Recently, the Ukrainian government announced its intentions to reintroduce legal gambling in an attempt to capitalize on the economic benefits amidst a poor economy. By establishing a legalized gambling system Ukraine hopes to qualify for financial assistance from the International Monetary Fund (IMF).
A letter signed by the president, prime minister, and finance minister of Ukraine presented the details of plan that would bring legal gambling back to the country since prohibition was introduced in 2009. The letter was sent by the Ukraine Ministry of Finance to the IMF following the IMF hinted they would not be able to continue providing financial assistance.
Earlier this week Ukraine received the first $1 billion installment of a package that has an estimated worth of $17.5 billion as part of a series of economic reforms. After a recent review of the country’s economy, the IMF was quoted as saying it must “break with the legacy of weak governance and stop-and-go reforms” in order generate sustainable growth. Ukraine’s recent economic struggles are no secret and have lasted a couple decades. The most recent economic bombshell took place in 2014 when the country’s revolution led to the overthrowing of the pro-Russian President Viktor Yanukovich and the Russian annexation of Crimea.
Legislation to legalize gambling was originally introduced in 2015 and proposed the construction of land-based casinos, while legalizing sports betting and a new national lottery. Like many countries in the world, Ukraine also looked to introduce online gambling. The original figures projected by the government suggested that the legalization could generate nearly $1.5 billion a year. However, operators opposed the legislation saying that the licensing fees and taxes were much too high. Most recently, the government suggested that delays in legislation have caused the nation to miss out on $370 million on gambling tax revenue.
If the proposed legislation was anything like the current government plans on lottery tax, then they may have been correct in opposing it. Reports say that the government plans to tax its current state lottery operators at the rate of 18% in 2017. In 2018 the tax will rise to 24%, increasing two percent each successive year until 2021 when it reaches an outrageous cap of 30%. Late last year the Ukrainian Gaming Industry Association was created in an attempt to help the government create a more appropriate legislation. The Ukrainian Gaming Industry Association is made up of individuals who are local industry stakeholders and represent the operators concerned with licenses and taxes of future gaming facilities.
If Ukraine hopes to capitalize on revenue from a proposed gaming industry then they must act quickly. Just across the border, in annexed Crimea, there are plans to create Russia’s newest “gambling zone.” Crimean Prime Minister Sergey Aksyonov says the proposed gambling zone is designed to operate outside of the international economic sanctions imposed on Russia. If these plans come to fruition, it is possible that international tourists could be drawn to the city of Yalta, rather than Ukraine.