Ukraine finalises lottery licence competition with three operators

Ukraine has completed a pivotal phase in the reform of its state lottery sector with the conclusion of an open competition to determine which operators may legally provide lottery services under a modern regulatory framework. This development is intended to bring a market that has been largely unregulated for more than a decade under transparent state oversight and establish stronger protections for both consumers and the state.

The state agency tasked with regulating lotteries and gambling, PlayCity, has identified MSL, Patriot and Ukrainian National Lottery as the companies that may receive licences to operate. These decisions are part of a broader effort to transform an industry long characterised by legal ambiguity and limited accountability into one that meets contemporary standards of regulation, digital reporting and fairness for players.

Background to the reform

For more than ten years, Ukraine’s lottery market operated in what government officials have described as a legal grey zone. Under the older legal regime, licences that had been issued by the Ministry of Finance expired between 2013 and 2014, leaving operators to continue activity with minimal formal oversight. State authorities acknowledged that a lack of updated legal tools, transparent reporting and enforceable compliance measures created risks of unmonitored activity, limited budget revenue and little assurance for players that games were fair and winnings were paid legitimately.

In response, the government initiated a reform process designed to bring lottery activity back into a regulated framework and improve transparency across the sector. Central to this effort was restructuring the institutional framework for gambling and lottery oversight, including the creation of PlayCity as a state agency reporting to the Ministry of Digital Transformation. This agency replaced the former regulatory body in 2025 and assumed responsibility for implementing new rules and tender processes for licences.

Open competition and selection of operators

At the end of 2025, PlayCity opened an official licensing window for lottery operators. The competition required companies to demonstrate compliance with updated licensing criteria, which were designed to ensure both operational capacity and the ability to maintain high standards of reporting and control. Among the conditions for eligibility were requirements related to digital reporting systems, wide geographic distribution of sales points and at least three years’ combined experience operating state lotteries. Firms were also required to operate websites in the .UA domain zone and demonstrate significant authorised capital and infrastructure for conducting lottery operations.

Despite the open nature of the tender, no new operators entered the process beyond the incumbent firms. Existing legislative conditions and operational requirements under current regulations were seen as limiting entry by new domestic or international companies. As a result, MSL, Patriot and Ukrainian National Lottery emerged as the winners of the competition and are now positioned to obtain official licences once further procedural steps are completed.

Licensing procedures and new operational requirements

Following the publication of competition results, the selected operators have ten days to submit formal licence applications. Once those applications are reviewed and approved by the regulator, companies will have an additional ten days to pay the annual licence fee. Under the new framework, each operator is required to pay an annual fee of UAH 24.2 million.

Under the updated licensing conditions, all operators must implement robust electronic reporting systems. Every lottery ticket and terminal must carry a unique QR code that allows consumers and authorities to verify the legality of the sale and confirm the legitimacy of the equipment. The real‑time tracking of sales and payouts through digital systems is designed to provide a reliable audit trail that addresses the transparency deficiencies of the past and gives the state greater oversight over turnover and prize distribution.

These operational requirements aim to reduce the potential for illicit activity in the sector while ensuring that players can trust that draws are fair and that winnings will be paid. Equal rules for all licensed businesses were introduced to prevent preferential treatment and promote competitive fairness across the industry.

Transitional licence duration under martial law

The licences awarded through this competition are structured as a transitional arrangement tied to the current state of martial law. Rather than the ten‑year terms provided under the existing law on state lotteries, the new licences are valid for the duration of martial law plus one year, with a total maximum duration of three years. The shorter timeframe was intentionally chosen by authorities to avoid embedding outdated regulatory conditions into long‑term licences before the underlying legal framework is modernised.

Government regulators have emphasised that this transitional phase provides the Ministry of Digital Transformation and Parliament with the necessary time to review and update core laws governing the lottery market. Within this interim period, they plan to implement broader legislative reforms that will formalise modern selection mechanisms, strengthen enforcement tools for the regulator and clarify operating standards for future licence competitions.

