Lottery operators have recently paid their first license fees to the state budget. At first glance, this may seem like a technical detail. In reality, for the first time in more than 12 years, the state has regained real control over the lottery market.
In just over six months, we accomplished what had not been possible for more than a decade. After the government approved the licensing conditions, we conducted a competitive selection process and restored effective state oversight of the lottery market.
We introduced mandatory license fees, transparent electronic reporting, and full regulatory oversight. These are the maximum changes that could be implemented within the framework of the current legislation.
At the same time, further steps are needed: updating the relevant law, lowering barriers to entry, and transitioning to a competitive model for selecting operators through open auctions. These changes will make it possible to restart the market systematically, rather than piecemeal.
The Ukrainian lottery market: 12 years without real regulation
For over a decade, the state lottery market operated without proper licensing rules and effective oversight. The state had virtually no insight into financial processes, and the reporting system was formal and opaque. There were no licensing fees during this entire period, so the state budget lost tens of millions every year, and over the entire period of uncertainty, the state lost more than Hr.1 billion ($23 million).
It would be naive to assume that this situation persisted by accident. The market was influenced by a powerful lobby of lottery operators at the political level, which effectively blocked any attempts to restart lottery regulation.
We changed that.
In just over six months of work, the state agency PlayCity accomplished what had not been possible for more than 12 years: licensing conditions were adopted and a competitive selection process was held. As a result, three operators were selected.
The state budget has already received more than Hr.72 million ($1.7 million) in license fees – Hr.24.2 million ($563,000) for each license. These fees will be paid annually. While we, together with the Ministry of Digital Transformation team, prepare legislative amendments, this annual revenue alone fundamentally changes the dynamics of the previous decade.
The lottery market in Ukraine: What is changing now
With the issuance of licenses, operators now fall under the full jurisdiction of PlayCity. This is where the key changes take effect:
- Mandatory electronic reporting has been introduced
- Each lottery ticket and terminal receives a unique QR code.
- The state has regained effective regulatory tools
- Operators are required to pay annual license fees
For citizens, this means one simple thing: draws will be fair, and winnings will be guaranteed.
Why Ukraine’s lottery market has not “opened up” to new players
Why have new or international operators not entered the market?
The answer is straightforward: the market structure is defined by law, and it remains legally closed.
The current model was established by the 2012 law. Within this framework, we have acted as effectively as possible. First, we restored oversight of existing operators. Now, we are working to transform the architecture of the market itself.
The law provides for:
- A model limited to three operators
- A requirement of at least three years of prior experience in conducting state lotteries
- A mandatory distribution network
- Strict time limits for holding competitions
Under these conditions, new entrants cannot realistically enter the market in the short term.
True market opening – meaning full competition – is only possible through legislative amendments. This next stage of reform is already underway.
It is also important to note that in previous years, there was not a single officially declared attempt by a foreign operator to enter the Ukrainian market. Expectations that licensing conditions alone would “open” the market to international investment ignore the fact that the core barriers were embedded directly in the law.
Licensing conditions are a subordinate act; they implement what is already laid down in the law. They cannot change the market model if the law itself restricts it. Expecting an executive document to “restart” a market that is legally closed is either a misunderstanding of the legal architecture or deliberate manipulation.
Why licenses are not issued for 10 years.
The government made a pragmatic decision to issue licenses for the period of martial law and one year after its termination, but for no less than three years – rather than for 10 years, as permitted under the current law.
This approach gives the Ministry of Digital Transformation the flexibility to finalize legislative amendments without effectively freezing the market structure for another decade.
The lottery market in Ukraine: What comes next
Amendments to the lottery law are being prepared with the aim of removing barriers to entry for new operators, including international ones, and holding a full open auction in three years.
Reforming the lottery market is not a one-time decision. It is a process consisting of several stages.
The first stage is restoring control and financial discipline.
The second is updating legislation and opening the market to new operators.
Today, the first stage has been completed. For the first time in many years, the state is no longer observing the market from the sidelines – it is actively regulating it.
The key now is not to stop.
The views expressed in this opinion article are the author’s and not necessarily those of Kyiv Post.