Ukraine and the possible end of the era of impunity for "state" lotteries

Recently, the overarching theme of my blogs has been the illegal operation of lotteries, which remains one of the key problems of the gambling market in Ukraine. However, recent developments suggest that this issue may soon be resolved and fair competition will return to the market.

The activity of illegal operators have always been one of the main problems for the gambling industry after its legalisation in 2020. In addition to not bringing any benefit to the state budget because they do not pay taxes and licence fees, illegal operators also distort the conditions of competition in the gambling market. Companies that operate legally and pay tens of billions of hryvnias annually in licence fees and taxes are simply unable to compete with grey market companies that do not pay any official fees.

In addition, the political situation around the gambling market is structured in such a way that the main attention of tax authorities and other regulatory bodies is focused on legal organisers. They are the ones who are constantly subject to fines and accused of all sins.

All of this seems not to concern illegal operators, because for some reason, they have not been paid serious attention to. In particular, this is most evident in "state" lotteries, which not only do not pay taxes and licence fees for their activities, but also imitate gambling without having any licences or permits to do so. However, it seems that the era of their impunity is coming to an end, as the relevant government agencies have finally paid attention to their arbitrariness.

Recently, the State Special Communications Service of Ukraine issued an order to electronic communication service providers to block the websites of the operators of the national lotteries UNL and MSL. This is how the authorised state body responded to the suspicion of the Bureau of Economic Security of Ukraine, which was announced to the representatives of the two aforementioned lotteries for tax evasion.

Recently, this became the first precedent in Ukraine when law enforcement agencies publicly accused lottery operators of tax and licence fee evasion. This case is very important because it sends two main messages to illegal immigrants and those who support them.

First, whoever is covering up the activities of lotteries and trying to lobby for legislative preferences in the parliament that would allow them to continue to avoid paying taxes and licence fees, lotteries are no longer untouchable.

Secondly, sooner or later, any companies involved in illegal activities in the gambling market must be brought to justice. After all, the key to healthy competition is, first and foremost, the inevitability of punishment for those who violate the rules of doing business set out in the law. Only under fair competition conditions can we talk about the development of the gambling market.

Better late than never - unfortunately, this is the key slogan under which all changes in the legal gambling market in Ukraine are taking place. This undoubtedly slows down the pace of development of the legal gambling market. However, it is good that these important changes have started to take place at all. I sincerely hope that the pace of the fight against lotteries and other illegal activities set by recent events will continue, and the country will have one less global problem in the gambling market.