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Eastern Europe holds the potential for both success and frustration. While some countries have liberal regulations and newly re-regulated markets, others exploit the gambling industry with skyrocketing taxes, constrain it with tight restrictions, or ban gambling and betting outright. Keep reading for a rundown of which markets to keep an eye on in 2023.

Eastern Europe is — and always has been — a region of great risks. Regulations change, laws are passed and repealed, and as one country lifts restrictions, another introduces them. But plenty of operators have found success in the region, and it will continue to offer savvy gambling providers opportunities to grow and prosper.

To help you keep up with the times, we’ll talk about the history of the industry in the region and the current situation in several Eastern European (and one Central Asian) countries.

Russia

The history of gambling in the Russian Federation is full of twists. At the beginning of the 2000s, gambling was completely unrestricted. Slot machines could be found not only in gambling halls and casinos but even in public spaces and convenience stores. The industry’s unfettered operation at the time gave it a poor reputation in the eyes of the public.

Early attempts at regulation were not successful. For example, in the 90s in St. Petersburg, there was an initiative to make all gambling enterprises partially state-owned so that proceeds from the industry could be used for public needs. However, when the system was put in place, operators reported no earnings, and the project failed. One of the authors of this unsuccessful initiative was Vladimir Putin, who in 1999 became Acting President of the Russian Federation.

Expectedly, the head of state with a record of criticizing gambling cracked down on the industry, and by 2009 most games of chance were outlawed. Land-based casinos were permitted only in specially designated gambling zones: Azov-city in Krasnodar Krai, Altai, Kaliningrad, and the Far East.

The gambling industry, which was booming at the beginning of the 2000s, dwindled as the blanket ban came into force. While demand was huge, gamblers were not interested in traveling to out-of-the-way regions. The zones were remote and had little to no tourism infrastructure, so for a vast majority of players, it was simpler to travel to a neighboring country or content themselves with the less-glamorous offerings of black market casinos.

Ultimately, most of the designated zones underperformed. Azov-city, the first gambling zone to open, was liquidated in 2018, costing investors 3.3 billion rubles. Neither Altai nor Kaliningrad has ever shown spectacular results.

The Primorsky zone, located in the Far East and owned by a Taiwanese company, prospered by attracting tourists from South Korea and China instead of focusing on local gamblers.

A new zone (to replace Azov-city) was opened near Sochi to take advantage of the infrastructure which was created for the 2014 Sochi Winter Olympics. However, the zones proved to be frustrating for investors and less lucrative than the government anticipated.

Needless to say, the worldwide shift from land-based to online gambling — which has been accelerating in the last couple of years — wasn’t felt in the country, as online casinos are completely illegal.

Nevertheless, there is a workaround for those who want to play online. By using a Virtual Private Network (VPN), users can redirect their web traffic from their device to a server located outside of Russia. VPNs allow people to securely and privately enjoy online casinos without the risk of being monitored.

Previously, sports betting was largely untouched. Bookmakers and operators of parimutuel betting can be licensed and work legally in the country, even outside of the gambling zones.

However, when the 2020 crisis hit the Russian sports industry, new regulations aimed to support it by utilizing the betting industry.

Bill № 1055657-7, “On Unified Gambling Regulator,” was introduced in November, swiftly passed into law in December, and signed by the president on December 30th.

The new legislation aimed to introduce a single regulator for the gambling industry, unified systems for payment, and online monitoring, as well as a new way to calculate compulsory contributions that betting companies pay to sports organizations.

Of course, the law received its fair share of criticism for being full of terms and measures that were not particularly well-defined. At the same time, it marks a novel direction for Russian legislation because, to an extent, it’s inspired by Western regulations and aims to centralize and streamline the industry.

This trend is also supported by Decree No 706, which came into force in January 2021. This measure removes numerous outdated restrictions and requirements, making the Russian landscape a little easier for operators to navigate.

New regulations governing the gambling business will come into effect on September 1, 2024. These changes aim to tighten control of the industry, particularly the online segment, addressing aspects such as online gambling platforms, mobile betting applications, and other digital gambling services. By implementing stricter oversight and control measures, the government aims to prevent illegal gambling operations and promote responsible gambling practices.

Belarus

For a while, the gambling market of Belarus prospered by catering to players from neighboring countries where gambling was illegal. However, in recent years, growth has subsided.

Even before the crisis, the industry was already in decline. The number of casinos, bookmakers, and slot-machine halls had been decreasing, year by year. Meanwhile, the government was reporting increased earnings from the gambling industry, thanks to ever-rising taxes.

