Gambling business legalization in Ukraine and its prospects for fintech
For 11 years, gambling has been banned in Ukraine. Cyberpolice and the National Bank had been trying to prevent the servicing of financial transactions related to gambling and online casinos all this time. The regulator reminded banks and payment systems of gambling ban in Ukraine.
But on Tuesday, the Verkhovna Rada passed a law on the gambling legalization. Yes, it should still be signed by the President. Yes, there are draft laws for its abolition. However the precedent has already been created.
According to the text of the legislative draft, the organization and conduct of casino gambling, betting and poker gambling is permitted not only in gambling houses, but also online (remotely). The law provides for the necessary restrictions on the gambling business operation. However, the gambling legalization has much more advantages than its ban, which certain groups of people managed to evade, and all the profits passed by the budget. The work of such a large sector in the legal field will stimulate the development of the economy.
The Cabinet expects the replenishment of the country’s budget by ₴2–2.5 billion. And it’s not just about licensing revenue. With the background of possible legalization investors are already interested in Ukrainian gambling market developed, but previously illegal.
What are the prospects for fintech?
First of all, the possibility to create legal projects in this industry. A significant increase in demand for payment system solutions will be a push for the product diversification and enhancement. The features of the gambling business will require payment platforms new payment solutions.
The second is security. The highest security level and transactions monitoring are essential for gambling industry, which will contribute to the expansion of anti-fraud solutions variety. And an increased competition due to the new players on the market will contribute to the development of better products.
Third, the overall increase in the competitiveness of Ukrainian fintech. The gambling business legalization will not only reduce the level of the shadow economy, but will also affect the business ecosystem. The correct government regulation and effective interaction will allow all industry participants to profit and expand. The gambling software development, its support, adaptation, and the launch of licensed online casinos on different platforms are far from a complete list. It isn’t even worth mentioning about boost for advertising agencies and platforms.
In many countries with strong economies, gambling is legalized and generates significant profit. Take for example the United Kingdom. During the period October 2018 to September 2019, the regulated gambling industry in Great Britain generated a gross gambling yield (GGY) of £14.3bn, £5.5 bn of which was revenue from the online (remote) gambling. And gaming and betting tax income amounted to £2.99 bn.
The part of this revenue in the form of taxes was forwarded to the state budget: for schools, hospitals, which felt underfunding to the full extant during the coronavirus, etc. Furthermore, it is possible to track cash flows and identify users. The operation of such a large sector online will promote the cashless economy growth in Ukraine.
Gambling is perceived negatively in our country. This is the Soviet inheritance of “bourgeois games” stamping, and the influence of those who benefits from the gambling illegal status. Although it should be beneficial to the state budget to Ukrainian citizens.
Yes, gambling occasionally leads to bad consequences, and it is sometimes difficult to get rid of gambling addiction. But the ban on gambling has not yet eradicated it. As well as a National Prohibition Act did not cure alcoholism, but only pushed for the bootlegging. The USA and the USSR two completely different countries tried it with the same results.
In many countries, where gambling is legalized, there is the low level of gambling addiction and the healthy sphere functioning is established by virtue of implemented regulatory standards and preventive measures. The fintech will only benefit from this: big companies new offices in Ukraine, new developers staff. These are new jobs and all new taxes to the budget. Exactly what a country that wants to overcome the crisis needs.