The editor has observed that coverage of the Eastern European gambling market is infrequent. In recent years, the international gambling industry has been growing rapidly, especially due to rising demand in Asia, Southeast Asia, and Latin America, which has significantly increased the industry's value. When discussing the Eastern European gambling market, it is essential to mention Ukraine. A few years back, around 2020, during the pandemic, many companies were considering relocating their operations to Ukraine. However, following the onset of the war in Ukraine, many of these companies abandoned that idea. Now, while some companies are stepping back, Ukraine has taken the opportunity to attract gambling operators by liberalizing its gambling policies. What gambling platform operators might seek here is not just a localized market in Ukraine, but a legitimate license and a stable operational base. After all, Ukraine’s new gambling regulations offer a variety of licenses, including iGaming, land-based casinos, sports betting, and lotteries, allowing international companies to enter the market and establish legal gambling operations. Therefore, today, the editor from TC-Gaming White Label will discuss the Eastern European gambling market, focusing on the Ukrainian gambling market and its range of gambling licenses.

Overview of Ukraine

Geography of Ukraine

Ukraine is a country located in Eastern Europe with rich geographical features and strategic significance. As the second-largest country in Europe, following only Russia, Ukraine covers an area of about 603,500 square kilometers, approximately the size of France.

Ukraine’s geographical location is unique, sharing borders with several countries. To the east, it shares a long border with Russia; to the north, it neighbors Belarus; and to the west, it is connected to Central European countries such as Poland, Slovakia, and Hungary. Ukraine's southern coast borders the Black Sea. This location makes Ukraine a crucial hub connecting Europe and Asia, historically serving as a crossroads for Eastern and Western civilizations.

Population, Language, and Religion in Ukraine

• Population: Ukraine has a total population of about 37.42 million, with women making up 54.3% and men 45.7%. Around 70.2% of the population resides in urban centers, while 29.8% lives in rural areas. Most people are concentrated in the capital city, Kyiv, as well as in major cities in the east and south, such as Kharkiv and Odesa. From early 2023 to early 2024, Ukraine's population grew by 1.4 million (+3.7%).
• Average Age: The average age in Ukraine is 44.3 years. The age distribution is as follows: 0-4 years: 3.5% 5-12 years: 9.0% 13-17 years: 5.9% 18-24 years: 4.4% 25-34 years: 9.7% 35-44 years: 17.0% 45-54 years: 15.4% 55-64 years: 15.0% 65 years and older: 20.1%
• Language: Ukrainian is the official language, but Russian is widely spoken in the eastern and southern regions, especially in large cities like Kyiv.
• Religion: Eastern Orthodoxy is the predominant religion, followed by Catholicism.

Per Capita Income in Ukraine

Ukraine's per capita income is considered moderate to low within Europe, with a GDP per capita of approximately $4,000 in 2023. Despite this, Ukraine’s economy has shown rapid growth in recent years, leading to gradual improvements in living standards. The government is actively promoting economic modernization reforms to bridge the gap with Western European countries.

Internet Status in Ukraine (As of January 2024)

• Ukraine has 29.64 million internet users, with a penetration rate of 79.2%. Between 2023 and 2024, the number of internet users increased by 1.1 million (+3.7%).
• There are 24.3 million social media users in Ukraine, accounting for 64.9% of the population. However, from 2023 to 2024, the number of social media users decreased by 2.4 million (-9.0%).
• Ukraine has 55.64 million active mobile connections, equivalent to 148.7% of the population.
• Mobile Network: 24.83 Mbps
• Fixed Network: 73.68 Mbps

History of Gambling in Ukraine

The history of Ukraine’s gambling industry dates back to the dissolution of the Soviet Union. With Ukraine declaring independence in 1991, gambling gradually began to be legalized. However, the country faced numerous challenges and instabilities economically and politically, resulting in a complicated development path for the gambling industry. During this time, gambling underwent many ups and downs, with frequent policy changes and a market environment that alternated between lenient and strict regulations. This volatility persisted until recent years, when, with increased stability and improved regulatory experience, Ukraine's gambling industry started to become more standardized and mature.

