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An unfinished reform and unjustified criticism

Recently, criticism of statements related to the gambling business has been constantly increasing. Critics of legal gambling emphasize that the organizers pay too little taxes, while the fact that billions of hryvnias are paid to the state budget is constantly omitted. The thesis of underpayment of taxes is used as the main justification for the need to hit the gambling market. However, if we look at this question from a more rational point of view, it turns out that the incompleteness of the reform is the key challenge, rather than "the reluctance of legal organizers to pay more."

It is always easier to criticize the consequences of a certain process than to understand its cause. Why should you go deep into the specifics of tax and regulatory legislation, learn legal nuances, if you can simply find the culprit? Furthermore, this "culprit" represents an area that has always been very sensitive and controversial for society due to the unlawful actions of illegal businesses. Therefore, it is easier to manipulate than to understand the essence of the problem and propose a solution.

However, if we put aside populism and criticism and look at the field of gambling from a pragmatic point of view, we will see a key dilemma in the current development of gambling in Ukraine. On the one hand, the legal gambling business has proven its capacity as an industry and its ability to fulfil its obligations to the state even during the war. In addition to taxes and license fees, legal gambling organizers spent more than 1 billion hryvnias to help the state and the people in 2022. On the other hand, the reform aimed at the legalization of gambling has not been completed, because the tax legislation has not been adopted and the unified State Online Monitoring System (SOMS) has not been implemented.

Therefore, the main problem is not in the gambling business itself, it is the conditions of its doing such business. The first step was taken: the state gave permission for this type of commercial activity. However, the second step must be done in order to fully complete the reform, namely to systematize the legislation and bring it into line with the specifics of the functioning of the industry. Otherwise, the business of legal gambling organizers simply will not develop.

First, it is impossible to wait for the reform to prosper while the old tax legislation, which contains a completely incorrect definition of GGR, remains effective. GGR is primarily the difference between money received and given away by gambling operators, not their entire income. All money does not stay in the casino.

Secondly, when the state taxes all the player's winnings at the rate of 19.5% according to the current legislation, even 100 hryvnias, then the player goes to the illegal establishments. After all, they do not pay any taxes and do not require personal identification.

Currently, the powerful potential of the market and the willingness of legal organizers to build business in Ukraine faces the lack of sufficient legislative and regulatory conditions for the effective realization of this potential. That is why it is necessary to adopt the draft tax Law 2713-д as soon as possible and introduce the unified online monitoring system (SOMS). On the part of the Ukrainian Gambling Council, we recently suggested how this could be done. We hope that an appropriate dialogue will be held and our arguments will be heard.


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