Why does the criticism of legal gambling continue despite all the success of the reform?

Feb 21, 2022peter

Anton Kuchukhidze, Chairman of the Ukrainian Gambling Council

Even though the gambling sector had a substantial positive effect on the Ukrainian economy after its legalization at the end of 2020, we still come across dozens of media publications and “analytical” pieces criticizing the industry. Opponents of the reform claim that legalization of gambling failed to bring planned revenues to the state budget, the profile draft law on taxation 2713-д will decrease the taxation of the gambling business and numerous technical issues remain unsolved. Why do these manipulations take place? Let’s take a closer look.

Since the issuance of the first gambling license at the beginning of 2021, the state budget received over 1.7 billion hryvnias in license payments only. Experts estimate the overall cumulative effect for the Ukrainian economy from the interaction of legal gambling operators with other businesses at 30 billion hryvnias.

Furthermore, licensed gambling companies created thousands of new jobs and invested hundreds of millions of dollars in the development of their and related businesses. The state started actively combating illegal gambling operators, and promoting the implementation of responsible gambling principles. Hundreds of illegal gambling halls have been closed and thousands of websites were blocked.

Considering the abovementioned, there is no need to be an expert in economics, state management or gambling to understand that the reform has brought significant positive results to the state budget and overall business environment within just one year. Furthermore, if you consider the conditions under which the formation of the legal gambling market took place, these results can be even regarded as outstanding.

Still, we see much criticism of the reform in the media. Numerous publications and experts are spreading provocations that the reform has failed and that gambling should be banned again. From my point of view, there are two main reasons for these, and both of them are purely political.

1. The success of the reform bothers representatives of the political opposition. Some politicians, members of Verkhovna Rada and lobbyists of the lottery business just cannot accept that the authorities in power managed to conduct a complicated reform that brought billions of hryvnias to the national economy. Thus, they initiate media campaigns criticizing gambling legalization and compromising the efforts of the government in this regard. Their main aim is to abolish the achievements of the legal market and make licensed operators close their business or resort to the gray gray-market operations.

2. The second reason lies within the legislative domain and concerns the adoption of the profile draft law 2713-д on gambling taxation. The thing is that in the process of gambling legalization the state authorities took all necessary steps except for one – balancing the tax burden on the legal gambling business. This step turned out to be critical for the complete success of the reform. Until it’s taken, the reform opponents will continue to claim that it failed since the market can’t operate properly without clear taxation rules.

Opponents of gambling legalization don’t consider the risks that the abolition of the reform may have. It seems that the increase in the number of illegal gambling halls and platforms, absence of player identification and non-observance of responsible gambling principles, cutting of license, tax, and other allocations to the state budget, decrease of the overall economic activity is considered a “fair price” for the reform’s abolition by its opponents.

It’s more than clear that to complete the reform and enable the full-fledged development of the gambling market it’s crucial to adopt 2713-д as soon as possible. It will not only stimulate legal gambling operators to develop their business but will significantly decrease the options of the reform opponents to conduct media attacks on it.