2020 was a rocky year for the country. After the crisis started, the land-based sector suffered even more, even though the Belarusian government didn’t impose strict lockdowns. Protests that erupted in August were also extremely detrimental to the industry; the economy suffered, mobile internet connections were disrupted, and the public was too preoccupied to focus on entertainment.

In the past, gambling was regulated by presidential decrees. In 2023, however, gambling regulations were codified into law, creating a general licensing framework. The potential implications of these changes remain uncertain, as licensing conditions are stringent in both the old and new systems.

If the government’s attitude changes and the situation in the country stabilizes, the market might start growing again, but at this moment it’s too early to anticipate any changes.

Ukraine

In 2009, all forms of gambling in Ukraine were banned, but the market recently opened back up. After 11 years, gambling was legalized again in the summer of 2020, kindling considerable interest among local and foreign investors.

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The new legislation allows for online and land-based casinos, betting shops, gaming halls, and poker rooms. Licensing requirements and fees are different for each type of business; in the case of land-based gambling establishments, they depend on geographical location. Our team here at Slotegrator covered the details in our video.

In 2022, during the early stages of the war, authorities changed the law to allow certain business sectors, including gambling, to enjoy a reduced 2% tax rate on their profits. As a result, almost all gambling operators quickly adopted this simpler tax system. However, in 2023, authorities proposed axing the perk, as tax contributions to the budget fell short of expectations.

The new regulations are finding themselves under critical fire. The variety of fees and taxes that operators are responsible for, as well as some of the highest licensing costs in Europe, could make operation in Ukraine financially untenable, jeopardizing the benefits of legalization. In iGaming, there’s always a risk that stringent regulations and licensing conditions can drive operators into the unregulated market, taking players (and tax revenues) with them.

However, overall, as one of the many promising regions for the gambling business in 2023, it is definitely a good idea for prospective operators and investors to closely monitor the situation in the country.

Despite the challenging circumstances the country is facing, the gambling industry in Ukraine still shows potential for growth and success. We will continue monitoring the situation in Ukraine closely and provide updates accordingly.

The Baltics

Latvia, Lithuania, and Estonia are success stories when it comes to economic growth and development. Each of these countries has a fully legal and regulated gambling industry.

The Baltic countries are in a unique position — geographically, they are close to Russia and draw quite a lot of gamblers who find it easier, cheaper, and more enjoyable to travel there than to go to one of Russia’s remote gambling zones. And like many other EU member states, they have a solid legislative base and stable relationship between the government and the gambling industry.

In many neighboring countries throughout both the EU and the CIS, gambling advertising is severely restricted, and the Baltic states take a similar approach. Lithuania and Estonia allow some forms of advertising, while Latvia prohibits them entirely.

The recent crisis, of course, left its mark.

In Estonia, the national budget suffered due to the lack of expected tax revenues from the gambling industry, which caused the cancellation of several social and healthcare projects that depend on tax revenues for funding.

In Latvia, not only did the land-based sector suffer, but a ban on online gambling was implemented in the wake of the Latvian Coronavirus bill. The measure was later deemed unconstitutional, but the damage was done — the industry suffered an overall revenue decline of 45.5% compared to the previous year.

Lithuania fared better — in the first quarter of 2020, the decrease was just 2.8% because the drop in revenue from the land-based market was offset by increasing results from the online gambling sector.

Before the crisis, all three countries enjoyed growth, so it’s safe to say that the decline is temporary.

A license is still required to operate anywhere in the Baltics. Estonia forbids operators to enter the market without a local license, while Lithuania and Latvia recognize licenses issued by other jurisdictions. Authorities relentlessly block offshore websites that try to slip through the cracks, sending a clear message — illegal operators will not be tolerated.

What’s next?

Industry operators and experts agree on one thing: it’s extremely important to have one’s ear to the ground. The Eastern European market is highly dynamic and subject to sometimes unpredictable changes.

Each country has its legal system and numerous political and economic factors in play that can influence the gambling market in one way or the other. Laws are written or repealed and economies boom and bust, but every year, opportunities open up, and those who follow the changes (or even anticipate them) can expect growth — and a payday.

Slotegrator works with companies all over the globe, including many operators in post-Soviet countries, and we are happy to share our extensive experience with both those who are new to the market and seasoned operators looking to expand. Click the button below for a free consultation.

Yana Khaidukova
Yana Khaidukova
Managing Director
As a software development expert, Yana has been in the gambling industry since 2019, when she became an Account Manager at Slotegrator, then moved on to be Head of the Customer Account and Vendor Departments. Her passion, hard work, and deep understanding of clients’ needs and industry trends led her to the Managing Director position that she occupies today. Yana knows the gambling industry well, constantly follows the latest industry developments, and never stops sharing her insights with her industry colleagues.

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