Ukraine’s lottery licensing application window closed on December 29, without attracting any new companies. The country’s three existing operators submitted their applications for permit renewal. The new permits will be valid for the duration of martial law, plus one year, not exceeding three years, during which time the government will revise lottery market regulations.
Ukraine Receives Lottery Permit Applications from All 3 Existing Operators: Quick Summary
- Ukraine’s gambling regulator, PlayCity, had announced the licensing competition window in early December. All three incumbent operators, M.S.L. LLC, Ukrainian National Lottery (UNL), and PJSC Patriot, have applied for a permit.
- Rather than a 10-year term, the new licences will be valid for the duration of the martial law, plus one year, not exceeding three years. The limited time will enable authorities to revise lottery regulations.
- Licensees need to abide by strict competition rules and legislative restrictions, which made applications from new operators unlikely. Permits previously issued by the Ministry of Finance expired between 2013 and 2014.
Legislative Restrictions to Dissuade New Lottery Applications
PlayCity, Ukraine’s state agency for lottery regulations, closed its licence application window on Monday, December 29. All three incumbent operators, M.S.L. LLC, Ukrainian National Lottery (UNL), and PJSC Patriot, have submitted applications for renewing their permits.
The Ukrainian gambling regulator had opened the lottery licensing window in early December. No new domestic or foreign operator has participated in the competitive auction. However, authorities had anticipated this development, as existing legislative restrictions impose several strict requirements for the current era of martial law.
Speaking to local media outlets, Hennadiy Novikov, the head of PlayCity, said that the licensing process was unlikely to attract new lottery operators due to legislative restrictions. However, the situation will likely improve in the future. He also explained that the new permits will be valid for the duration of the martial law, plus one year, not exceeding three years. This will allow the government sufficient time to revamp lottery regulations.
Novikov stated:
Licenses will be issued not for 10 years but for the duration of martial law plus one year, though not exceeding three years. This gives the Ministry of Digital Transformation and parliament time to revise lottery market regulation, propose new rules, and relicense the market under an updated approach with the possibility of attracting international companies.
The latest licensing process was significant since the previous permits issued by the Ministry of Finance had expired between 2013 and 2014. As a result, gaming operators have not paid a licensing fee to the government for all these years. The three operators will collectively generate UAH 67 million (roughly €1,364,465) in licensing fees for the state.
PlayCity Introduces High Market Entrance Barriers and a Reformed Regulatory Framework
The gambling watchdog has deliberately laid out extensive and operationally demanding requirements for the applicants. The licensing conditions include:
- Active, separate subdivisions in every Ukrainian city with a population exceeding 500,000
- Lottery distribution points in every locality with a population of over 5,000, totalling no fewer than 5,000 points of sale (POS)
- Websites with a .UA domain name
- An electronic betting acceptance system
- At least 5,000 electronic betting terminals owned by the applicant
- At least three years of cumulative experience in organising and conducting state lotteries
In April, PlayCity took over the responsibilities of regulating online gambling operations in Ukraine from the Commission for the Regulation of Gambling and Lotteries (CRGL). Ukraine’s Ministry of Digital Transformation announced the establishment of the new regulator following serious allegations of corruption and the unchecked growth of offshore gaming platforms.
Since PlayCity assumed its regulatory responsibilities, several reformative steps have been enforced. In September, Ukraine launched a real-time gambling monitoring system for tracking illegal bets and gambling sites. Individuals from the regulated gambling industry and Ukrainian tech professionals collaborated to design this software and protect consumers from Russian casinos siphoning money to fund the war against Ukraine.
PlayCity is proactively working to open the Ukrainian online gambling market to reputable international operators. Novikov noted that the regulator is framing new guidelines to enable fair competition, and the reforms will be implemented within the next few years.
Novikov observed:
Opening the market to everyone is my personal position. I don’t know what the final decisions will be. But I believe the market should be open not only to companies with previous experience in lotteries, and not necessarily only to state-owned ones.
He also believes that systematic changes are required for effective oversight. While lottery operators currently report to the Treasury, the reports do not include those of instant lotteries.
Novikov explained:
Two of the three existing operators simply installed their computers at the State Treasury: in one case, a laptop, in another, a desktop PC, and gave a Treasury employee the password. Once a day, the employee logs in, clicks ‘generate’, and produces a report.
Novikov also emphasised the importance of framing new advertisement guidelines to protect consumers from gambling harm.
He continued:
Right now, lottery operators are not abusing advertising. We all see that. But we do not know what will happen after new licensing conditions are introduced.