Lotteries will be stripped of "state" status, and licenses will be sold at auctions

The Ministry of Digital Transformation is preparing a reform of the lottery market, which includes abandoning the concept of "state lottery", selling licenses through auctions, and strengthening control over operators. The draft law is planned to be submitted to the Verkhovna Rada approximately in September.

Zoryana Toporetska, head of policy formation for the gambling and lottery sector at the Ministry of Digital Transformation, told Ukrainian Radio about this.

However, this does not mean prohibiting lotteries as such. The Ministry of Digital Transformation proposes to remove the word "state" from the legislation, since in fact lotteries in Ukraine are conducted by private operators, and the state only establishes rules and controls their activities.

According to Toporetska, the current wording can create the impression for the consumer that the lottery is organized by the state or that the operator is state-owned. After the reform, the legislation proposes to keep only the concept of a lottery operated by a private operator who has obtained the corresponding right.

Licenses to be sold through auctions

One of the main changes will be a new mechanism for operators to enter the market. Instead of the current competitive procedure, the right to conduct lotteries will be sold at auction.

The starting price of a license should be about 24 million UAH. This will be the minimum price from which participants will bid for the right to operate in the market. The winner will be the operator who offers a higher amount.

The Ministry of Digital Transformation expects that this model can open the Ukrainian market to European companies as well. According to Toporetska, the practice of granting the right to work in the lottery market through auctions or concessions is used, in particular, in Greece and Italy.

Similar changes were previously announced by the state regulator PlayCity. The agency proposed replacing the competition with an electronic auction, where the license would be obtained by the participant with the highest bid.

"Toto" lotteries to be banned

The reform is also intended to more clearly separate classical lotteries from gambling. The Ministry of Digital Transformation proposes to ban "toto"-type lotteries, since for the consumer they are actually similar to bookmaker bets.

The ministry believes that bookmaking should be carried out only under the corresponding bookmaker license. Lotteries, on the other hand, should remain in classical formats—draw-based or instant.

Separately, it is planned to introduce certification or expert examination of lottery equipment so that operators cannot use mechanics and equipment typical of casinos or other gambling businesses under the guise of lotteries.

PlayCity to gain more control capabilities

The draft law should expand PlayCity's powers to oversee operators and increase the list of grounds for license revocation.

If the auction winner does not start operations within six months, its license is proposed to be terminated and offered for auction again. The Ministry of Digital Transformation wants to avoid a situation where an operator obtains the right to work in the market but does not use it.

Lottery operators are also planned to be connected to the State Online Monitoring System. This should allow the regulator to receive data on their activities in a much more prompt format. Currently, the first phase of the system is already being tested among organizers of gambling, and the Ministry of Digital Transformation plans to fully put it into operation by the end of the year.

Lottery market already being brought out of the "grey zone"

The current law on state lotteries for years did not provide a full licensing system. According to Toporetska, operators worked for a long time on the basis of old licenses issued back in the early 2000s.

After the transfer of regulation to the Ministry of Digital Transformation and the creation of PlayCity, new licensing conditions were approved. In March, PlayCity reported that the budget received over 72 million UAH from the first licensing payments by lottery operators in over ten years. Three companies each paid 24.2 million UAH.

The next step should be changing the law itself. The Ministry of Digital Transformation expects to transfer the draft law to the parliament in September, but declines to predict the time of its further consideration and adoption.

Based on materials from: Ukrainian Radio, PlayCity