The ongoing Russia-Ukraine conflict has led to many casualties, the destruction of infrastructure, and the disruption of multiple supply chains. One of the hard-hit sectors is online gambling, which is suffering significant losses in both Russia and Ukraine.
This article aims to show how the online gambling industry was and continues to be impacted by the Russia-Ukraine conflict and to also shed a light on the future of the industry when the conflict eventually ends.
Ukraine and the Online Gambling Industry
Ukraine formally legalized online gambling in 2020, after striking down a ban from 2009. This opened the door for foreign investment in the country’s new industry whereas some of the top gambling operators began operations in the country and many of them even opened offices there.
Ukrainian gambling entrepreneurs also benefited from the lifting of the ban, and some of them founded companies that have since become very valuable. Others returned to their native Ukraine as well. One such example is the sports betting company Parimatch, which became the first to be licensed in post-ban Ukraine in 2021.
After all, Parimatch was first founded in Kyiv in 1994. The company might have moved their headquarters to Cyprus, but they happily served Ukrainian customers when the market re-opened.
When the conflict broke out, Parimatch noted that many members of their team have begun volunteering in Ukraine, some of whom worked tirelessly to intercept Russian communications and to also find and disperse propaganda.
Parimatch has also been donating thousands of euros to support the Ukrainian war effort.
Other companies also showed their support by donating to the Ukrainian army, as well as local charities helping the displaced people in the region.
BeyondPlay, a new gaming operator, created a fundraiser where gambling leaders and players alike could support Ukraine. The fundraiser has already met its goal of raising £250,000. CDC Gaming Reports and GeoComply have also shown their support either through fundraising or helping with logistics and monitoring.
For now, the online gambling world is preoccupied with the unfolding situation and only discusses the important matter at hand – the preservation of life and the ending of the conflict. There is no much talk of business, which is more than understandable and valid at the time.
Russia and the Online Gambling Industry
Many Russians gamble online, yet online gambling is not legal. A federal law in 2006 officially banned online gambling, while land-based gambling was allowed in only four areas (Altay, Primorie, Kaliningrad, and Rostov).
Bookmakers, however, can take online bets, and online sports betting is thus perfectly legal. A 2019 law excluded remote sports betting from the otherwise strict ban.
Despite the ban, many Russian players have gambled online by accessing foreign websites. Still, the government has worked hard to end this practice and many online casinos from abroad cannot be accessed from Russian IP addresses.
More recently, in 2021, Russia also banned transactions to foreign online casinos, similar to the American UIGEA of 2006, which significantly reduced the number of Russian players online.
With the developing situation in Ukraine, this number has decreased even more as various payment services like PayPal and card issuers like VISA and Mastercard have suspended their services in Russia. It’s not only illegal to gamble online in Russia, it’s virtually impossible.
Still, considering the already low number of Russian players online, the conflict in Ukraine did not exactly change that much. Moreover, as opposed to Ukraine, Russia doesn’t have its own online operators whose job was put in jeopardy.
Overall Impact
Now that we’ve discussed online gambling in Ukraine and Russia, it’s time to talk about the potential damages to the industry that the conflict caused and will continue to cause.
Ukraine is in no shape right now to continue business as normal, so online operators based in Ukraine (whether they be native or foreign with local offices) suffer losses that cannot even be measured for now. Naturally, Ukrainian players have also decreased, which further damages the market.
These are the direct consequences of the conflict on the online gambling industry. There are, however, many more indirect consequences not only to Ukraine and its residents, but to the industry as a whole.
The conflict created massive supply chain issues in Europe, which further drove up the cost of necessities such as fresh produce, while the price of gas has gone through the roof as many countries can no longer rely on Russian gas (some have been cut off by Putin, while others have limited their imports).
When the price of gas is volatile and has the tendency to rise, all industries suffer, including the online gambling one. In addition, since the cost of living is rapidly rising, fewer people in Europe (and the world) would gamble, so the impact of the conflict could cost the online gambling market millions, if not billions of dollars.
It’s difficult to say whether things could ever go back to normal, but for now, the situation is only worsening.