Gambling became legal in Ukraine recently, with the adoption of the relevant law in 2020. In early 2021, the Gambling and Lotteries Regulation Commission (CRGL), the state regulator of the gambling market, issued the first licenses to companies. Who wanted to trade openly. Bringing the industry out of the shadows was a big step for the market, but it didn’t solve all the problems associated with it. Furthermore, the war has been a serious challenge for the Ukrainian gambling business over the past 19 months.
Igor Zotko, owner of PIN-UP Ukraine (UKR Game Technology LLC), a company working in the field of legal gambling, talked about the peculiarities of the Ukrainian and global gambling market, market innovations after legislative changes, as well as company donations. Initiative.
Information about PIN-UP Ukraine
PIN-UP Ukraine is a Ukrainian online casino that was one of the first casinos in the country to receive an operating license. The license to organize and operate online casino gambling was issued to UKR Game Technologies LLC by the Gambling and Lottery Regulation Commission in 2021. The owner of PIN-UP Ukraine is Igor Zotko.
On the problems related to the industry after its legalization
Can you tell us how the law legalizing the Ukrainian gambling market affected the industry?
The law of July 14, 2020, which defined the working conditions for the gambling market in Ukraine, solved the main problem – gambling has come out of the shadows and become more open to the public. This is a major success after the ban was implemented in 2009. However, despite almost three years of legal work, the market is still new and not yet established, as legislative initiatives are still being implemented, new players emerging and growing, and changes in taxation. Are happening. On th eway. I think this process will take a very long time.
What problems does the market face now and what is needed to make it work?
First of all, it is necessary to eliminate legislative changes and ensure equal rules for all market players. Secondly, we need to reduce the taxation levers that are currently insane and hindering market growth – the offline segment is the most difficult situation. Third, banks should treat gambling businesses like all other businesses. Many banks are not willing to work with gambling businesses in case of acquisition. Some banks prohibit players from paying out winnings more than twice a day. Although winnings are taxed, they also hinder growth.
What should be done to solve market problems?
To overcome the problems, first of all, it is necessary for all incompetent people and pseudo-experts to stop commenting toxically on the market, the only regulator of the industry is CRGL, which in turn is under the Digital Ministry. Change. Secondly, it is necessary to clearly separate gambling from the lottery business, for example, this can be achieved by equalizing the cost of licenses and taxes or by clarifying the legislation. Third, it is imperative to close the possibility of operations in the gray market, which currently accounts for 40-45% – this must be done strictly and irreversibly. No licensed product can compete when almost half the market is in the shadows and offers players large bonuses, tax-free winnings and other perks. The immediate need of the market is two-way communication with the regulator. The regulator should highlight market issues, communicate directly state requirements and reach consensus. The main thing in this process is the will of the state and the regulator. I believe the market is ready for and needs such communication.
To what extent does the situation in the Ukrainian gambling industry correspond to global market trends?
“In the global context, the Ukrainian market displays courage, activity and prospects.”
The legalization of the market in Ukraine covers betting, casino, poker and lottery together, so this is a reassuring step. The gambling market in no other country, and in almost all civilized countries, has taken such a bold step. The United States is moving from state to state towards legalization, and progress is being made in Europe, Brazil has been trying to move forward for 5 years, but there are shadow schemes going on there at the moment. Ukraine has successfully passed the first steps on the path to a healthy, competitive and, most importantly, transparent market.
on business in the gambling industry
How did you start working in the industry?
When I was a student, I placed my first bet on a sports game and lost money. After that, I realized that I either had to stop playing or organize something similar myself. Who would have thought that a random idea would come to fruition almost 20 years later? In 2008, I started working in e-commerce. I went deep into the topic of gambling business which requires payment processing, different types of casinos and lotteries, and also realized the philosophy of players, their motivation and their goal in the game. Then I worked for a gambling company, where I strengthened my knowledge with practice. Later, I became the head of a fintech company. And when the gambling market was legalized, it turned out that there were very few participants in it and there was room for new players if you did not think long enough. At that time, I knew the owner of the PIN-UP brand and recommended a non-major investor to choose this brand for development in Ukraine. And in 2022, I got an offer to officially lead the project, which I later achieved.
What is gambling for you?
