The 4H view: Everything you need to know about Ukraine

EGR has partnered with 4H Agency to bring its readers a series of long-form articles on the requirements and key facts and figures for a host of emerging markets throughout the world.

Tapping into 4H’s talent pool of experts, the articles will outline the regulatory framework and entry requirements for interested parties, as well as an insider’s view on how the market could shape up in the coming years.

Here, the series continues with Ukraine, with commentary from 4H’s head of CIS desk and senior consultant, Dmitry Hotsyn.

Market overview

Ukraine, located in eastern Europe, is the second largest country on the continent after Russia. The capital is Kyiv, located on the Dnieper River in northern Ukraine.

As of 2023, it had a GDP of $178.7bn, a population of 37 million people and a Corruption Perceptions Index score of 36 (placing it 104th on the list). These figures not only highlight Ukraine’s challenges with governance and economic development, but also underscore its potential as a growing market in eastern Europe.

Ukraine’s gambling industry has seen dramatic changes over the past two decades. Gambling was officially banned in 2009 after concerns about its social and economic impact. However, this ban drove the industry underground, with illegal operators flourishing and depriving the government of tax revenues.

Recognising the need for reform, the Ukrainian government legalised gambling in 2020. Today, the country’s gambling market, both onshore and offshore, has significant growth potential.

The legalised onshore market includes casinos in designated tourism zones, online gambling and betting operators, while offshore operators still cater to Ukrainian consumers due to lower costs and fewer regulatory restrictions. In 2023, the gambling industry generated approximately $1.4bn – a 28-fold increase from 2022 revenue of $50m.

The combination of a growing legal market and efforts to clamp down on unregulated activities positions Ukraine as a promising hub for gambling in the region. 

However, ensuring compliance, addressing corruption and reducing the appeal of offshore operators will be crucial for sustained growth.

Regulations

Licence types

Ukraine regulates and licenses the following gambling verticals:

Online casinos

Online poker

Land-based casinos

Online sports betting

Slot machines hall

B2B gambling providers

It is important to note that legally, lottery games are excluded from the gambling scope in Ukraine. However, like in every country within the Commonwealth of Independent States (CIS), lottery is under a state monopoly and therefore restricted for interested operators.

Land-based sports betting can be organised only on the basis of an online sports betting licence (as an “additional” licence, see below). The vertical relates to bets on sports or betting on horseracing. 

A horseracing betting licence is issued for only one betting shop, located at a racecourse and can be granted only to the owner of a racecourse.

There are also “additional” licences (ie. casino tables, slot machines, sports betting shops), which shall be licensed in addition to the relevant main licence.

Furthermore, gambling legislation provides for a special “investment” licence, granted for building a five-star hotel with a casino (such licences are free of charge, issued for 10 years and won’t be covered under this overview).

Licence requirements

There are some general requirements applicable to every licence:

Applicants must be registered in Ukraine

Applicants shall not be connected with aggressor countries (ie. Belarus and Russia)

Minimum authorised capital for operating is approximately $730,000; the amount exceeding this threshold can represent securities and other assets, including property rights

Minimum bank deposit or a bank guarantee for the payment of winnings in amount of ~$1.1m

All relevant gambling equipment, including the online system, must be connected to the state online monitoring system

All gambling equipment must be certified prior to use

Servers for online gambling shall be located only in the territory of Ukraine

Separate requirements also differ depending on the type of the licence:

Land-based casinos shall be located only in special “gambling zones” (five- and four-star hotels or in suburban recreational complexes)

For land-based casinos, there is also a minimum number of tables and machines to be operated depending on the city’s population:

10 gambling tables, including at least two roulette tables, and at least 50 gaming machines for cities with more than 500,000 inhabitants

Five gambling tables, including at least one roulette table, and at least 20 gaming machines for cities with fewer than 500,000 inhabitants

Slot machines halls shall be located in three- to five-star hotels with at least 50 rooms in Kyiv, and at least 25 rooms in other cities; minimum of 50 slot machines must be located in one slot machine hall

Land-based betting is permitted in betting shops within three- to five-star hotels with at least 50 rooms in Kyiv, and at least 25 rooms in other cities, as well as within racecourses

Licence costs and taxation

All gambling licences in Ukraine are issued for five years, except for “additional” licences (as specified below), which are issued for the term of the main land-based licence.

Online casinos annual licence fee: ~$1.2m till 31 December 2024

Online poker annual licence fee: ~$970,000 till 31 December 2024

Land-based casinos annual licence fee:

In Kyiv: ~$11.6m till 31 December 2024

In other cities: ~$5.8m till 31 December 2024

Online sports betting annual licence fee: ~$5.8m

Slot machines hall annual licence fee: ~$1.4m till 31 December 2024

Additional licences annual fee:

For roulette table ~$34,400 till 31 December 2024

For other casino table ~$17,500 till 31 December 2024

For slot machine ~$1,100

For sports betting shop: ~$5,800

B2B gambling providers annual license fee: ~$58,400

Gambling tax is as follows:

Online casinos: 18% GGR

Online poker: 18% GGR

Land-based casinos: 18% GGR

Online sports betting: 18% GGR

Slot machines hall: 10% GGR

There is also a general income tax of 18% of revenue. Players’ winning tax is 18% of winnings.

In addition, there is also a military fee tax of 1.5%, which is added to both income and winnings tax.

