Anton Kuchukhidze, Head of Ukrainian Gambling Council, in his recent blog post highlighted some of the issues with lotteries that are being exploited currently in Ukraine. Below is the original post that the Head of UGC published in his blog.
Despite all the challenges that the legal gambling market in Ukraine has faced from the very beginning of its existence, the Commission for Regulation of Gambling and Lotteries (CRGL) was able to achieve significant results and keep the industry afloat even despite the full-scale war with the russian federation. However, there are still a number of systemic problems that prevent the full realisation of the potential of legal gambling operators. Uncontrolled activity of lotteries and, in particular, operating gambling without the appropriate licences, is one of these problems.
Three years is a sufficient time to evaluate the success of any project, even one as powerful as the legalisation of an entire sector of the economy. If you look at the statistics recently published by CRGL, the key player in this reform, and analyse the context in which the market was formed and continues to be formed, you can definitely say that the reform was successful.
Let us look at just a few basic indicators:
- CRGL issued 7,579 licences and permits for gambling;
- In 3 years, legal gambling operators transferred more than UAH 4.25 billion in licence payments to the state budget;
- A Register of Persons Restricted from Access to Gambling Establishments and/or Participation in Gambling was created; there are already 2,655 entries.
That is, we see that the state has completed at least 50% of the scope of the important work. The sector has been legalised, the budget receives revenues, the CRGL performs its regulatory functions, licensed operators implemented mechanisms for compliance with the principles of responsible gaming, and help the Armed Forces of Ukraine, etc.
However, most of the achievements mentioned above are of a technical nature, whereas the tasks that require the presence of systemic interaction between various state bodies and the corresponding political will still remain unresolved. It is primarily about the fight against illegals, in particular lottery operators, as well as about updating the legislation in the field of taxes and the State Online Monitoring System.
The activity of lotteries, which imitate gambling on their platforms without having the appropriate licences and without making any payments to the state budget, is particularly cynical. They use any loopholes in the law to simulate gambling, including online casinos, slot games and sports betting. In addition to that, there are a number of state lotteries whose licences expired in 2014 and have not yet been renewed. Have they stopped working? Unfortunately, the answer is negative.
Lottery operators systematically breach the law and receive illegal excess profits at the same time. They use their online resources to organise and conduct gambling without having the appropriate licences, and in some cases, as we found out, even without lottery licences. They do not hesitate to partner with the underground land-based illegal sector, organising “instant lotteries” in illegal gambling halls, which in fact imitate playing on slot machines. Given this entire context, it is very surprising that none of the MPs systematically raises the issue of combating illegal lotteries. At the same time, the information space is full of criticism of legal gambling operators, which annually pay billions of hryvnias to the state budget.
Effective fighting against illegal businesses and, in particular, illegal activities of lotteries is the second half of the task that needs to be done in order for the legal gambling market in Ukraine to be able to fully realise its potential. In this context, the argument that “it is not the time” for gambling reforms due to the war contradicts logic, because solving this issue will significantly increase the revenues of the state budget, which can also be used for defence and reconstruction of the country. There are resources for this, but political will is needed.
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