Early Development and Rapid Growth of Gambling in Ukraine

After Ukraine gained independence in 1991, its gambling industry began to take root and grow rapidly. Casinos, lotteries, and various forms of gambling activities gradually became common entertainment for Ukrainians. By the early 2000s, the gambling industry experienced an explosive growth phase, with numerous gambling establishments and gambling machines appearing across the country, making gambling common in both urban and rural areas.

However, this rapid growth brought a series of issues. Due to the lack of effective regulation and clear policies, the industry quickly fell into a state of disorder. Unlicensed and unregulated gambling activities became widespread, leading to numerous social problems and creating significant negative impacts on Ukrainian society. As these issues worsened, the Ukrainian public began to express strong dissatisfaction with the lack of control over the gambling industry.

2009 Gambling Ban in Ukraine

In 2009, the Ukrainian government imposed strict restrictions on gambling due to public safety concerns. The catalyst was a tragic casino fire that resulted in 10 deaths and 11 injuries, including six people with severe burns and five suffering from gas poisoning. This incident shocked the entire nation and raised widespread concerns about the safety management within the gambling industry.

Following this event, the Ukrainian parliament passed a law that broadly banned all forms of gambling, including traditional casinos, slot machines, and emerging iGaming platforms. However, despite the official enforcement of the ban, illegal gambling activities did not disappear. Instead, they went underground, increasing criminal risks and limiting the government’s ability to protect citizens involved in gambling. The shift of gambling activities to the black market also resulted in a loss of significant tax revenue, impacting the national economy.

The 2020 Gambling Law and Industry Revival

After more than a decade of prohibition, the Ukrainian government announced a comprehensive reform in 2020 by enacting the new Gambling Law, marking the re-legalization of gambling. This reform aimed to regulate the market, boost tax revenue, and attract foreign investment. The new legislation legalized various forms of gambling, including casinos, iGaming, sports betting, and lotteries. It also established the Ukrainian Gambling and Lottery Commission (KRAIL) to oversee licensing and market regulation, with the government adopting an open stance toward international operators. The re-opening of the gambling market brought foreign investment, created job opportunities, and stimulated economic growth in Ukraine. By establishing transparent and strict policies for licensing and regulation, the government aimed to ensure a sustainable, well-regulated gambling industry that could also support the local economy.

Current Status of Gambling in Ukraine

In recent years, Ukraine has made significant progress in legalizing and regulating the gambling industry. Since implementing the 2020 Gambling Law, the country has emerged as a noteworthy market in Eastern Europe, drawing attention from global operators. Ukraine’s transparent regulatory policies and licensing system are designed to attract foreign investment, bolster economic growth, and ensure industry sustainability. These policies present a prime opportunity for global operators to enter a new market. The international gambling industry has been expanding rapidly, with market growth driven by regions such as Europe, Africa, Asia, and Latin America. This expansion is further encouraged by restrictions in other markets, such as the Philippines' prohibition on POGO (Philippine Offshore Gambling Operators) and China’s crackdown on illegal gambling. These factors have shifted attention to Ukraine, where policies are relatively lenient and the market has substantial potential.

The editor from TC-Gaming has gathered some recent news about gambling in Ukraine, which can serve as a reference for all gambling industry leaders.

• June 2024: The Ukrainian gambling regulatory body, the Gambling and Lottery Regulatory Commission (KRAIL), has blocked 371 websites offering illegal gambling in the country.
• April 2024: The Ukrainian parliament, the Verkhovna Rada, voted to dissolve the Gambling and Lottery Regulatory Commission (KRAIL).
• April 2024: The Ukrainian gambling regulator (KRAIL) received 194 gambling-related license applications in the first quarter of 2024. (Out of these 194 applications, 152 licenses were granted, including 138 gambling machine licenses, 3 licenses for providing gambling services, 9 table game licenses, and 1 each for iGaming and roulette table licenses.)
• August 2023: The Ukrainian parliament reinstated an 18% business tax on the gambling industry, noting that the gambling tax was 10% in July 2021.

