SBC News Voice of the Sports Betting Industry
Anton Kuchukhidze, Chairman of the Ukraine Gambling Council (UGC) provides SBC with an update on how a liberalised gambling industry is planning for its future amid the unknown outcomes and consequences of a brutal war…
The war launched by Russia against Ukraine has caused grave damage to the national economy. Commercial activity has declined significantly or minimized in all sectors. Of course, legal gambling is no exception. Like most areas of entertainment, legal gambling suffered greatly from the drop in demand, especially in the first months of the war.
Online segment traffic fell by more than 80%. Like any other business, during the first months of the war, UGC (Ukrainian Gambling Council) members were in survival mode and emergency adaptation to the new reality. It is worth noting that most of them were successful at this task. Legal operators managed to save jobs, transfer employees to safer parts of Ukraine or even relocate them abroad, and restore business processes.
Naturally, the ground-based sector suffered the most. UGC members’ offline gambling establishments were shut down in the first months of the war. Part of their business remained in the temporarily occupied territories or near the frontline. 80% of gambling establishments were closed, taken away by the invaders, or destroyed. There are only a few legal gambling halls, one of which is in Kharkiv, that managed to operate close to the frontline and under wartime conditions.
Since April, most of our members have begun to restore their online and offline operations. Online operators, for obvious reasons, show better growth. Indeed, it is still too early to talk about pre-war traffic indicators, but still, its growth is evident. According to optimistic projections, the volume of the Ukrainian online gambling segment is expected to reach pre-war levels by the end of this year. The offline segment is also starting to gradually restore. A number of gambling halls in the western part of the country, as well as in Kyiv, have reopened.
Despite the many challenges faced by the legal gambling business, its representatives fully support the State in its fight against russia. UGC members have transferred more than UAH 200 million (about USD 5.4 million) for the needs of the army and various humanitarian initiatives. Also, licence fees were paid in the amount of more than UAH 350 million (more than USD 9.4 million).
In the short term, the market is looking forward to two key initiatives to improve its resilience and open new prospects for investors.
- Adoption of the legislative initiative presented by CRGL to provide gambling operators with the right to defer the payment of license fees during martial law, subject to the submission of an application for license suspension. It will reduce financial and regulatory pressure and help legal operators, especially those running ground-based halls, maintain business.
- The market is still waiting for the adoption of the specialized tax bill 2713-d, streamlining the gambling taxation and making it understandable for market players. Today, the lack of clear taxation rules is one of the key obstacles to attracting investment in the sector. Even despite the war, there are several large foreign online gambling brands ready to enter the Ukrainian market. The lack of clear taxation rules is what is holding them back.
In the current crisis, the key is that legal gambling has managed to survive and successfully overcome the challenges faced. At the same time, the State is also trying to provide legal operators with maximum support for them to keep their business and, after Ukraine’s victory, create even more benefits for the Ukrainian economy.
