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Anton Kuchukhidze: How legalization of gambling has affected the IT industry in Ukraine

In my blogs and comments for the press, I have repeatedly mentioned economic benefits that legalization of gambling has had on the Ukrainian economy. One of the best examples of such synergy is the IT sector, since online gambling is the most dynamic sector today.

Over the past few years, the IT sector in Ukraine has demonstrated positive growth, steadily increasing its share in the country’s GDP and export revenue. The Ukrainian IT sector is also a leader in terms of attracting foreign investment.

The drivers behind the growth of the Ukrainian IT industry are both external factors, namely the global growth in demand for the automation of processes and analysis of a rapidly increasing amount of data, development of the virtual entertainment industry, as well as a number of internal factors. The most important of the latter are the high qualification of Ukrainian IT specialists and a relatively low cost of services, as well as growing domestic demand for IT services and products of other industries.

In particular, the legalization of gambling has become one of the above drivers. Along with land-based casinos and slot machine halls, online gambling, being the major customer of IT solutions, was also legalized.

The demand for such solutions can be partially met by already existing businesses. However, gambling has specific needs that can be met only by B2B companies with a narrow specialization. In just over a year of operation of the legal market, the Commission for Regulation of Gambling and Lotteries issued 19 licenses to B2B companies maintaining the IT infrastructure of licensed gambling operators, which made it possible to attract more than UAH 34 million (about USD 1.2 million) to the state budget. Let me remind you that only a year and a half ago such a revenue item simply did not exist.

It is also important to note that the gambling industry, actively consuming IT products and services, stimulates the development of IT in several respects at a time.

1. Hardware. Land-based gambling establishments are the major consumer of slot machines being essentially an IT product.

2. Software products. Legal online gambling operators cannot operate without special games of chance and some IT solutions required to ensure the functioning of online casinos, betting websites and other online gambling sectors.

3. New jobs. Some legal operators create their own IT teams and even separate businesses to develop their own software products and games, both using them and selling them to other companies, creating thousands of new jobs for programmers, project managers, designers and other specialists.

4. Innovations. Given the specific needs of online gambling, the industry is also a source of innovation. In order to solve some tasks related, for instance, to cybersecurity, restriction of the access of minors to gambling, analysis of behaviour to prevent the spread of gambling addiction, there must be highly specialized IT solutions that are not found in other industries, thus being innovative.

The example of a specific industry clearly shows an overall economic effect of the gambling legalization on the Ukrainian economy. At the same time, the potential of the industry is much higher, and the more gambling companies in Ukraine, the greater will be the economic benefit from their activities both for related industries and for the State as a whole.

Anton Kuchukhidze, Chairman of the Ukrainian Gambling Council, exclusively for the Ukrainian News


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