How Ukrainian gambling survives during the war

A year and a half has already passed since the beginning of the full-scale invasion of Russian troops into Ukraine. During this period, the gambling business began to recover little by little after significant losses of assets and customers, having rearranged its operations. From the very beginning of the war, legal gambling organizers, despite all the material losses, continued to fulfil their financial obligations to the state budget and at the same time spent hundreds of millions of hryvnias on supporting the Armed Forces of Ukraine, Territorial Defence Forces and humanitarian projects of the government and local self-government bodies.

In total, out of the three years that have passed since the legalization of the gambling market in our country, half of this time it works during a full-scale war. No country in the world had such experience of operation of a newly created industry in the entertainment business. Therefore, informing the foreign community about this is an important area of the national policy regarding the formation of Ukraine's image in the world. For example, in a recent interview to International Masters of Gaming Law (IMGL) non-profit association, member of the Committee for Regulation of Gambling and Lotteries (CRGL) Olena Vodolazhko spoke about how gambling companies in Ukraine survive during the war and what support steps they expect from the state.

Answering the questions of IMGL representatives, she reminded that, despite the war with Russia, the process of legalizing the gambling business, which began in the summer of 2020 with the adoption and entry into force of the Law of Ukraine "On State Regulation of the Organization and Conduct of Gambling" (hereinafter "the Law"), did not stop. The CRGL, the organizers of the newly created market and the society understand the need not only to endure under martial law, but also to continue and complete the reform of the gambling business, which was started even before the invasion.

Force majeure circumstances, caused by the start of a full-scale war with Russia, led to formal violations of licensing conditions by legal gambling organizers. However, as Olena Vodolazhko pointed out, position of CRGL was to support the organizers and strive to preserve the newly created market, in particular through avoiding to apply measures to revoke licenses on formal grounds.

The offline segment suffered the biggest losses: many companies lost premises and gaming equipment that remained in the occupied territories or were damaged by shelling and hostilities. However, all legal market organizers showed great resilience and made a conscious effort to avoid firing employees, continue paying wages and help workers who were forced to flee their homes due to the war.

Olena Vodolazhko noted that the adoption of the Law on the legalization of gambling business after more than eleven years of prohibition proved to be insufficient for the full opening of the market for foreign operators, as it required changes in the tax legislation, which was still inconsistent with the effective legal provisions and created a rather non-transparent system of gambling business taxation in Ukraine.

Such changes were to be implemented gradually, and during the transition period, the high cost of licenses provided for by the Law became part of the consensus that allowed entering the market without an automated online gambling revenue monitoring system, which, according to the law, should fully monitor gross gambling revenue from gambling (GGR) of each organizer. Currently, the market is waiting for the simultaneous implementation of both the tax changes provided for by draft law No. 2713-d and the control system, such as the State Online Monitoring System (SOMS). This will allow domestic gambling companies to recover faster and will be a guarantee for making decisions by international companies on investing in the legal Ukrainian gambling market.