This is a way to have fun. Some people go to the gym, some go to the movies or fishing, and some play at the casino. These are evenings with friends – easy and comfortable, without the unhealthy desire to win all the money in the world. Anyone who thinks that this is an opportunity to make money or get rich easily is wrong. I believe that this type of entertainment should be presented to society in exactly the same way.
on trading in the financial industry
You are also the owner of the financial company Yediny Prostir, tell us how your businesses cooperate
In short, they don’t. These are different activities that I own – there is only one thing in common. Yedini Prostir is the first independent project I started from scratch almost four years ago, compared to the casino I acquired earlier this year.
There was a scam related to Yedini Prostir regarding commission in the state app “Diya”, one of the reasons why these operations cannot be performed by the state bank.
I wouldn’t call it a scam, as it is enough to delve deeper into the operational activities to avoid asking such questions. Firstly, the financial company guarantees seamless payment processing as it collaborates with multiple banks, including state-owned banks. This protects the system from failures, which cannot be guaranteed by any single bank, even a state-owned bank. Secondly, regarding the price of services, Yedini Prostir won the tender for these services, and our offer was the most favorable for the customer. You also need to understand that no government agency makes payments to the financial company, all earnings come from administrative fees only.
There were also questions about the commission, which said the company made millions in fees from charitable projects
I can call it propaganda. Currently, we have four types of payments in Diya, which are made by Yedini Prostir. These are the army of drones, military bonds, the presidential initiative United24, and administrative payments to the state. Yedini Prostir does not charge any fees for charitable initiatives, only for administrative services, but these are the lowest rates on the market – 1.5%, of which almost the entire amount goes to cover the cost of the service. So far, Yedini Prostir has earned about 2 million hryvnia over the past year from cooperation with Dia, and not the tens or hundreds of millions of hryvnia that someone has invented. Clearly, these funds are not enough to cover the company’s operating expenses.
But then how does the company make money?
You should understand that there are no free services in the financial market – any transfer by an individual without any fee is covered by the bank payment system or the company that provides the service. For Yedini Prostir, the collaboration with Dia has never been about profit; It is an image project where the company invests instead of earning. To be able to do all this, there are regular commercial projects, where the company earns on fees and invests in the development and improvement of services for the state.
I am already accustomed to information attacks on my businesses, where Yediny Prostir is making profits from donations or I allegedly own a Russian pin-up casino. Maybe someone thinks that in this way they can shut down one of these companies for their own benefit, which is very doubtful for me because the regulatory authorities have no questions for my companies.
On PIN-UP’s work during the war and the company’s charity initiatives
How did your company PIN-UP Ukraine work at the beginning of the Great War?
Like most Ukrainians, we were shocked by the outbreak of full-scale war. Our first priority then was to protect our personnel, especially in the cities from where the attack began. We transported them to the central and western regions, guaranteed them stable salaries and paid some of them a lump sum. Additionally, we distributed power banks and Ecoflow charging stations to our employees.
If we talk about business then undoubtedly there has been a huge decline in sales. Gaming is entertainment, and what kind of entertainment can we talk about during war? The figures began to increase only in the late summer of 2022.
How is the company working now?
Our work has become stagnant compared to the beginning of the war. Apart from this, we have also become very active in helping the army. Some of our employees have been moved to the front lines – the company continues to pay their salaries and provide financial and moral support. They create requests for the units they serve and the company shuts them down, completely or partially.
Can you tell us about PIN-UP Ukraine’s charity initiatives?
From the very first week, our staff began volunteering, purchasing essential items and sending humanitarian aid to areas most affected by the war, where there was no food or water. In addition, we received specific requests from soldiers we knew personally and from their units, and we met those needs as well.
At first, we were helping haphazardly, then Marina Ilyina, the owner of the international brand PIN-UP, created the PIN-UP Foundation, a charity that helps socially vulnerable Ukrainians and those affected by the war, and we Started collaborating together. We help the Foundation financially to implement the LINE-UP humanitarian project, which provides emergency assistance to Ukrainians in frontline settlements. Volunteers travel to remote occupied areas, where there are often no shops, and help local people with whatever they need. In addition, the Foundation participates in the restoration of cultural monuments and has purchased a generator for the Kharkiv Metro to ensure its operation.
In total, PIN-UP has donated 134.8 million PLN to charity.
I personally finance part of the cost of the ASKOLD training center for organized troops, which provides training and education based on the combat experience of the Ukrainian army and NATO standards. More than 17 thousand people have passed through the center so far. The center exists thanks to donors and needs material resources, which is very important now.