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“We’re currently seeing history in the making”: Exclusive interview with Evoplay Entertainment on the regulation of Ukraine’s gambling market

George Miller

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Exclusive interview with Evoplay Entertainment on the regulation of Ukraine’s gambling market
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With Ukraine getting ready to regulate online gambling for the first time in more than a decade, we caught up with Vladimir Malakchi, CBDO at Evoplay Entertainment, to take a deep dive into the market’s potential and what we should expect to see once it goes live.

 

Can you give us the lowdown on gambling regulation in Ukraine and what’s happening right now?

VM: We’re currently seeing history in the making. In short, the Ukrainian gambling industry is coming back. While gambling peaked at almost $1.4 billion in revenue in 2008, the state monopolised the market into lotteries in 2009, making it the only legal form of gambling – and prohibiting anything else.

After more than a decade of prohibition, the current legislation being adopted by parliament will soon mean that regulated online gaming will be available to Ukrainian players. With one of Europe’s most hotly anticipated gambling bills on the table, we’re sure that regulation will be of great benefit to players, suppliers and the national economy alike.

So, once the market’s live – how’s it going to look?

VM: In its current form, the bill legally permits the operation of online gaming, as well as land-based casinos – along with retail and sportsbook outlets and commercial lotteries. The government is set to appoint a new authority to oversee licencing, compliance and inspections.

The body will outline a list of products requiring mandatory certification, as well as the regulatory authorities responsible for awarding it. The government will also be closely monitoring operator data, with a view to updating regulation by 2022 as the market develops.

How big is the potential here?

VM: Given the market has been out of action for more than 10 years, it’s difficult to evaluate the size of what we’re dealing with today. With the gambling market peaking at $1.4 billion in revenue in 2008, we’re dealing with a respectable benchmark. Conservative estimates put the expected GDP boost at close to $100 million dollars for the first year, which is enough to be taken seriously.

These figures also clearly show that the legalisation of betting causes a significant increase in economic activity. A well-formulated legal framework protects players, creates jobs and drives growth, for which we are strong proponents.

How would you define the typical Ukrainian player? What kind of demographics are we dealing with?

VM: When it comes to assessing player preferences, strong local knowledge is critical. Just as we’ve seen in other territories, it’s going to be all about getting the balance of delivery just right. Prominent Ukraine-based suppliers such as us are going to be well positioned to evaluate the behavioural patterns exhibited by Ukrainian players; and we’ll be looking to capitalise on our unique placement.

From what we can paint as a broad picture, the country’s players share a lot of similarities with their European counterparts – typically a 35 to 54-year-old male. The difference is that, with a lower average income, total bet spends in Ukraine will be lower than those observed elsewhere on the continent. As a consequence, expect low-spend, high entertainment titles to perform strongly.

How accustomed are they to online casino?

VM: The more than decade-long national ban on gambling means that most players will generally be unfamiliar with it, which means that there needs to be marketing efforts to help players migrate. Accordingly, land-based casinos will likely continue to hold most of the market for the first few years as we go through the adoption process.
At the same time, mobile usage in Ukraine is rapidly spreading, with a market share that has tripled in the last three years alone. Over 70% of internet usage is now coming from mobile in Ukraine, which shows how important a mobile-first strategy will need to be here. Digital adoption here for iGaming is definitely going to come via mobile rather than desktop and given how tech-savvy the population is, there’s plenty of potential.

And how about slots in particular?

VM: Online slots offer that classic gaming experience that arguably made Vegas great all those years ago. The same can be said for any new market – and any operator worth their salt is going to make sure they have the industry’s top suppliers in their stable. Of course, this will be a particular plus if they’re also based locally such as ourselves! I’m sure our development team can’t wait to get stuck into one or two Ukrainian-themed titles in the near future to really bring a feel of home.

Take us through the process – what does a game supplier need to get online in Ukraine?

VM: So far, the Ukrainian government has only set out requirements for operators, with suppliers still awaiting the list of mandatory B2B licenses and game certificates that are needed to go live. Once this information is received, our preparations will commence.

Regulatory approval is likely to depend on the commercial reputation of the company in question, which puts Evoplay Entertainment in a strong position given our local presence. I think if we look for a comparative style of entrance requirements, then we’re probably looking at internationally recognised certification or similar – much as you would expect for many European markets.

What does it mean for local suppliers such as yourselves? What are your plans?

VM: For a Ukrainian company like us, the legalisation of Ukraine’s gambling sector is an opportunity to show players in our native territory what we are all about. With an understanding of the country’s culture that only local knowledge can bring, we are ideally placed to become one of the market’s standout suppliers.

But this doesn’t just mean creatively speaking – our time-to-market can likely be fast accelerated too. I also expect, circumstances safely permitting, that we will be able to conduct more face-to-face meetings and attend more local trade shows than our competitors.

Who do you expect to be the biggest commercial players here?

VM: The newly regulated Ukrainian market represents an exciting prospect for some of our industry’s biggest names. We’ve already seen a surge in interest from our foreign partners, and with over 26 million potential customers up for grabs if we’re talking internet users, this will only increase in the future.

