New licensing conditions for Ukraine's lottery market

Although PlayCity and the Ministry of Digital Transformation declare the development of new licensing conditions, the absence of plans in the government and parliament to change the basic legislation on the organisation of lotteries indicates only the beginning of the change process.

According to PlayCity, new licensing conditions have already been prepared. Currently, the documents are at the stage of public discussion, after which they are planned to be coordinated with other state authorities and approved by a government resolution.

It is worth noting that the current situation is beneficial for shadow operators, who continue to operate without licences, avoiding taxation and regulatory control. Effective changes could create a competitive environment for legal organisers and increase government revenues, but without a legislative framework, they risk remaining unimplemented in practice.

Gennadiy Novikov, head of the state regulator PlayCity, emphasises that the law on lotteries envisaged the adoption of new licensing conditions back in 2013. According to him, they could have been approved both when gambling was banned and in 2021, when gambling was already legalised. However, this did not happen, and lottery activities remained in the shadows and semi-shadows for more than a decade. And this has brought a lot of problems for legal gambling organisers, who cannot do anything about lottery imitation of gambling without paying the relevant licence fees and taxes. It is extremely difficult to compete in such conditions.

The above points are crucial to consider when revising the licensing conditions for lotteries. At this stage, the draft includes elements that simulate gambling, and it permits nearly all aspects of lottery activity. This raises concerns about the level of protection for other market participants, players, and the overall integrity of the market environment. Given the current version of the document, there is a strong likelihood that the conditions were influenced by lobbying from the lottery sector. For this reason, the document should be thoroughly reviewed by experts through public consultations.

In addition, I believe that PlayCity has both the competence and the determination to quickly assess the true status of lotteries and effectively regulate their activities. Clear regulation of the lottery sector is essential to protecting the legal gambling industry from speculative schemes and illegal operations that have been undermining the market for more than five years.

It is also important to recognize that changes to the lottery legislation are necessary, as current laws define imitation gambling. A common tactic of the lottery lobby is to draft licensing conditions based on existing lottery legislation, then claim that “everything complies with the law.” This approach must be addressed. The launch of the lottery segment in Ukraine’s gambling market is a critical step toward greater transparency, a more competitive environment, and increased revenue for the state budget. I hope that the new licensing and taxation mechanisms for lotteries will finally bring this sector into the legal framework and put an end to large-scale illegal imitation gambling. In any case, this is a much-needed step for all market participants. We look forward to the legislative changes and, more importantly, their practical implementation.