PlayCity launches initiative to revise taxation on winnings in favor of players

The legal gambling market in Ukraine has been growing rapidly over the past five years of operation. However, the excessive tax burden, in particular on player winnings, is gradually making the legal sector less competitive compared to the shadow market. No other jurisdiction in the world has been able to solve this problem solely through restrictive measures and increased law enforcement.

All national regulators are searching for ways to balance the interests of the state, business and users of gambling business organisers' services, and most often their proposals are based on the liberalisation of fiscal legislation.

The national gambling regulator, the State Agency for PlayCity, based on the experience of its colleagues from countries where legal gambling has a longer history of development than in Ukraine, proposes to reform the taxation system to support players, stimulate the legal market and strengthen the fight against illegal operators.

The reasons for this proposal are clear and logical. The current system of taxation of winnings in Ukraine provides for the collection of tax on the entire amount of the payout, rather than on the net win (the difference between the win and the bet). This makes the legal market less attractive for players, who often choose illegal platforms where taxes are not collected.

Therefore, the head of PlayCity proposes a radical reform: taxing only net winnings, which will reduce the financial pressure on players and increase the competitiveness of licensed organisers. According to the agency, this will become an effective tool to combat the shadow market, which is estimated to account for 30-40% of the total gambling volume in Ukraine.

The problem of excessive gambling taxation is not unique to Ukraine. In the UK, one of the largest iGaming markets in Europe, the government plans to increase taxes on online and offline gambling in the 2026 budget. It is expected that the tax rates on gross gaming revenue (GGR) will increase from the current 15% to higher rates (the new tax ceiling is still being agreed by the Ministry of Finance).

The chairman of the UK Betting & Gaming Council warns that tax increases can cause significant damage to the legal gambling sector by promoting shadowing, and cites the example of the Netherlands, where after the taxation rate was raised to 37.8% in 2025, the market lost 25% of its revenue and the state budget (proportionally) lost tax revenues. This experience serves as a warning for Ukraine, where high taxes (10% GGR + 18% income tax) are already creating significant fiscal pressure on legal gambling business organisers.

The Ukrainian Gambling Council, a non-governmental organisation, has its own vision of the optimal gambling taxation model for the domestic market. UGC Chairman Anton Kuchukhidze has repeatedly emphasised the need for reforms to ensure the competitiveness of the legal market. His recommendations include:

1. Introduction of unified legal terminology in the legislation to avoid misinterpretations and simplify reporting, including a clear definition of gross gaming revenue (GGR).

2. Replacing the current multi-layered taxation with a single GGR tax of 10-15%, as in New Jersey (13%) or the UK (15%). This will reduce the pressure on organisers and players.

3. Legislative regulation of lottery operators and their separation from other types of gambling with the blocking of the use of imitation mechanisms when full-fledged casinos operate under the guise of lotteries.

4. Toughening sanctions for illegal operators, including blocking financial transactions through cooperation with the NBU and payment systems such as Visa or PayPal.

All of this requires the speedy implementation of the State Online Monitoring System being developed by PlayCity. We hope that we will soon witness its launch and relevant legislative changes in the fiscalisation of gambling.