Planned legislative and tax reforms

Authorities acknowledge that structural reform of the lottery sector cannot be completed solely through licensing procedures. A series of amendments to key laws are expected to follow, including revisions to the 2012 Law on State Lotteries and changes to the Tax Code.

The lottery law has not been substantially updated for more than a decade and currently lacks provisions to effectively support modern regulatory oversight, transparent enforcement and fair competition. Proposed amendments are intended to introduce clearer mechanisms for selecting operators, empower regulators with meaningful enforcement capabilities and establish transparent operating rules that align with international standards.

Tax reform is also seen as an essential element of the sector’s modernisation. Under the current tax regime, lottery winnings and operator revenues are taxed on the full payout amount without deducting ticket purchase costs. Government officials have said this approach encourages shadow activity and undermines efforts to fully integrate the sector into the formal economy. They aim to develop a balanced tax framework that supports legalisation, incentivises compliance and enhances state revenue without discouraging legitimate business activity.

Implications for the lottery market and future opportunities

While the completion of the licensing competition represents a significant step forward, it is only the first phase in a broader agenda of reform that will unfold over the coming years. Its immediate goal was to relaunch the lottery market under new rules that improve transparency, strengthen consumer protections and generate stable budget revenue through licence fees and taxation.

Looking ahead, the government has signalled its intention to open the market further once the legislative environment is updated. International operators with established experience in regulated markets may be eligible to compete in future licensing rounds under revised rules that level the playing field and encourage global investment. Such participation could bring new products, technologies and expertise to Ukraine’s lottery sector while reinforcing regulatory standards and consumer confidence.

If these reforms are implemented as intended, the structural shift in Ukraine’s lottery market may serve as a model for similar transitions in other sectors of the wider gaming and entertainment industry. The move from prolonged legal uncertainty to a regulated, transparent market model aligns with broader efforts to modernise the country’s economic framework and strengthen the rule of law in commercial activities.

Conclusion

Ukraine’s finalisation of the open competition to license lottery operators marks a vital milestone in the transformation of a long unregulated market. With MSL, Patriot and Ukrainian National Lottery poised to begin operations under new conditions, the state has taken a meaningful step toward establishing a transparent, accountable and digitally‑enabled lottery sector. Continued legislative reform and tax restructuring will be essential in cementing these gains and enabling expanded participation in the future. The success of this process will be measured by enhanced consumer trust, improved state oversight and greater contributions to public finances.

FAQs

What is the recent change in Ukraine’s lottery licensing system?
Ukraine has completed an open competition to select licensed operators under updated rules designed to enhance transparency, reporting and regulatory oversight.

Who are the companies selected to operate lotteries in Ukraine?
The operators identified in the licensing competition are MSL, Patriot and Ukrainian National Lottery.

What is PlayCity’s role in the lottery market?
PlayCity is the state agency responsible for regulating lotteries and gambling, overseeing the licensing competition and enforcing compliance.

How long will the new licences be valid?
The licences are valid for the duration of martial law plus one year, with a maximum validity of three years in this transitional phase.

What must operators do to comply with the new licensing conditions?
Operators must implement electronic reporting systems and assign a unique QR code to every lottery ticket and terminal for verifiable legal sales.

Why does Ukraine use a shorter licence period instead of a ten‑year term?
The shorter licence period allows lawmakers time to reform the legal framework before issuing long‑term licences.

Are international companies able to enter the Ukrainian lottery market now?
Under current legislation, no new international operators entered this competition, but future legislative reform aims to attract global participants.

What legislative changes are planned for the lottery sector?
Authorities plan to update the Law on State Lotteries and revise tax laws to clarify rules, strengthen enforcement and encourage transparency.

How will the reform affect players?
Reform is designed to ensure fair lottery draws, transparent ticket sales and reliable payment of winnings, enhancing player confidence.

What fiscal impact does the government expect from the new lottery framework?
The government expects increased revenue from annual licence fees and improved tax compliance through transparent reporting.