Gambling in Ukraine: How to organize it with benefit for the country?

Author : Oleksiy Kushch

18:31, 12 March 2018

Gambling in Ukraine: How to organize it with benefit for the country?

Author : Oleksiy Kushch

When some experts say that there should be only one national lottery operator in the country, they are cunning. Remember - they are trying to impose you the theory of an all-powerful Ministry of Finance, which in the interests of the state will put order in the market. But it is more believed that some officials just want to earn money

18:31, 12 March 2018

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Any gambling business, including casinos, lotteries, gambling halls, is not just a lucrative form of entrepreneurial activity, but also three or four kilotons of valuable cash. This kind of business like no other is a marker of the country's civilization in terms of economic development. By analogy, the same marker, but only in the context of morality, is the attitude of society, for example, to stray animals. Although one familiar businessman from Europe said that he judges the country by the number and condition of public toilets in the center of the capital. This marker replaces for him the need to read numerous analytical books. As you may have guessed, he somehow refused to invest in Ukraine.
As for the lotteries, this filter works as a kind of test: it shows how the economy is affected by corruption or budgetary efficiency. In the first case, the lottery system is used for money laundering of corrupt politicians and shadow businessmen (they need legal income to fill all kinds of declarations and go to the bank, as well as to purchase expensive property). In the second case, the lotteries are a powerful tool for replenishing the state treasury. Thanks to these revenues, it is possible to implement those social projects, which, in a different scenario, simply did not have the necessary resources.

It would be nice to do this kind of targeting for us. For example, create a special fund to accumulate income from the national lottery and pay out talented young people's grants for scientific and innovative developments. In this case, the vice of some (and the gambling is still a vice) would serve for the talents and development of the creative abilities of others.

In Ukraine, all kinds of lotteries and sports betting are used for different purposes, but not for filling up the budget.

It is for this reason any attempt to reform the lottery system in the country ends with a total distrust on the part of the society. People have become accustomed to the fact that attempts of the state to impose "order in issuing licenses" result in the fact that the order is "imposed" only in the pockets of the profile ministers. Hence the conspiracy versions that the initiative of the state to improve the procedure for the functioning of the national lottery, let alone introduce a state monopoly on it, is not caused by concern for the revenue side of the state budget, but by an attempt to accumulate the necessary "cash" for the upcoming elections. Lotteries really fit the most for this. Not without reason, some American presidents were accused of forming their election funds at the expense of the casino's black cash (although more than half a century has passed since that time).

Right now, the gambling business in Ukraine reminds America in the twenties and thirties of the last century, with the only difference being that there the bootleggers violated the law, and we have semi-legal casinos and always unprofitable lotteries. Although potentially these lines of business, with skillful regulation, must earn tens of billions of hryvnias and billions of dollars to pay to the budget in the form of taxes and fees.

At the moment, the lottery market in Ukraine is divided among the three main players. These are operators: Patriot, MSL, and UNL.

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On one hand, even a cursory analysis of the market allows us to understand that: 1) the budget does not receive those revenues from the operation of lotteries that it could (for the current year it’s 1.9 billion UAH of taxes on the sale of licenses for the lotteries). This is approximately five times more than the operators paid to the budget in the pre-crisis 2013 year. On the other hand, there are estimates that show that lotteries can bring to the budget 5-6 billion UAH. The main battle of the Titans unfolded, as expected, around licensing conditions. And here there are several undercover channels of influence. Old-timers of the market try to prove with the help of the Antimonopoly Committee that these conditions are not quite adequate, they say first to give the market a "warm-up", and then collect taxes. The role of the Anti-Monopoly Committee in this story is not entirely understandable, since the lottery market and antitrust policy are some kind chaos: there are no goods and prices for them, in addition, if we take a market model in which priority is given to one state operator, then the role of the Committee is even reduced to the ghostly "butterfly effect".

In conditions when each article in the media seems to be paid by the officials, let me express my subjective opinion. Moreover, this is the opinion of a person who has never played a lottery, except in his youth, putting on the "auto".

At the moment, the paradigm of future lotteries in Ukraine will be reduced to a banal one - who will control the process. For the authorities, this is an opportunity to take control of another source of eternal cash flow. For the market participants, it’s another opportunity to appeal to the Anti-Monopoly Committee or the concerned public about the regulatory dominance of the state. For us, as recipients of an effective budget process, this issue is of interest only in how it will affect our future development.

When some experts say that there should be only one national lottery operator in the country, they are cunning. Remember - they are trying to impose you the theory of an all-powerful Ministry of Finance, which in the interests of the state will organize the market. But what order on the market can we talk about, if the profile ministers cannot understand their tax payment requirements and shout for each occasion, and not in the desert, but in Facebook. But also those who try to impose us an erroneous discourse on the fact that market participants need to be given a certain grace period – they are also wrong.

Remember - your mind is manipulated. The only thing that Ukraine needs today is the transition to the American model of regional lotteries when each region in the context of the decentralization program will be able to license its regional lottery. Revenues from it will come to local budgets with the aim of developing regional social programs, including those aimed at developing scientific and innovative areas of development. In the future, these local lottery programs can develop into transnational projects, but not later and not earlier than the economic prerequisites for the development of this specific market would appear. Any attempts to centralize this process on the eve of elections will face objective social dislike. Ideally, each region should receive the right to issue its lotteries, as it happened in the States in the past - to replenish local budgets. Revenues from local lotteries should be accumulated in local budgets.

Regional development of lotteries can give a real market momentum to this segment of the market. And then the "decision makers" who are accustomed to the fact that all their whims are satisfied by one call will forever remain in the past.

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