Legalizing gambling is one thing – keeping it legal is another.
Ukraine legalized gambling in 2020. The reasoning was straightforward: Gambling exists whether the state regulates it or not, so better to bring it into the light, tax it, and use the revenue to support the country.
Five years on, the industry – despite generating Hr.17.2 billion ($409 million) in legal tax income in 2024 – still operates largely in a semi-criminal space, and the state has yet to fully reap the intended benefits.
Legalization remains a work in progress. Some officials say market operators are now cooperating with authorities, but others warn that overly strict regulations could push players back to the shadowy operators, many of which are Russian.
Here’s a look at the fine line Ukraine is walking to keep control of the industry – especially at a time when wartime revenue is critical for the country’s survival.
Key changes in Ukraine’s gambling market in 2025
In 2025, Ukraine overhauled its gambling market with a new regulatory system, resumed licensing, launched industry associations, implemented electronic monitoring and reporting, and largely removed Russian operators.
- Ukraine created an integrated gambling regulatory system, with the Ministry of Digital Transformation setting policy and PlayCity enforcing it, replacing the Commission for Regulation of Gambling and Lotteries (CRGL)
- The Association of Ukrainian Gambling Business Operators (AUGO) was launched to unite legal operators and foster cooperation with the state
- Licensing for gambling and lottery operators resumed under new conditions.
- The State Online Monitoring System (SOMS) is being developed for launch by the end of 2025.
- Electronic reporting for operators has been implemented.
- Russian companies such as Parimatch and Pin UP have been largely removed from the market.
Regulators are generally positive, and market operators are willing to work with the government, based on Kyiv Post observations. According to Oleksandr Kogut, CEO of AUGO, authorities are starting to “perceive the industry in a new way,” creating grounds for cautious optimism.
For now, all key players appear ready to engage in full dialogue on any market issues.
Shadow economy, tax issues
However, the market still struggles with a big shadow economy and unclear taxes.
For example, the Favbet case, where the accounts of the largest taxpayer were blocked, could cause a Hr.424 million ($8.7 million) shortfall in tax revenues for the fourth quarter.
Market players generally agree on the size of the shadow economy: Business representatives say the illegal market could account for as much as half of the sector, a figure widely accepted by market players.
The AUGO and the Ministry of Digital Transformation largely agree with this assessment. For example, according to the ministry’s estimates, the share of the illegal segment in Ukraine is 47-56%.
In 2024 alone, Ukraine said it had to shut down over 4,500 illegal online casinos.
But now, the market is also concerned that future changes, despite the government’s good intentions, could fuel the shadow economy.
This mainly concerns current plans to introduce gambling limits, intended to protect against gambling addiction – a problem that has plagued the country far and wide, including frontline troops.
But operators argue that these limits could push many players to illegal casinos that ignore such rules.
Sources, especially business representatives, told Kyiv Post that the black market is dominated by Russians, who have been entirely excluded from the legal segment.
What happens to the gambling market now?
Natalia Denikeeva, the deputy minister of digital transformation, told Kyiv Post in an interview that the ministry’s main task next year is to keep reforming the industry.
First of all, the ministry wants to change the law on gambling so that it finally complies with modern principles of digitalization. The law on state lotteries, which has not been updated for over 10 years, also needs updating, she said.
Then comes the Tax Code, as the current tax model for winnings pushes many players into the shadows.
Changes are also needed for laws concerning advertising to protect minors, according to Denikeeva. This includes, for example, the introduction of graduated penalties for promoting illegal gambling advertising.
There is still work to be done, but one notable achievement in 2025 is that newly created state and industry bodies are now engaging in full-fledged dialogue with market operators – and, as with many disputes, dialogue is an important first step toward solutions.