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Market Update: Ukraine (EEGReport Magazine – Issue 5 – February – May 2017)

We are catching up with Iryna Sergienko, CEO of the Ukrainian Gaming Industry Association starting from August 2016 and a Board Member of the All-Ukrainian Union for bookmaking development.


EEG Report Magazine: Hope you are having a good day. What are the latest news and updates regarding the gambling industry in Ukraine?

Iryna: If we talk about the market itself, it continues to operate and grow. Thus, several betting companies entered a marketed in 2016, namely ZirkaBet, UaBet, Fortunalive and others. In addition, the slot machines market began to work again, in fact in public access mode for a consumer. 
However, as to market regulation we have not had any good news so far. At the legislative level, the ban on gambling continues to operate (Law of Ukraine “On Prohibition of Gambling Business in Ukraine”,2009) and the Criminal Code of Ukraine. Currently, all kinds of gambling are prohibited, except for the lottery.
Lottery belongs to the licensed activities (Law of Ukraine “On Licensing of Types of Economic activity”, 2015), but due to lack of license provisions, no one is issued a license yet.

EEG Report Magazine: Has the situation in Eastern Ukraine influenced anything in this gambling industry?

Iryna: If the situation in the East has affected the industry development, it is hardly noticeable. The industry is developing and gathering pace. To the best of my knowledge, regardless of inflation processes of 2014-2016 gambling operators completed 2016 quite successfully.

EEG Report Magazine: What is the opinion of the population regarding gambling and luck games?

Iryna: It is really a difficult matter. Ban of gambling business was accompanied by a significant PR aimed to develop an invincible belief of the population that gambling is evil. Therefore, if we talk about the average citizen of the country, the majority would be rather against legalization than for it. Many people are gambling, but they prefer to keep it out of the public eye.
However, I must say that in recent years, due to the active work aimed to legalize and regulate the gaming industry, the situation has been fundamentally changed. If three years ago, the majority of representatives of the authorities and mass media chose to bypass this issue, now the authorities, mass media and the best part of progressive community start to realize that the prohibition of gambling is not effective and that it will be the market regulation which will help protect the interests of the socially vulnerable categories of citizens (children, people prone to gambling addiction). 
Nevertheless, we are still to do much work in this direction. Changing public opinion about gambling will take a lot of time.

EEG Report Magazine: Are there any new laws or regulations that will soon be applied? If so, tell us something about them.

Iryna: The most likely scenario for 2017 is the following: There is a good chance, that the Ministry of Finance of Ukraine will take licensing provisions for the lottery market and will begin to issue licenses on carrying out of the lottery, not being able to delay this issue any more. Much will depend on exactly what kind of license terms will be offered to operators. If the license terms include such types of lottery as “sports lottery” and “moment lottery’ (as it was in accordance with the previous licensing conditions), then in fact lottery operators will have the right to conduct betting and slot machines business under the names of “Sports Lottery” and ” Moment lottery”. The issue of the possible market monopolization also remains a matter of importance (creating an oligopoly). 
For our part, we are ready and will be involved in the development and discussion of any initiatives aimed to change the unhealthy gambling market situation prevailing now, but we are going to adhere to the consistent position that in order to create the conditions for formation of a civilized market of the gaming industry in Ukraine, the issue of gambling legalization should be resolved through the adoption of the law.

EEG Report Magazine: How are the Ukrainian relationships, regarding the industry, with the rest of the European countries?

Iryna: I have to state the obvious – the Ukrainian market of gambling business today is not a full-fledged participant of the global gambling market and it is developing in quite an isolation under its own rules.
At the same time, a Ukrainian player is quite a progressive one and has the ability to play almost at any online operator.

EEG Report Magazine: Can you give us a few examples, regarding the near future of the industry, and how it will be shaped?

Iryna: I will not answer this question yet. There are many oppositely directed interests around the issue of gambling legalization. It could be a help and a hindrance. A hindrance, because it is difficult to promote healthy initiatives in the interests of the society and the country. A help because every potential market participant, having serious intentions and willingness to engage in the dialogue, can engage in the dialogue aimed to change the situation and legalize the industry.

EEG Report Magazine: If you could change anything regarding the laws and the gambling industry in Ukraine, what would you change?

Iryna: Our legislation requires fundamental changes. It is an extensive issue and requires much time to speak about. However, if we talk about the key elements, then our vision assumes that:

1) all kinds of gambling must be legalized and regulated, taking into account the specific character of each of them,

2) gambling (luck games) and non-gambling games (skill games) must be clearly distinguished,

3) online gambling must be legalized, and

4) online gaming must be controlled by the state in the same way as off-line gaming,

5) effective mechanisms to protect legal operators from unfair competition in the online space must be put in place, in particular at the level of financial institutions and payment websites,

6) fiscal load must be set taking into account marginality of each kind of gambling and its localization,

7) requirements to operators must be based solely on the need to ensure stability in the market and maintain its reputation, there must be no artificial restrictions aimed at monopolization of the market by separate subjects,

8) effective mechanisms for socially responsible gaming shall be provided and implemented, as well as

9) progressive mechanisms to monitor the activities of operators, including technological processes related to the correct hardware and software operation.

EEG Report Magazine: What is in your opinion, the most important factor that could contribute to the evolution of the gambling industry?

Iryna: I believe that the only way that can be ultimately successful – it is consolidation of efforts and resources of all stakeholders who want the gaming industry in Ukraine to revive, become reputable and have a stable development as the sector of economy. Association will enable us to join the public and open dialogue with the authorities and the community with a single, powerful position. The Ukrainian Gaming Industry Association was founded as a platform for such a dialogue.