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What can the legal gambling sector expect in 2024?

Legal gambling sector fulfilled the objectives established for 2023 despite all the challenges. Revenue to the state budget exceeded the targets established at the beginning of November. However, these targets were achieved against the background of systemic problems with tax and regulatory legislation, the resolution of which is constantly postponed. In addition to that, these problems are complicated by new legislative initiatives, in particular, Draft Law No. 10101 proposed by Mr. Hetmantsev, which is actually intended to destroy all the achievements of the reform on the legalization of gambling. If the state is interested in preserving revenues from legal gambling, this adverse trend should be reversed as soon as possible.

If as of the beginning of November, the legal gambling organizers exceeded the planned indicator of the state revenue, which reached 101%, then by the beginning of December, they reached 117% of the target. That is, instead of the planned UAH 1.596 billion of license payments, the budget has already received more than UAH 1.871 billion, which is 95.4% more than UAH 86.8 million allocated for the operation of the Commission for Regulation of Gambling and Lotteries (CRGL) in 2023.

Budget plans for next year are somewhat more modest. However, the trend regarding the ratio of expenses for the Commission and the amount of income it should generate persists. In 2024, the state budget plans to receive UAH 1.047 billion in license fees from the legal gambling sector. And UAH 76.8 million were allocated for the operation of CRGL, which is almost 14 times less than the amount of planned revenues.

That is, they traditionally expect tens of times more from the CRGL and the market than is allocated for the operation of the Commission. In general, it is understandable. After all, an effective state regulator should really bring much more to the state than is spent on its work. CRGL effectively addressed this issue before and during the full-scale war.

However, there is one big catch. It is about the fact that in order for the market to work and the regulator to be able to perform its tasks effectively, appropriate legal conditions must be created that will establish clear rules of the game both for legal market organizers and for state bodies that control their activities. Currently, only license conditions for gambling organizers are fully functioning within the market. The issues of taxes, monitoring, regulation of advertising, license conditions for lotteries, distribution of competences for combating illegal businesses have not yet been resolved.

Is it realistic to achieve the established targets in such conditions? A rule of thumb states that it is real. But is this enough? Of course not. You don't need to think a lot to understand: if the market fulfils the targets in extremely difficult circumstances, then the effect will be many times better if the proper conditions are created for the market.

It will also be interesting to see what part of the planned revenues will come from lotteries. After all, they have not paid anything to the state for many years. By the way, even the name in the revenue column of the 2024 budget literally reads as follows: "Fee for licenses in the field of the organization and conduct of gambling and for licenses to issue and conduct lotteries." If lotteries finally start to pay at least for licenses to conduct their activity, not to mention the licenses for organizing and conducting gambling, in which they also actively engaged off the books, then it will be easier to achieve budget revenue targets.

Termination of the powerful anti-gambling lobby is another important condition for achieving the goals established for 2024. This lobby is led by the above-mentioned Danylo Hetmantsev along with a number of other MPs who promote bills like Draft Law No.10101. The sole purpose of such legislative initiatives is to create tax and regulatory conditions under which it will simply be unprofitable to engage in legal gambling. As a result, legal organizers will be forced to either go underground or simply disappear. This will return the market to an illegal state, and therefore, those who cover it will receive the revenue from the gambling market instead of the state budget.


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