We’ll likely see a combination of big-name brands staking their claim with the usual roster of titles, along with the smaller, agile suppliers like us looking to provide operators with a more customised approach to the market.

And finally? Give us a snapshot as to how you see the first year here once we’re ready to go?

VM: In all seriousness – having seen the plans and what’s on the table, I think it’s in the Ukrainian government’s interest to provide a fair playing field for foreign and local brands, and the bill looks like it’s shaping up to do just that.

If we look at LatAm’s recent regulatory developments to compare, everyone will no doubt be hoping for a pro-active Colombia based model similar to the stellar work done by Coljuegos, which has set a shining example. I have no doubt that this will be possible – and having seen how well Croatia, the Baltics and Romania have performed in recent years, I expect to see a market that offers player protection and a fair playing field for all.

As to how the market will look – it’s hard to define. While we can use other European markets as a benchmark, we are dealing with not only a very different culture to the likes of Italy and Romania for example. The Baltics are really the only similar regulated markets we can likely compare Ukraine to. With individual populations numbering as small as one million for Estonia, it does make things hard to compare to Ukraine’s much greater population – so this is certainly a step into the unknown for many!

Eastern Europe

Ukraine’s UPEA Unveils Five-year Strategy for Esports Development

Niji Narayan

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Ukraine’s UPEA Unveils Five-year Strategy for Esports Development
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The Ukrainian Professional Esports Association (UPEA) has introduced its strategy of esports development in Ukraine for the next five years, as well as its structure and key objectives.

UPEA intends to raise funds, develop streaming studios, open an “esports ready” hotel, increase the number of international tournaments, attract investments, and more.

The Association plans to attract $100 million of investments, $42 million of which has already been made towards the purchase and development of the first “esports ready” hotel on the infrastructure base of the Dnipro Hotel. Another $20 million is planned to be invested into its reconstruction, according to a release.

“We want Ukraine to be among the world leaders, and today we have all chances to enter the TOP-5 countries with the most developed esports ecosystem,” Oleksandr Kokhanovskyy, Board Chairman for UPEA and Founder of Natus Vincere, said.

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Eastern Europe

Covid-19 Sets Back Romanian Gambling Industry by Five Years

Niji Narayan

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Covid-19 Sets Back Romanian Gambling Industry by Five Years
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Covid-19 pandemic has set back the Romanian gambling industry by five years, according to the data from the National Institute of Statistics (INS).

The Romanian gambling operators experienced one of the most severe declines of the last 30 years between March and May this year. The local gambling and entertainment industry fell by about 24% in March 2020 compared to the same period of 2015. The gambling sector’s March turnover was only 57 % of February’s. Then, in April and May, gambling businesses reported almost zero revenue.

“Given the situation, we made the necessary business continuity decisions and decided that the safety of our customers and employees was our main priority. We focused on the long-term business principles and we organized our activity so that we would be able to adapt as quickly as possible to the multitude of changes that occurred during this period. For example, over the past three months we went from ‘closed until further notice’ to being open round the clock and then back to limited opening hours (until 11 PM, later extended to midnight), and we hope to be able to return to our non-stop hours as soon as possible. During all this time, we’ve been focusing on communicating with our clients and employees, for whom we’ve taken extra health and safety measures. Maintaining communication with professional associations and the authorities for accurate information on the latest developments concerning gambling halls was equally important,” Attila “Otto” Török, strategy director at Game World Romania, said.

According to the latest data provided by the National Gambling Office (ONJN), 250 gambling operators are currently active on the Romanian market. They contribute about EUR 600 million to the state budget every year. At the beginning of 2020, there were about 45,000 direct employees of the local gambling industry and a few other thousand worked in related and dependent fields.

“According to Romslot data, for each RON the Romanian gambling industry generates, the upstream and downstream industries – HoReCa, IT&C, security – generate another 5 RON,” Török said.

He added that Game World currently has about 400 employees, while the parent group has a workforce of about 2000.

When talking about the biggest challenges the gambling industry is now facing, Török says these are related to the coronavirus pandemic and the health crisis, even though all operators have strictly implemented all the measures required by authorities to limit the spread of the virus.

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Eastern Europe

Domestic and International Operators Interested in Gambling Market of Ukraine

Niji Narayan

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Domestic and International Operators Interested in Gambling Market of Ukraine
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According to Oleg Nemchinov, the Minister of the Cabinet of Ministers, the Finance Ministry has already received several formal and informal requests regarding the regulation of gambling from gambling networks, bookmakers and lottery operators. The gambling commission has not been created yet and officials expect even more interest when the regulator is formed and starts issuing licenses.

The Minister has also commented that legalisation will force illegal gambling to follow the rules.

“I believe that the legalization of the gambling business will bring all these establishments out of the shadows or simply force illegal activities to close. The Commission is called upon to prevent pseudo-lottery, pseudo-games, pseudo-automatic, only a verified software product, only licensed institutions, only people who officially work,” Oleg Nemchinov said.

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