A lesson from the U.S. for Ukraine - Why legalizing the gambling industry does not guarantee order in the market

Legalization is always only the first step in building any system in a country. Conventionally, it is a permit that authorizes the start of a certain process. However, what should be done after this "permit" is obtained? What are the next steps? These are the most difficult questions. The answer to them requires systematic work aimed at making this "permission" work and ensuring that all parties involved benefit from it. That is why the development of a regulatory system capable of responding quickly to changes in a particular industry is key to ensuring that the legalized economy works and benefits businesses, the state, and consumers.

The Prohibition era taught American officials that strict prohibitions are ineffective. After all, when a certain industry is banned, it does not disappear, but becomes illegal and goes underground. This not only means a loss of tax revenue and other contributions to the state budget, but also the need to spend a lot of resources on combating illegal business and solving other related problems.

The ban on the sale and consumption of alcohol led to the emergence of an entire criminal infrastructure—bootleggers and criminal gangs that received a huge share of the profits. This situation lasted for more than a decade and ended with the illegal sector becoming too large and difficult to control. As a result, supporters of prohibition did not achieve the expected results, but instead exacerbated the problem of crime and loss of state revenue. The response to this was eventually the gradual legalization of alcohol production and the development of appropriate regulatory and licensing systems.

However, the mere fact of legalizing a particular industry has never meant and will never mean that everything will immediately fall into place, the market will form, and everyone will voluntarily comply with the rules. Let's continue with the example of the US—a jurisdiction that is currently one of the most developed in terms of legal gambling.

Gambling has been legal in the US since 1931, and, of course, a powerful regulatory system has been formed in the country during this time. However, there are still certain segments of the market that will always "strive" to remain in the shadow sector and outside the regulatory environment. That is why in the US, despite legalization and billions in revenue from official gambling operators, a significant portion of gambling, especially online and in the crypto casino segment, continues to operate outside of regulation, depriving the budget of revenue and creating new social challenges.

For Ukraine, this is a clear signal: legalization is only the foundation, not a completed process. If the state does not ensure complete digital transparency, effective control of transactions, unified taxation rules, and strict restrictions on illegal platforms, part of the market will inevitably go underground again. As a result, the budget will lose revenue, legal businesses will continue to suffer from unfair competition, and players will be at greater risk of becoming addicted to gambling.

Therefore, for us, the next steps in developing a civilized and controlled gambling market are to strengthen the national regulator and develop clear rules for taxation and regulation, including lotteries . The creation of such a system does not increase pressure on the industry, but rather is the only way to make it predictable, responsible, and truly profitable for the state.