Among the news, one item that may concern industry leaders is the decision made in April this year by the Verkhovna Rada to dissolve the Gambling and Lottery Regulatory Commission (KRAIL). If this measure passes, it could lead to significant changes in the governance and regulation of the gambling industry in Ukraine. The rationale behind this proposal is to "better protect the military from the harmful effects of gambling."

This discussion follows a petition initiated by soldier Pavlo Petrychenko at the end of March. The impact of gambling on Ukrainian wartime society has become a focal point of debate in recent months. On April 2, the Ukrainian president addressed the nation, tasking authorities with preparing conditions to "strengthen control over the country's gambling industry." It seems that the need for funding during wartime is a significant factor.

Over the past year, the regulatory approach to Ukraine's gambling industry has faced opposition. KRAIL operates as a collegiate body, consisting of a chairman and six members. Meetings are only valid if five members are present, which is necessary for licensing applications. Due to the ongoing war, some committee members have been drafted, hindering KRAIL meetings and delaying regulatory activities, including license issuance.

Despite the uncertainties in governance and regulation, Ukraine's gambling industry remains an emerging and potentially lucrative market. Its openness to policy changes and flexible legal environment continue to attract significant investment from international operators. In the context of war, gambling revenue has become an important means of supporting Ukraine's economy and finances. The Ukrainian government may continue to adjust and optimize gambling policies to balance regulation and revenue generation, aiming to establish a foothold in the global gambling market.

Overview of Gambling Licenses in Ukraine

Before 2020, gambling activities in Ukraine were strictly prohibited, and the entire industry operated underground. However, with the passage of a new gambling law, the Ukrainian government recognized the importance of regulating the gambling industry and established a comprehensive legal licensing system. The strategic goal of the Ukrainian government is to achieve breakthroughs in multiple areas by implementing transparent gambling policies and strict licensing management. First, these measures aim to attract domestic and foreign investment, injecting new vitality into the Ukrainian economy. Second, through standardized management, the government hopes to promote the healthy development of the entire gambling industry and contribute to national economic growth. To ensure the healthy development of the gambling industry, the Ukrainian government established a dedicated Gambling Regulatory Authority (KRAIL), which is responsible for overseeing all domestic gambling activities and has the authority to issue legal gambling licenses.

Types of Ukrainian Gambling Licenses

1. iGaming License: Includes iGaming sports betting, casinos, and lotteries, suitable for operators wishing to enter the iGaming market.
2. Land-Based Casino License: Designed for physical casinos, which can operate within designated hotels or resorts.
3. Sports Betting License: For betting on sports events, available in both land-based and iGaming formats.
4. Lottery License: Suitable for traditional lottery operations, which can be sold through physical stores or iGaming.

Requirements for Operating Physical Gambling Venues in Ukraine

When operating a physical gambling business, hiring employees is essential. For example, a minimum of 50 employees is required for a physical casino in Ukraine. This is a significant distinction between managing a physical casino and an iGaming business.

Casinos

• The hotel must have at least 150 rooms in Kyiv and at least 100 rooms in other regions.
• The gambling area must be no less than 500 square meters.
• Minimum equipment requirements include at least 10 gambling tables, with at least 2 being roulette tables, and 50 slot machines (for cities with a population over 500,000); for small towns and rural areas, at least 5 gambling tables, with 1 being a roulette table, and 20 slot machines are required.

Slot Machine Halls

• The hotel must have at least 50 rooms in Kyiv and at least 25 rooms in other regions.
• The area of the slot machine hall must be no less than 300 square meters.
• At least 50 slot machines must be provided.

Retail Sports Betting Shops

• Sports betting shops must be located in three-star or higher hotels, with at least 50 rooms in Kyiv and at least 25 rooms in other regions.
• Shops offering horse racing betting should be located within racetracks.
• The gambling area of sports betting shops must be no less than 50 square meters.

Costs of Ukrainian Gambling Licenses

To operate a physical gambling business in Ukraine, a gambling license must be applied for and obtained. Applicants need to register a legal address in Ukraine and provide tax, payment, and accounting information, as well as the identities of shareholders and ultimate beneficiaries. License fees vary by type and region. As of October 2024, the Ukrainian government has issued 10 licenses for physical casinos, 15 licenses for slot machine halls, and 1 license for a retail betting shop. After obtaining a license, operators can conduct both offline and iGaming businesses simultaneously.

