Benefits of Gambling Legalization of Ukraine

After 10 years, gambling is finally set to be re-regulated in Ukraine. In light of the legalization of casino and sports gambling, Slotegrator is taking a look at some of the benefits that will be enjoyed by operators, players, and the government.

Situation Before the Ban

Almost all forms of gambling were prohibited in Ukraine after a casino fire in the city of Dnipro (then Dnipropetrovsk) in 2009. At the time of the ban, the market had been growing rapidly. Between 2005 and 2008, the total volume of the market increased from €246 to €967 million. Below there is a short breakdown of revenues and license fees collected by the government before the ban went into effect.

Breakdown of revenue sources before the ban:

  • Slot machines: €705 million
  • Casinos: €37 million
  • Lotteries: €66 million
  • Betting companies: €158 million

License fees in the years before the ban:

  • 2006 - €79 million
  • 2007 - €85 million
  • 2008 - €88 million
  • 2009 - €10 million

Once the ban came into effect, many companies continued to operate disguised as lotteries, the only form of gambling which remained legal. According to the Ukrainian Ministry of Finance, the black market accounted for 80% of all gambling in 2013. The lottery has been accused of being tied to corruption. Illegal online sports and casino gambling are highly popular throughout the country.

Predictions for after the ban

Benefits for operators

A limited number of gaming licenses will be available through electronic auction. Digital license holders will be able to offer both casino gaming and sports betting. Operators who obtain a gaming license will be able to legally face the Ukrainian market after legalization, and will no longer have to resort to black or grey market solutions.

Online operators have a lot to gain by participating in the regulated market. Estimates of black market gambling revenues vary, with the low end being €300 million and the highest estimates coming in at €1 billion. Much of that traffic can safely be expected to move into regulated channels.

Benefits for the government

Estimates vary widely depending on a number of factors including the tax rate (which has not been finalized), but the government is expected to earn somewhere from €200 million to €400 million in tax revenue from legalization. The money will be directed towards social programs - a welcome change when compared to the millions of euros of gambling revenue that simply flowed outside the country while gambling was prohibited.

The government of Ukraine is under pressure from other European and Western countries, as well as its own people, to root out corruption. Regulating the gambling industry will demonstrate that President Zelensky’s government is serious about tackling corruption.

Benefits for players

Players will finally be able to gamble and bet safely on licensed premises and trust that their chosen operator is in full compliance with the law. Players will also now have legal recourse in case of disputes with operators - an impossibility when gambling on the black market.

The current situation is effectively a monopoly, with only four licensed lottery operators and three of the four licensed operators conducting lottery activities. After legalization, there will be a wider variety of companies offering betting products, creating the kind of competition that results in higher-quality products for punters.

Benefits for the people of Ukraine

The new law allows casino licenses to be issued to 5-star hotels. President Zelensky has made public his desire to create a “tourism cluster” on the black sea. This has tremendous potential to increase tourism, which in turn would boost the Ukrainian economy and provide jobs. Tax revenues from gambling will go to social programs associated with healthcare, sports, and culture, directly benefitting the people of Ukraine.

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