Advertising restrictions

As of April 2024, almost all gambling advertising in Ukraine was banned. There is no offline advertisement in the country and a lot of restrictions online.

This was due to the implementation of new amendments to the current gambling legislation, which will overhaul the gambling industry. After finalisation of such amendments and implementation of a new law, gambling advertising will be allowed again but regulated more strictly than before.

As an example, previous gambling advertising restrictions include:

Age and vulnerability requirements

Advertising of gambling in publications for children and youth is prohibited

Advertising of gambling on goods (including clothing) intended primarily for persons under the age of 21 is prohibited

Advertising of gambling in places of entertainment, theatre and concert, sports events, sports competitions, and other events for persons under the age of 21 is prohibited

Gambling advertising cannot be aimed at vulnerable groups of people, such as minors, people on low incomes or people suffering from mental illness

Additional restrictions: These prohibitions concern mainly gambling ads in scientific, popular science, educational, socio-political, reference, literary and artistic publications, publications for children and youth, and other publications; in publications and in all printed media; on the external and internal surfaces of vehicles and on the subway; as a means of outdoor advertising.

Sponsorship: Sponsorship of programmes of audiovisual and audio media, theatre and concert and other events, which are intended mainly for persons under the age of 21.

AML and responsible gambling regulations

The AML regulator is the State Financial Monitoring Service of Ukraine.

Ukrainian AML regulations for gambling operators focus on maintaining transparency and mitigating financial crimes. Operators are required to conduct due diligence for significant or suspicious transactions and apply enhanced measures to high-risk or complex financial activities.

Compliance also involves retaining client verification records, nominating responsible personnel for financial monitoring and adhering to strict player verification and exclusion procedures. 

These measures – combined with financial and time limits, responsible gambling practices and staff training – aim to foster a secure and responsible gambling environment.

Namely, there are:

Thresholds for identification of players – licensed operators are required to carry out due diligence checks for suspicious transactions or transactions of more than $1,340

Gambling operators are obliged to store documents, records and data regarding the measures taken to fulfil the requirements in the field of prevention and countermeasures for proper verification of clients, for persons who were denied the establishment of a business relationship and/or the conduct of a financial transaction, and generally all documents relating to business relations (conducting financial transactions) with the client (for five years)

There are also some responsible gambling regulations, such as a player verification system, personnel requirements, age restrictions, self-exclusion provisions, time requirements, financial limits, rules of responsible messaging and responsible gambling training requirements.

Market specifics for entry

Ukraine’s gambling industry is open to both domestic and international investors, with licensing being the primary entry mechanism (open licensing regime).

There are some limitations for the market entry for the interested operators to know. For example, gambling establishments cannot be located in government premises, within 500 metres of educational institutions, inside religious buildings or premises owned by religious organisations.

The market also provides some benefits. In Ukraine, the online sports betting licence is considered as primary. Therefore, by obtaining an online sports betting licence, operators will be able to apply for land-based one.

Secondly, the country’s B2B gambling provider sector remains underdeveloped. A significant number of B2B providers operate without licences. Under the existing framework, only providers with offices in Ukraine are required to obtain a local licence, while foreign unlicensed operators can work without restrictions.

The main feature of the Ukrainian market is that it is young, having opened only in 2020 – and all changes are taking place in real time. Moreover, the military situation in the country also affects the state of the market.

Current numbers of issued licences:

Online casinos: 27

Online poker: three

Land-based casinos: 10

Online sports betting: Six

Slot machines halls: 23

Casino tables: 10

Sports betting shops: One

B2B suppliers: 35

The 4H view

The Ukrainian gambling market is undergoing a significant transformation, driven by legislative reforms and structural changes aimed at modernising the industry and addressing existing challenges.

Current regulatory shifts align with broader reforms initiated earlier in 2024, following a public scandal involving gambling losses among military personnel. 

The incident led to immediate government actions, including restricting military participation, banning gambling advertising and cracking down on unlicensed operators by blocking more than 370 illegal websites. 

The legislative response initially focused on tax reforms, but expanded into a comprehensive overhaul, with the first draft of the new gambling law passed in May 2024.

The upcoming legislation is expected to introduce stricter penalties, mandatory registration for B2B operators within Ukraine, enhanced monitoring mechanisms for advertising and new taxation rules, including an increase in the military fee tax from 1.5% to 5%. 

These changes are designed to foster a safer and more transparent market while addressing loopholes that have allowed unlicensed operators to flourish. Despite these challenges, the Ukrainian gambling market has shown remarkable growth, particularly in the online sector, which now dominates industry revenues. 

Looking ahead, the Ukrainian gambling industry is poised to become more competitive and aligned with international standards. The ongoing reforms aim to balance the interests of operators, players, and regulators while leveraging digital transformation to create a sustainable and profitable market. 

These changes, while ambitious, reflect Ukraine’s commitment to reshaping its gambling landscape into a modern and well-regulated sector.

Dmitry Hotsyn is the head of the CIS desk and a senior consultant at 4H Agency. With a wealth of experience under his belt, Dmitry provides expert guidance on international expansion, mergers and acquisitions and organisational structuring for gambling enterprises.

Before joining 4H Agency, he served as a co-leader of the gambling practice at Ukraine’s largest law firm and worked in an IT-focused investment fund, where he assisted in investment and operational support.