Regulated Gambling in Ukraine: What Is the Potential?

Gambling has been banned in Ukraine for a long time. However, the time may have come for some big changes. The new president of the country, Volodymyr Zelensky, has announced his plans for carrying out several economic policy reforms that may include the legalization of gambling. There is now a possibility that five-star hotels could welcome casinos in the future.

Gambling in Ukraine

The gambling business in Ukraine has been illegal since 2009, according to the Law on the Prohibition of the Gambling Business. The bill was later amended to ban online casinos as well. The only legal form of gambling is the state lottery.

Despite the prohibition, the underground gambling business is prospering. Bookmakers take bets from Ukrainian punters under the lottery companies' names, while online casinos that are registered in offshore jurisdictions offer their services to Ukrainian citizens.

Many experts believe that by prohibiting gambling, the government just cuts off a valuable stream of revenue. According to some estimations, the yearly value of the illegal online casino market in Ukraine is roughly $1 billion.

Current Situation

Summer 2019 has seen numerous discussions about legalizing casinos in Ukraine. President Zelensky has revealed his plans to eliminate all bans regarding gambling, mentioning that adult citizens have the right to take control of their money by making decisions on how to spend it.

Zelensky has suggested legalizing gambling by allowing operators to open casinos in five-star hotels. This is intended to stimulate the development of the region's tourism cluster near the Black Sea. This decision is also being taken to improve Ukrainian-Turkish relationships and partner with Turkish businesses, rather than competing with them.

Future possibilities

What can be expected from the Ukrainian gambling industry? Some politicians, such as Yuriy Pavlenko, say that gambling can be legalized, but the country should be careful. He believes that it would be best to create a “Ukrainian Las Vegas” - a specialized area with hotels and casinos that would be fully monitored and controlled by authorities.

Ukrainian economists highlight that the establishment of local casinos would have many advantages, as the chosen region would be developed in three stages. The first stage would be the creation of the gambling zone, which would last for 2-3 years and start bringing in profits immediately. Second, gambling zones would become investment projects, as they would attract entrepreneurs who would start buying properties and opening business offices. This would bring in around $1 billion. The third stage would be marked by the establishment of the fully-functioning economic zone.

Two areas that could be considered for the creation of gambling zones are the city of Odessa and Shatsky Ozera ("Lakes of Shatsk"). Interestingly, in December 2018, Ukrainian authorities closed 5 illegal casinos in Odessa. The black-market gambling business continues to be quite prosperous in Odessa, even though authorities take active and aggressive measures against it.

Currently, gambling legalization is only a discussion. However, it seems that the suggestion to permit casinos is more serious and ambitious than those before. Experts estimate that the government’s budget would receive around $394.32 million in revenue from legal gambling. The legalization of online gambling is not currently being discussed, but industry experts believe that talks about casino resorts could expand to include the possibilities of online casino legalization as well.

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