The result of the Ukrainian elections, saw Volodymyr Zelensky taking the office with an impressive 73.22% of the total vote in the second round. The new President of Ukraine has declared that one of his strategies to modernize the local economy would be the rearrangement of the legislation of the gambling industry.
Gambling in Ukraine is considered illegal and it is banned by the Prohibition of Gambling Law that took into effect in 2009. Almost all forms of gambling are prohibited with the exception of lotteries. Many operators have taken advantage of this loophole for the last decade to function under the law’s radar. The oligopoly of lotteries is controlled by three companies, Patriot, MSL and UNL, which can award “lottery licences” to operators. The three companies are accused of having tight bonds with politicians that were involved in the previous government of Petro Poroshenko.
This regime in the gambling industry has resulted in a shady market with untrustworthy operators that cannot provide their customers with any sense of accountability. The fact that no jobs can be created, and innovation and private initiative are actually condemned to failure, forms a toxic atmosphere around the market, despite the great potential of expanding. A regulated gambling market in Ukraine would bring to the state approximately UAH 5 billion of profit. Right now, the Ukrainian state is benefited only with UAH 6 million, which by no means can depict the potential that the Ukrainian market has.
The liberation of the economy after so many years of strict “statism” is a right step towards social justice but the concerning fact for the gambling industry is that even if it gets reorganized, the oligarchs could assume the biggest share. There are major doubts about the legislation that will be implemented and whether it would secure that the industry would be open for “every businessman”. There is talk that the oligarchs have already lobbying towards the formation of a “Master License” system which would practically create a new oligopoly and wouldn’t improve the current situation in terms of financial revenue for the state.
It is apparent that if the new Ukrainian government desires the gambling industry to be transparent and uncorrupted, they need to show “iron” grip towards the oligarchs and impede their aspirations. In the rest of Europe, an independent regulator (i.g. UKGC in the United Kingdom) is usually the authority that decides who receives a gambling license. By this way, it is ensured that the operators will meet the industry standards and that the customers will be protected from harming behaviors. This system is naturally leading to an open market that can bring in the investments and the partnerships that the industry needs so that it can constantly evolve.
As soon as the brick-and-mortar casinos would be established on Ukrainian soil, it is obvious that the regulation of online gambling comes next. Ukrainian online casinos have been banned since 2009 and most of the foreign operators are restricted but this hasn’t stopped Ukrainians from gambling as the legality of gambling online remains unclear. The re-launch of online gambling in Ukraine would allow foreign operators to actively target Ukrainian customers again and also it would allow potential local operators to start businesses within a regulatory framework.
To conclude, the Ukrainian president has a huge task in front of him to deliver. The opening and regulation of the betting sector will definitely be a step towards the liberation of the economy and the creation of a significant amount of jobs. Also, it will attract a number of industry-related foreign companies which will refresh the local economy. So, the bottom line is that the country will find itself benefited in many ways from such a move.