An open competition is only the first step toward a transparent lottery market

In developed countries, lotteries are one of the key sources of revenue for state budgets within the gambling sector. Through active regulation of the industry, governments receive significant amounts in taxes and fees. In Ukraine, however, the situation remains uncertain. As a result, we have a multi-million-dollar sector of the economy that is not controlled by the state in any way and creates problems for legal businesses. The first steps toward addressing this issue have already been taken, but the process lacks stability and the changes lack a systemic approach.

The lottery market in Ukraine has effectively been in a “suspended” state for more than 11 years: the rules and regulation remain at a rudimentary level, which is why modern approaches to combating illegal operators simply do not work. Holding an open competition for licenses does not automatically solve this problem. It is only a starting point—one of dozens of steps that still need to be taken for the reform of the lottery market to be successful.

To reach the level of developed Western jurisdictions, a clear legal framework is required—one that defines tax rates, licensing conditions and grounds for license revocation, as well as sanctions for illegal activities in the gambling and lottery sectors. At the same time, effective mechanisms of cooperation must be established between the regulator, fiscal authorities, and law enforcement agencies in order to promptly shut down illegal operators.

It is also important to remember that at the current stage, most illegal operators work in the online segment. Therefore, this cooperation should be based on a strong technological component. Blocking the relevant platforms must occur quickly, as must the termination of the economic activities of the legal entities behind their operation.

Unfortunately, in Ukraine we cannot speak of serious progress in this direction. This sector has been functioning “outside the law” since 2014, when the last licenses of state lottery operators expired. Since then, they have continued to operate comfortably in the “grey zone,” avoiding the payment of taxes and license fees. While previously they conducted illegal activities mainly in the lottery segment, today lottery operators increasingly imitate gambling games, competing with legal gambling organizers. This creates difficulties for the latter and highlights the ineffectiveness of existing regulatory mechanisms, given that the lottery market could be a significant source of budget revenue.

Formal requirements for market participants and digital tools—such as unique QR codes on tickets, online tracking of sales and payouts—can indeed increase transparency in the sector. However, no matter how advanced these technical solutions may be, without changes to legislation and the introduction of procedures for their implementation, they will either have a very limited effect or not work at all. That is why the sector primarily needs an updated regulatory framework, clear operating rules, a transparent and unified tax model, and adherence to the principles of responsible gaming.

Until these steps are completed, lotteries will remain only a conditionally legal segment, and the state will continue to lack control and stable revenues. An open competition for licenses is undoubtedly a strong signal of positive change, but a significant amount of work still lies ahead. I hope this work will be systemic and comprehensive, replacing the current approach focused on piecemeal solutions. It is precisely a systemic and comprehensive approach that will allow the Ukrainian lottery market to become transparent, modern, and competitive.