Overview of the gambling market situation in Ukraine. What will happen after legalization?

 Overview of the gambling market situation in Ukraine. What will happen after legalization?

 

What will happen to the market in case of adoption of the law on legalization?

All representatives of the world gambling market are interested in this question. It is known that in 2009 Yulia Tymoshenko's government decided to close gambling business and prohibit all types of gambling activities. The reasons for such a decision have not been clear up to this day, although there are various rumours. Let's see what happened afterwards.

This measure allowed to neutralize criminal organizations that covered the business and bring the part of the budget benefiting from the taxation into the comatose condition ... However, despite the fact that the law came into force, many organizations managed to fully or partially operate illegally, as it is assumed. The acting Prime Minister of Ukraine Arseniy Yatsenyuk openly discusses this issue. He says that it is time to stop closing our eyes to the full operation of the gaming industry and it's time to get considerable profit from this business into the state budget.

For example, in 2009 Kiev hosted about 10 poker series of European level held either in hotels or in operating poker clubs, which were able to continue their activities due to the prefix "sports". There are rumours that land-based casinos and halls with slot machines are also very conveniently located in 5-star hotels in the centre of Kiev, where the "family" plays. 

2014: dramatic changes

In 2014, the situation changed dramatically when the Minister of Internal Affairs closed the remaining existing gambling establishments in Ukraine and the Verkhovna Rada took on the creation of a law on the legalization of gambling industry. The lawdraft received considerable attention in the gambling community and made many market players think about the quality of such changes and their impact on the situation.
Following the example of our northern neighbors from Belarus, where gambling is completely legal, it is possible to draw the following conclusions: the Ukrainians, most likely, will have to forget about playing in casinos or poker clubs for fun. With almost 100 percent guarantee, we can say that the legalization of gambling will shift the proportion of players toward the rich segments of population because the gambling taxation will result in a situation where stable dollars will be used instead of unstable hryvnias. There is probably no use to explain who will be able to spend dollars in Ukraine. Also, one should not forget that the important factor for the law adoption is the income to the state treasury. At this stage, three options are being considering regarding the gambling legalization with various tax options and tax deduction for businesses. For example, the Belarusians have 13% income tax for players.  More details of these options can be found at Ukrainian Gaming Congress.

The Ukrainian market is perhaps the "sweetest" for the Ukrainians themselves who can take large loans to buy equipment in the West, work as a contractor and know that the business of foreign operators will not be closed (because essentially they will close receipts to the European accounts and this is an issue of international relations) and will be able to work legally and make a profit, even though it is smaller than in the past, as well as for the players who will arrive  from neighboring countries. Thie is no wonder that among the speakers of Ukrainian Gaming Congress will be the adviser on tourism of the minister of economic development and trade of Ukraine Oleksiy Evchenko, who will speak about the advantages of junket players attraction.
 

It is worth paying attention to the fact that the law will regulate activities of online operators providing their services in the areas of casinos, betting and poker. Moreover, this draft law is unique due to the fact that it considers actually the most urgent, advanced and realistic way of the gambling operation in the era of computer technology.

In this context, the situation will be a bit more complicated. In case of legal business conduction, companies will be forced to pay taxes, that is, to reduce their profits. We cannot predict the subsequent reaction of the companies, but it is clear that they will either have to accept the changes, or to increase the fees charged from the players (the so-called rake), or leave the Ukrainian online gambling market, which was so attractive due to its uncontrollability until this moment.

It is inevitable that some part of the business will remain in the shadows. Smaller casinos being not be able to pay for licenses and taxes will transfer to the shadow format. They will cause demand among those who will not be able to bid in foreign currency.
 

To sum up

In general, adoption of a law on the legalization of gambling business in Ukraine has both pros and cons. If they manage to carry out reforms with full control of all stages, the corruption schemes will not able to control the business providing an opportunity to create jobs and bring profit into "empty" treasury of the country. On the other hand, there is a risk for the players as many people are addicted to gambling and they can uncontrollably leave their money in gambling establishments. For this purpose, they will need to consider some methods of control and rehabilitation of players.

 

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