• The license fee for opening a physical casino in Kyiv is $9.2 million.
• In other cities, it is $4.6 million.
• The license fee for a slot machine hall is approximately $1.62 million.
• The license fee for betting operations is about $6.5 million.

Ukrainian Gambling Taxes

The total gaming revenue (GGR) tax rate for physical casinos and betting shops is 18%, while the tax rate for slot machine halls is 10%. Additionally, all operators must pay an 18% corporate income tax applicable to all industries.

Requirements for Ukrainian iGaming Licenses

The requirements for operating iGaming businesses differ from those for physical operations, but iGaming offers operators extensive possibilities. Online casinos are not restricted by specific geographical locations, allowing gambling platform operators to expand their target markets beyond Ukraine and attract a global audience (essentially acting as offshore gambling).

• Gambling companies must be registered in Ukraine.
• Operators must provide documentation indicating the domain name of the iGaming platform or betting website (.UA), which must be registered in a special register of the Ukrainian regulatory authority KRAIL.
• Software must connect to an online monitoring system, comply with international standards and certifications, and meet technical documentation requirements.
• Operators must have a registered capital of 30 million Ukrainian hryvnias and deposit a bank guarantee of 34 million hryvnias.

Costs of Ukrainian iGaming Licenses

Operators applying for an iGaming license must submit documentation including the company’s legal address, tax records, payment and accounting information, and information about shareholders and ultimate beneficiaries.

• The license fee for an iGaming platform is 39 million hryvnias (approximately $1.4 million) and is valid for 5 years.
• For betting websites (such as sports or lotteries), the license fee is 180 million hryvnias (approximately $6.5 million), valid for 5 years, allowing holders to organize both offline and iGaming betting operations.

Ukrainian iGaming Taxes

iGaming and betting businesses in Ukraine are taxed at 18% on total gambling revenue (GGR), similar to physical operations. Operators must also pay an 18% corporate income tax.

Additionally, players' winnings are subject to an 18% tax, along with a 1.5% military tax, which applies to all types of income.

Daily Expenses in Ukraine

Housing Costs in Ukraine:

• Rent: In central Kyiv, the monthly rent for a one-bedroom apartment is approximately $500 to $700; in suburban areas, it ranges from $300 to $500.
• Utilities: Including electricity, water, heating, and garbage disposal, the average monthly cost is about $100 to $150, depending on the season and usage.
• Internet: Home broadband costs about $10 to $20 per month, depending on the provider and package.

Transportation Costs in Ukraine:

• Public Transport: A single ticket costs about $0.30, while a monthly pass is about $10 to $15.
• Taxi: The starting fare is about $2, with an additional charge of about $0.50 per kilometer.

Dining Costs in Ukraine:

• Fast Food: A meal at fast food chains like McDonald's or KFC costs about $4 to $6.
• Mid-range Restaurants: A three-course dinner per person costs about $15 to $25.
• Coffee: A cappuccino costs about $1.5 to $2.

Other Expenses in Ukraine:

• Gym Membership: Monthly fees range from $20 to $40.
• Movie Tickets: A ticket costs about $4 to $6.

Issues and Challenges Facing Ukraine's Gambling Industry

Security and Safety

Due to the ongoing military conflict, certain regions in Ukraine face severe security challenges, particularly in the eastern and southern areas. This situation not only affects the daily lives of local residents but also significantly impacts business activities. Although the capital, Kyiv, is relatively safer, there remains a potential risk of airstrikes, keeping the entire city in a state of high alert. In this complex environment, gambling operators must prioritize the safety of their employees and customers alongside business operations. To address this, gambling companies need to develop comprehensive and detailed security plans, including establishing emergency evacuation procedures, enhancing physical security measures, implementing cybersecurity protections, and providing employee safety training. This approach can quickly and effectively safeguard personnel and assets.

