Anton Kuchukhidze: How many business sectors does legal gambling help to develop?

For some reason, many view the gambling sector in isolation from the rest of the economy. This is wrong, since following the legalization of gambling in Ukraine, it has become part of the economy similar to agriculture, metallurgy, IT, restaurant or hotel business. It intersects with dozens of other businesses, thus generating revenues for the State and companies operating in related areas.

Legal operators are fully integrated into the economic system. What is important is to stress that we are talking specifically about licensed companies conducting transparent business activities rather than illegal market participants which are not integrated into the economic system, do not pay taxes and create problems for players, legal industry and the State as a whole.
Being economic entities, legal gambling operators do not exist in a vacuum, they interact with other companies, use their products and services to build and maintain their own activities.

Thus, when it comes to proceeds from the gambling business, we should not talk only about license fees and taxes paid by legal operators. We need to look at the combined effect created by the gambling business for the entire economic system, being both an employer and a consumer of other companies’ goods and services.

Now, in which areas does gambling generate income?

1.     Rental of premises in hotels, rental of land for the construction of hotel complexes to open land-based casinos and slot machine halls.

2.     Consulting services. Companies need lawyers, business consultants and technical supervisors in order to understand the nature of the legal system, as well as to properly carry out licensing and equipment certification procedures.

3.     Services provided by banks and payment systems.

4.     HR consulting. It is a new market, which is why the recruitment and training of qualified personnel takes a lot of time and investment.

5.     Construction and renovation of premises. Legal casino and slot machine operators invest millions of dollars in the development of hotel infrastructure and related construction projects.

6.     Purchase of gambling equipment and specialized software.

7.     Maintenance of the IT-component of business, IT-departments, outsourcers, or adoption of a mixed approach.

8.     Services provided by advertising and PR companies, the manufacture of marketing products.

9.     Stimulation of demand for hotel and restaurant services.

10.  Tourism development, in particular, gambling tourism.

11.  Sponsorship contracts particularly relevant for the betting industry, where most legal operators sponsor sports teams or competitions.

12.  Funding of social responsibility programs, charity.

This list could go on, but all we need to remember is that for more than a year the gambling business has been part of Ukraine’s economy, generating internal revenues which, among other things, are used to build roads, pay pensions, wages, and cover other public expenditures. For a little more than a year of the industry’s existence, the total economic impact of the gambling legalization is estimated at UAH 30 billion. Given the challenging environment of the market development, this is an excellent result.

Both the State and other businesses benefit from the combined economic effect created by the gambling business. In fact, legal gambling business representatives who have been unable to invest over several years, have now finally gained the right to invest their money and, as we can see, actively spend it on maintaining the country’s economy. I also expect that with the adoption of the amended draft law No. 2713-д, the economic benefits derived from the gambling business will grow, and we will witness more foreign investment and players in the Ukrainian gambling sector.

Anton Kuchukhidze, Chairman of the Ukrainian Gambling Council, exclusively for the “Ukrainian News”  

Anton Kuchukhidze