How to accurately calculate gambling business revenues?

Since its legalisation in 2020, the gambling business in Ukraine has become one of the most discussed topics in economic and regulatory circles. Some actively criticised the reform, while others had high hopes for the industry as a source of state budget revenue. However, the optimism of the latter was tempered by populist rhetoric and statements from several politicians claiming that gambling had not proven profitable for the state following legalisation. They pointed to low revenues in 2021, argued that the reform had failed, and suggested that gambling should be banned again. Yet assessing the industry's "profitability" in this way is misleading for several reasons.

Before legalisation in 2020, the gambling business in Ukraine operated in the shadow economy, benefiting everyone but the state. Following the adoption of the new law, the transition from the shadow sector to a legal market began. However, tangible results were not immediate, and there are logical reasons for this. The first licences were only issued in 2021, and comprehensive reporting from companies did not begin until the second quarter of 2022. By overlooking these important facts, many analysts and members of the public—whether knowingly or not—have drawn inaccurate conclusions about the industry's true potential.It is also interesting to note that there have never been any proper conditions for realising the industry's potential.

First, legalisation occurred during the COVID-19 pandemic. As a result, land-based gambling venues—traditionally the most profitable segment of the industry—were unable to operate at full capacity, and the number of players remained extremely low. Due to the reduced turnover from bets and winnings among land-based operators, the amount of taxes paid was also minimal. Nonetheless, despite these losses, licensed operators continued to pay their licensing fees.

Second, as soon as COVID ended, the full-scale Russian invasion began. Like the entire economic system, the industry went through very difficult times, but managed to hold on and today continues to grow and constantly increase payment volumes.

Third, beyond the force majeure factors mentioned above, the market has operated—and continues to operate—under uncertain tax and regulatory conditions. This, to put it mildly, has not been conducive to its development.

Nevertheless, despite these challenges, the gambling industry has demonstrated its important role in supporting the state budget. According to the State Tax Service, the sector has paid over UAH 6.3 billion in taxes since the beginning of the year. This reflects not only the industry's revenue growth but also its significant contribution to public finances. It is important to recognise that even during periods of severe difficulty, businesses are finding ways to adapt, maintain tax payments, and support the country’s economic stability.

Of course, there is no easy way to develop the gambling business in Ukraine. This is an area that faces numerous challenges, from the need to create an effective regulatory system to fighting the illegal market and maintaining responsibility in doing business.

The gambling industry’s ability to withstand significant challenges further underscores its considerable potential as an economic sector. Therefore, conclusions about its viability should be based on current performance rather than on the exceptional circumstances that limited revenue generation in the first year following legalisation.