively engaged in international cooperation, sharing experiences and implementing best practices for regulating gambling on a national scale.
To disband an efficient state body would create uncertainty in the industry, raise questions among investors, and undermine market stability during a time when predictability is paramount. Therefore, maintaining a stable regulatory environment, free from political influence, is crucial to attracting foreign investment and ensuring a thriving gambling sector in Ukraine.
On behalf of the Ukrainian Gambling Council, I am thrilled to participate in the forthcoming SBC Summit Tbilisi this October. Engaging with our long-term partner, Sports Betting Community, remains a cornerstone of our commitment to the gambling industry’s growth and development in Ukraine. Especially during these challenging times of conflict, it is crucial for Ukraine to be present at significant industry events to provide essential market insights, share perspectives, and represent the voices of Ukrainian businesses.
By actively participating in these discussions, we aim to contribute vital information to the international gaming community and foster stronger connections that will ultimately drive the industry forward.
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