Why are the world’s major gambling operators still avoiding Ukraine?

Six years ago, Ukraine legalized gambling, yet none of the world’s top 10 gambling industry giants has entered the Ukrainian market. This was recently acknowledged openly by Natalia Denikeieva, Deputy Minister of Digital Transformation. The Ministry of Digital Transformation recognizes that the Ukrainian market is attractive to global businesses, but the current regulatory framework does not create the conditions necessary for them to enter. The ministry considers the adoption of three pieces of legislation to be the key measure of the reform’s success: an updated gambling law, amendments to the Tax Code, and amendments to the law governing state lotteries. “I very much want to see foreign investors and Ukrainian companies with transparent ownership structures in Ukraine,” Denikeieva emphasized.

The industry itself has been saying the same thing for a long time. The 2020 legalization was only half-completed: the core gambling law was adopted, but related legislation was not comprehensively aligned. As a result, certain provisions still contradict one another, while businesses operate in an environment that cannot be reliably forecast several years ahead. For an investor calculating the return on an investment, such uncertainty is a red flag.

The most telling example is taxation. Draft Law No. 2713-d, which was intended to establish a balanced tax framework for the industry, passed its first reading in the Verkhovna Rada back in the summer of 2021. At the end of 2022, the relevant parliamentary committee recommended the bill for its second reading, but the final vote never took place. The bill was intended to replace a confusing and contradictory set of provisions with a clear model: a single tax on an gambling operator’s gross gaming revenue, combined with fair taxation of player winnings. I am convinced that if Draft Law No. 2713-d had been adopted in a timely manner, the reform would have progressed at a completely different pace, and leading global companies would have been operating in Ukraine long ago.

I can also speak from my own experience communicating with foreign investors. As soon as they learn what percentage of an gambling operator’s gross gaming revenue is taken by the state, on top of which corporate income tax is also paid, and that the tax on winnings in Ukraine stands at 25%, their interest disappears. A player who is taxed at such a level will go where nothing is withheld — to the illegal market. It is therefore no coincidence that researchers have found that the illegal segment already accounts for more than half of the market.

The second issue rightly highlighted by the Ministry of Digital Transformation is opaque ownership. The market has already seen one of the industry’s largest and best-known companies lose its licenses after the regulator identified links between its structures and the aggressor state. Cases like this deter legitimate investors more than any tax burden: no serious international player will want to compete in a market where the true beneficial owners may remain hidden.

Lotteries require separate attention. If we genuinely want a competitive market, the monopoly of so-called state lotteries must finally come to an end. This is not merely an economic requirement; it is also a constitutional one. Article 42 of the Constitution of Ukraine explicitly requires the state to ensure the protection of competition in business activities and prohibits the abuse of a dominant position in the market and unlawful restrictions on competition. The current lottery market model does not comply with this principle.

The conclusion is straightforward. Over the past year, the state has learned how to control the gambling market: block operators, impose fines, and monitor activities. But control without economic incentives to operate legally is only half of the reform. Without the adoption of all three laws, the market will not receive the new impetus it needs to develop: foreign investors will continue to bypass Ukraine, while the state budget will continue to lose billions that are currently being absorbed by the shadow economy.