Ukraine Must Legalize Gambling to Help Justify $17.5 billion IMF Assistance Package

Posted on: April 11, 2017, 05:00h. 

Last updated on: April 11, 2017, 04:52h.

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Expertise: Commercial Gaming.

Ukraine has assured the International Monetary Fund (IMF) that it is ready to legalize gambling next year and, more importantly, ready to capitalize on the ensuing economic benefits.

The move comes as part of a series of economic reforms designed to convince the IMF that the country is worthy of a $17.5 billion financial assistance package.

Ukraine received the first $1 billion installment of the package this week, but following a review of the state of the country’s economy, the IMF emphasized it must “break with the legacy of weak governance and stop-and-go reforms” in order to generate sustainable growth.

Ukraine has been beset by economic, military and political problems over the past 20 years, not least in 2014 when a revolution toppled the pro-Russian President Viktor Yanukovich, precipitating the Russian annexation of Crimea.

2015 Bill Failed

“The economic and social costs of the crisis have been high,” said the IMF mission chief for Ukraine, Ron van Rooden. “The government has undertaken important reforms under very difficult circumstances, but it has to do much more to recover the lost ground, to bring incomes closer to those in the neighboring states, to improve social conditions, and to build a modern market economy.”

The economy is showing slow progress since the recession of 2014-15 and Prime Minister Volodymyr Groysman has said the country will begin to witness the benefit of reforms over the next 12 months. Although it probably doesn’t bode well that the chief of the Ukrainian Central Bank, Valeria Gontareva, resigned on Monday, claiming her “job was done.”

The country introduced a draft gambling bill in 2015 that would have opened up the market to land-based casinos, sports betting and online gambling, in the hope that reforms would generate $1.5 billion per year for the economy.

But protests from operators at unrealistically high licensing fees and taxes effectively killed the legislation off. Ukraine has little choice but to do it right this year and to do it quickly.

Meanwhile, in Crimea…

Across the border, plans are afoot to begin work on transforming the annexed Crimea into Russia’s newest “gambling zone,” which hopes to draw international tourists to future casinos built around the port city of Yalta.

The new zone, according to Crimean Prime Minister Sergey Aksyonov, is designed to skirt the international economic sanctions imposed on Russia after it seized control of the territory.

“There are certain arrangements that will make it possible [for investors] to bypass the sanctions,” Aksyonov told the TASS news service this week. “I will keep quiet about such secrets for now. Nobody will agree to invest in this project if there were doubts this plan might not work.”