Recruitment

The war has led to a severe labor shortage in Ukraine as many male citizens have been drafted into the military. As a result, companies are increasingly recruiting women and young people to fill vacant positions. The ongoing conflict has also triggered a talent drain, with many highly skilled professionals, particularly those in IT and finance, leaving Ukraine for safer and more stable work environments. This talent exodus exacerbates the challenges of recruiting skilled workers, especially for roles requiring specialized expertise. Gambling companies face dual pressures of retaining existing talent and attracting new talent amid these circumstances.

Infrastructure and Transportation

The war has caused extensive damage to Ukraine’s transportation network and infrastructure. While transportation systems in major cities are still functioning, their stability and reliability have significantly declined. Frequent air raid warnings, road damage, and fuel shortages have made travel unpredictable, affecting daily life and creating additional challenges for gambling platforms’ operations. To ensure business continuity and operational efficiency, gambling operators need to undertake additional measures.

Psychological Impact

The prolonged conflict has placed immense psychological strain on employees, leading to issues such as anxiety, depression, and post-traumatic stress disorder (PTSD). These mental health challenges not only affect employees’ quality of life but may also impair their work performance. Employees may struggle with concentration, decision-making, and motivation, resulting in decreased productivity. Over time, this state can impact both personal career development and the overall productivity and performance of gambling companies.

Legal and Regulatory Challenges

The war may lead to significant changes in the legal and regulatory environment. In times of upheaval, government functions may become severely limited, introducing uncertainty into the regulatory framework of the gambling industry. This instability can affect the enforcement of existing regulations and could result in the introduction of new, potentially stricter or more relaxed rules. For gambling operators, this uncertainty heightens operational risks, as they may face sudden policy shifts, changes in licensing procedures, or restructuring within regulatory bodies. Consequently, gambling companies need to remain vigilant and prepared for potential legal and regulatory changes.

Economic Uncertainty

The war has profoundly impacted Ukraine’s economy, causing a sharp decline in consumer spending and a notable contraction in market demand. This economic shock is altering current consumer behavior patterns. The prolonged conflict also threatens the stability of Ukraine’s financial system, potentially leading to issues such as liquidity shortages in banks and currency devaluation, which could disrupt the normal functioning of the financial sector, including critical areas like cash flow and payment processing. Financial instability could directly impact the daily operations of gambling businesses.

Summary

In recent years, Ukraine has made significant progress in legalizing and regulating its gambling industry, becoming a highlight in the Eastern European gambling market following the 2020 gambling reform law. However, the appeal of the Ukrainian market is tempered by significant uncertainties, primarily due to ongoing military conflict, security risks, infrastructure damage, and evolving legal and economic environments. The war’s impact on infrastructure directly disrupts normal business operations, such as the instability of transportation networks, which affects logistics and personnel mobility. Security threats also pose risks to employees and operational sites, necessitating additional safety investments by operators.

On the legal front, the war has led to frequent adjustments in Ukraine’s gambling regulations. For example, discussions around disbanding the gambling regulatory commission (KRAIL) and changes in gambling taxation have intensified the regulatory risks faced by gambling operators. Additionally, the economic volatility caused by the war complicates revenue forecasting and risk assessment for gambling operations.

Despite these uncertainties, Ukraine remains attractive to international gambling operators due to flexible policies and significant market potential. The Ukrainian government seeks to attract foreign investment through the liberalization of the gambling sector to stabilize its economy, but achieving a balance between economic stimulus and policy stability will be a long-term challenge.

TC-Gaming, with 17 years of experience as a provider of gambling platform solutions, understands the dynamics and demands of international gambling markets. TC-Gaming offers clients comprehensive localized support and flexible solutions, from technical support to customized payment systems, helping clients smoothly enter the local market and adapt to its regulatory and market environment. Additionally, TC-Gaming provides multilingual service modules and regional language experts to help clients optimize user experiences based on the characteristics of target gambling markets, ensuring seamless integration of gambling platforms with local markets.

TC-Gaming also closely monitors global gambling market trends, particularly the legal and regulatory changes in emerging gambling markets. The company not only provides clients with market analysis and insights but also continuously optimizes its platform solutions to meet market demands, helping clients maintain competitiveness in complex and changing gambling market environments. Through professional and flexible services, TC-Gaming has become a reliable partner for international gambling operators entering new and emerging gambling markets worldwide.