In partnership with 4H Agency, EGR has launched a series of comprehensive articles focusing on the essentials of various emerging markets worldwide. These pieces draw on the expertise of 4H’s professionals to detail the regulatory landscape and entry prerequisites, offering insights into how these markets might evolve.
Continuing the series, we turn our attention to Ukraine, featuring analysis from Dmitry Hotsyn, 4H’s CIS desk head and senior consultant.
### Market Overview
Ukraine, the second-largest country in Europe, has its capital in Kyiv. As of 2023, Ukraine boasted a GDP of $178.7 billion and a population of 37 million, ranking 104th on the Corruption Perceptions Index with a score of 36. These figures reflect Ukraine’s governance and economic challenges alongside its potential as a burgeoning Eastern European market.
The nation’s gambling industry, having undergone significant transformation, was banned in 2009, leading to a rise in underground operations. Recognizing the need for reform, Ukraine legalized gambling in 2020. The market now shows vast growth potential, with the legal sector thriving alongside efforts to curb unlicensed activities. By 2023, the industry’s revenue surged to $1.4 billion—a 28-fold increase over 2022 figures.
### Regulations
**Licence Types**
Ukraine’s regulations encompass:
– Online casinos
– Online poker
– Land-based casinos
– Online sports betting
– Slot machine halls
– B2B gambling services
Notably, lotteries, under state monopoly, are outside the gambling scope. Land-based sports betting is an adjunct to online sports betting licenses and is specific to bets on sports, including horseracing.
Separate “additional” licenses exist for casino tables, slot machines, and betting shops, while a special “investment” license is available for building a five-star hotel with a casino.
**Licence Requirements**
General conditions include:
– Ukrainian registration
– No ties with Belarus or Russia
– A minimum capital of roughly $730,000, extending to securities and assets
– A bank deposit/guarantee for winnings of around $1.1 million
– State monitoring system linkage for all gaming equipment, which must be certified and operated with servers located in Ukraine
Specific requirements depend on the license type, with regulations on the location and scale of operations based on city size.
### Licence Costs and Taxation
All licenses, except certain additional ones, are valid for five years.
Key annual license fees are:
– Online casinos: ~$1.2 million
– Online poker: ~$970,000
– Land-based casinos: ~$11.6 million in Kyiv, ~$5.8 million elsewhere
– Online sports betting: ~$5.8 million
– Slot machine halls: ~$1.4 million
– B2B providers: ~$58,400
Gambling taxation is set at 18% for most sectors, with slot machine halls at 10%. General income and winnings taxes apply, alongside a 1.5% military fee.
### Advertising Restrictions
Major advertising restrictions came into effect in April 2024, curtailing most gambling promotions. Following new legislative amendments aimed at reshaping the industry, advertising will resume under stricter regulations.
Past restrictions involved prohibiting ads targeting vulnerable groups and minors, and sponsorships for events meant for younger audiences.
### AML and Responsible Gambling Regulations
The State Financial Monitoring Service oversees AML policies, mandatory for maintaining transparency and preventing financial crimes. Operators must conduct due diligence on sizable transactions, uphold player verification systems, and store transaction records.
Such regulations, alongside responsible gaming measures, aim to promote a safe gambling environment.
### Market Entry Specifics
Entry into Ukraine’s gambling market, open to national and international investors, relies on licensing. However, gambling establishments have restrictions on their locations.
Despite these challenges, Ukraine’s online gambling sector is dominant, with B2B provision still developing. The market’s young nature, coupled with the ongoing military situation, presents unique dynamics.
### Current Licence Figures
– Online casinos: 27
– Online poker: 3
– Land-based casinos: 10
– Online sports betting: 6
– Slot machine halls: 23
– Casino tables: 10
– Sports betting shops: 1
– B2B suppliers: 35
### The 4H Perspective
The Ukrainian gambling landscape is transforming through legislative and structural reforms aimed at modernization and tackling challenges. Recent strides, catalyzed by a gambling-related military scandal, include ad bans and crackdowns on unlicensed operators.
Expected legislation will introduce stricter penalties, mandatory B2B registration, heightened ad monitoring, and tax changes like a raised military fee. These efforts seek to create a secure and transparent market, fostering competitive growth aligned with global standards.
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Dmitry Hotsyn, leading the CIS desk at 4H Agency, draws on extensive expertise to provide guidance on global expansion and organizational strategy for gambling enterprises. His experience spans leadership roles in Ukraine’s largest law firm and a tech-focused investment fund.
