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The biggest problem with the Ukrainian gambling market right now is taxation, according to Viktoriya Zakrevskaya, the deputy chair of trade group the Ukrainian Gambling Council (UGC).
Zakrevskaya explained during a roundtable discussion on Central and Eastern Europe at the World Regulatory Briefing on February 6, part of the ICE gambling conference, that the gambling industry faces the same challenges “that were present before the war”.
“Tax regulation was supposed to be amended and the tax rates that apply now existed before the industry legalised in 2019. Right now we have the biggest amount of taxes in the world.
“This means, and I am saying this not as a state official but as a representative of business, that some international brands are pushed to move some of their business outside of Ukraine. This is very unfortunate for the country," Zakrevskaya said.
Casinos and betting operators in Ukraine pay an 18 percent gross gaming revenue (GGR) tax, gaming machines pay a 10 percent GGR tax and lotteries pay a 30 percent GGR tax. All operators also pay an 18 percent income tax and there is an 18 percent tax on players' winnings.
However, gambling is not top of the political agenda due to the ongoing war and most of the industry is still operating in “grave, grave difficulties”, according to the UGC deputy chair.
“We are hopeful that the war is going to end soon and the market will be able to finish its legalisation process (of an online monitoring system),” Zakrevskaya said.
The most heavily impacted part of the gambling industry has been the land-based sector, particularly operators that had premises based in the Eastern part of Ukraine, as they have either been destroyed or forcibly taken over.
“This has been very painful,” according to Zakrevskaya, but the situation has been improving with much of the land-based market re-establishing operations in the central and western part of the country, often under strict curfews.
Another issue caused by ongoing security concerns is foreign companies capping their potential investments in Ukraine.
“We saw some of the big investors that were already present in Ukraine had to close their business and consider whether or not they want to come back,” Zakrevskaya.
The outlook for the online sector is more positive.
“[Online operators] have been flexible and able to not only continue their work on the same level but even to grow,” according to Zakrevskaya, which has seen the industry contribute to the “largest amount of taxes in the history of Ukraine”.
The UGC estimates this was around $300m in 2023, with licence fees amounting to around $53m.
When the war ends, the UGC is hopeful that Russia’s attractiveness as an Eastern European gambling hub will be severely affected, paving the way for the Ukrainian market to take its place as a regional gambling epicentre.
