Legalization without proper control: results of the audit of state policy in the sphere of gambling business
Gambling in Ukraine has been legalized since 2020. However, an effective control system in this high-risk sector has not yet been created. The audit of the Accounting Chamber on the topic of “Gambling: expectations and reality” showed that despite the growth in tax revenues from this type of activity, the current state of state regulation and control does not guarantee full transparency, tax discipline, responsibility and protection of public interests.
The first audit in the field of gambling and lotteries, conducted since the beginning of the legalization of this sector, covered the period 2021-2024. The report on its results was adopted at the meeting of the Accounting Chamber on July 22. Responsible for the audit – Head of the Accounting Chamber Olga Pishchanska.
The purpose of the audit is to assess the efficiency and effectiveness of state regulation, collection of taxes, fees and other payments in this area, as well as the regulation of the impact of gambling on society. The audit findings indicate significant shortcomings at the legislative, organizational, tax and social levels.
As stated in the report, after the adoption of the Law of Ukraine “On State Regulation of Activities Concerning the Organization and Conduct of Gambling” and the establishment of the Commission for the Regulation of Gambling and Lotteries (KRAL, Commission)*:
– 88 business entities received licenses to conduct activities in the organization and conduct of gambling;
– their total revenues increased from 3 to 142 billion UAH;
– and the amount of taxes paid increased from 200 million to 17 billion hryvnias.
GAPS IN STATE SUPERVISION
The auditors note that not all expectations from the legalization of activities in this area were met, which was largely due to failures in the activities of the Authorized Body. In particular, KRAL did not implement the State Online Monitoring System and did not ensure the formation of registers of gambling business organizers. Accordingly, the Commission did not have reliable data on the real volumes of the market.
Also, KRAL did not systematically conduct inspections of market players and did not develop a mechanism for collecting annual fees for licenses canceled in 2023 from gambling business entities. As a result, the state budget underpaid 1.3 billion hryvnias.
GAMMING TAXES – UNDERRECEIVED
50% of gambling business entities declared a loss-making financial result in 2023-2024. But according to auditors, the fact that gambling organizers declared different amounts of income received by players in their income tax and personal income tax reports (in 2023 - 6.7 times, in 2024 - 3 times) indicates the possible existence of schemes for the former to evade taxes.
The actual effectiveness of tax control over tax collection in this area was unsatisfactory: only up to 0.9% of the additional amounts were actually paid, and 94% - canceled by the courts.
Separately, the audit recorded that the legally established possibility of gambling business entities being on a simplified taxation system in 2022-2023 (at a rate of 2%) led to a loss of 1.9 billion hryvnias to the budget.
LOTTERY OPERATORS - WITHOUT LICENSES
The relevant Law of 2020 transferred the licensing of lotteries from the Ministry of Finance of Ukraine to the authority of KRAL. However, due to the failure to approve the licensing conditions, the Commission has not issued a single license during its entire operation. The validity of the old licenses of players in this market expired back in 2014, and the state budget did not receive more than UAH 220 million in revenue from their sale in 2021-2024, the auditors calculated.
ILLEGAL GAMBLING
The ineffective mechanism for blocking illegal sites, weak application of sanctions, and uncontrolled advertising of gambling contributed to the formation of a shadow sector in the gaming industry.
KRAIL could not independently block sites with illegal online casinos, and out of 512 requirements for organizers of illegal gambling and providers of hosting services for illegal casinos, 29% were fulfilled.
Also, only 20.1% of the fines imposed by KRAIL out of a total of UAH 35.7 million were paid. Since August 2024, no new fines have been imposed, and the licenses of companies that fell under NSDC sanctions were revoked only 5 months after the decision was made. The reason is the incapacity of KRAL due to the lack of a quorum.
COUNTERING GAMBLING ADDICTION
During 2021-2024, the number of players who participated in gambling and received income in the form of winnings increased by more than 40 times - from 16 thousand to 640 thousand people.
At the same time, there is no reliable data on the total number of gambling participants. The state has not commissioned any sociological research on the scale of gambling addiction or its impact on families, youth, and the economy. This fact makes it impossible to form an appropriate state policy.
«Without systematic data collection and social research, the state cannot act confidently in the matter of combating gambling addiction. This increases social risks, and also complicates the formation of a humane, well-founded state policy in the field of protecting citizens from the negative impact of gambling», – emphasized, presenting the report, Olga Pishchanska.
To the PlayCity Agency:
- ensure the creation and implementation of the State Online Monitoring System;
- establish the operation of electronic registers of gambling organizers;
To the State Tax Service of Ukraine:
- increase the efficiency of tax administration in the field of gambling.
The representatives of the audited entities present at the meeting agreed with the recommendations of the Accounting Chamber, expressed their willingness to ensure their implementation and noted the potential positive impact of their implementation on the development of the sector.
*From 01.04.2025, KRAL was liquidated and the PlayCity State Agency was established.
For timely updates - follow us on social networks:
Facebook, Telegram, Instagram, X, LinkedIn, Youtube
For additional information and comments, please contact the Department of Information Activities and Communications:
RP_press@rp.gov.ua
(044) 298-74-75