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Anton Kuchukhidze: lack of state budget revenue from gambling is a myth

With the gradual approach of the end of the budget year, “experts” begin to count the revenues received by the State in various spheres of the economy. And, of course, the gambling industry is no exception.

Recently, there have been more and more statements that the gambling legalization has not met expectations, and the state budget has not received billions of hryvnias. Such statements are wrong, to say the least.

The fact is that when planning budget revenues from the gambling industry for 2020, a technical mistake was made. According to analysts and experts, the projected income from direct license royalties should amount to UAH 1-1.5 billion. For unknown reasons, the draft budget indicated UAH 7.4 billion.

The budget revenue from the GGR (Gross Gaming Revenue) tax was set at the level of UAH 5.6 billion (10% of the projected GGR of legal operators for 2021). Considering that the market should only function for the first year, and many regulatory and tax issues have not yet been resolved, this did not seem very realistic.

By the way, these tax and regulatory issues are still unresolved. Draft law 2713-д on gambling taxation was not voted on. GGR is still paid in the form of triple license royalties. There is also a legal conflict regarding the appointment of CRGL members, which must be addressed quickly.
All this prevents the establishment of clear market rules which are so important for foreign investors. And the less investment will be attracted to the gambling sector, the less income the budget will receive in the form of taxes and related payments.

What is the current situation with real budget revenues from gambling?

First, the fact that the technical error has been removed from the draft budget for 2022 is an improvement. The proceeds from the sale of licenses for organizing and conducting gambling are planned to be UAH 763 million. In my opinion, the figure is underestimated, and real income may amount to UAH 1-1.5 billion. However, the lack of errors is undoubtedly a good sign.

Second, in just over a year of gambling market operation, the State received more than UAH 30 billion. It includes income from license royalties and all the money that legal gambling operators paid in the form of income taxes, employment taxes, VAT, payments related to the rental of premises, etc.

As you can see, the gambling industry generates significant revenues to the state budget. At the same time, it has the potential to produce even more.

So, I strongly hope that in the near future the draft law 2713-д with amendments thereto will be adopted and the legal conflict related to the appointment of CRGL members will be resolved. These steps will provide clear rules of the game for foreign partners who not only invest in the Ukrainian gambling market and create jobs, but also pay taxes here, thus increasing state budget revenues.

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

Link: 
https://ukranews.com/ua/news/803682-anton-kuchuhidze-nedootrymannya-derzhavnym-byudzhetom-dohodiv-vid-gemblingu-tse-mif
Anton Kuchukhidze