The Ukrainian government has taken a significant step forward in reshaping its gambling landscape with the establishment of a new regulatory body called PlayCity. This development comes at a critical time as the nation works to distance itself from the corruption scandals that plagued its previous gambling oversight commission. Announced in March 2025, PlayCity will serve as the central authority responsible for implementing and enforcing gambling policy following the dissolution of the Commission for the Regulation of Gambling and Lotteries (KRAIL), which was formally liquidated after allegations of corruption and troubling connections to Russian-affiliated online casinos surfaced.
Ukraine’s Gambling Evolution: From Ban to Legalization
Ukraine’s relationship with gambling has been tumultuous over the years. Following a decade-long prohibition, the nation reopened its doors to legal gambling operations in 2020. This significant policy shift came shortly after President Volodymyr Zelenskyy’s election in 2019, when he pledged to legalize casinos in luxury hotels as part of a broader strategy to boost tourism investment.
What ultimately materialized, however, extended far beyond Zelenskyy’s initial vision. The legalization encompassed a much wider spectrum of gambling activities than originally intended. The legislation permitted casinos to operate in 4 and 5-star hotels, while slot machine halls were allowed in establishments with 3 to 5-star ratings. Perhaps most significantly, the law also embraced online gambling platforms, dramatically expanding the industry’s digital footprint across the country.
Economists typically classify gambling as a “demerit good” – a service whose consumption is viewed as socially undesirable due to potentially negative effects on consumers. The challenge with such services is that complete prohibition rarely proves effective. Instead, gamblers simply migrate to illicit gambling operations or seek opportunities in other jurisdictions – a transition made increasingly seamless with the proliferation of online gambling platforms.
This reality underscores the complex balancing act Ukraine faces: regulating an industry with inherent risks while preventing the flourishing of an underground market that could potentially finance organized crime or even serve as a conduit for foreign influence operations.
The Fall of KRAIL: Corruption Scandals and Russian Connections
The Commission for the Regulation of Gambling and Lotteries (KRAIL) was established as Ukraine’s primary gambling regulatory body following the 2020 legalization. However, its reputation was severely damaged by corruption allegations that eventually led to its downfall.
In a high-profile case that exemplified these issues, Ukraine’s top anti-corruption court removed KRAIL’s former deputy head after accusations emerged of the official illicitly receiving $90,000 in exchange for processing licenses and permits. The National Anti-Corruption Bureau of Ukraine (NABU) and the Specialized Anti-corruption Prosecutor’s Office (SAPO) arrested the KRAIL member on August 20 following covert investigations into what detectives described as “systematic acceptance of illegal benefits” at the regulator.
The corruption case involved permits issued to business premises in the Chernihiv and Zaporizhzhia regions, with operators reportedly promised gambling licenses in return for bribes. The Supreme Anti-Corruption Court detained the unnamed suspect and set bail at UAH5m (approximately £164,500). Investigators continued their work to expose what they believed to be an “organised criminal group” operating within the regulatory framework.
Corruption concerns extended beyond individual cases to become a central topic during the EU-Ukraine Summit in Kyiv, where European Council President Charles Michel and European Commission President Ursula von der Leyen discussed judicial reforms and anti-corruption measures with President Zelenskyy.
Against this backdrop of institutional corruption, coupled with allegations of KRAIL’s potential connections to Russian-affiliated online casinos, President Zelenskyy signed Law No. 9256-d, effectively liquidating the compromised regulator and paving the way for a new oversight body.
PlayCity: A Fresh Start for Gambling Regulation
In March 2025, the Cabinet of Ministers formally approved the establishment of PlayCity as the successor to KRAIL. Taras Melnychuk, the cabinet’s representative in parliament, revealed initial details through a Telegram message, describing PlayCity as a “central executive body” tasked with implementing state policy in gambling and lottery regulation.
PlayCity will operate under the direct coordination of the Cabinet through Deputy Prime Minister for Innovation, Education, Science, and Technology Development, Mykhailo Fedorov, who also serves as the Minister of Digital Transformation. This arrangement ensures that the new regulatory body aligns closely with the government’s broader digital transformation and anti-corruption initiatives.
To facilitate a smooth transition, PlayCity will maintain operational continuity in several key aspects. The agency will employ 61 staff members—precisely matching the number of positions eliminated from KRAIL—and will occupy the same physical premises previously used by its predecessor. This approach helps minimize disruption while symbolically representing a fresh start with new leadership and oversight.
Financial continuity has also been preserved, with PlayCity operating within the 2025 state budget allocation initially designated for KRAIL, totaling UAH160.4 million. However, the government has already reallocated UAH14.3 million to the Ministry of Digital Transformation to support the initial setup and operations of the new regulatory structure.
Reforming Ukraine’s Gambling Landscape
The Ukrainian government has emphasized that PlayCity’s primary objectives extend beyond mere oversight to include transformative changes in how gambling is regulated. Key among these goals is the digitization of the gambling licensing process, which aims to streamline operations while reducing opportunities for corruption that thrived in the more opaque paper-based systems of the past.
Another central focus will be implementing stringent market oversight mechanisms to address the persistent challenge of illicit gambling operators. This is particularly critical considering the government’s assessment that the shadow gambling market costs Ukraine up to UAH 10 billion annually in lost revenue. By bringing these operations into the regulated sphere, officials believe they can simultaneously eliminate corruption, enhance market transparency, and substantially increase budget revenues.
“The state loses up to UAH 10 billion due to the shadow market. Digitalization of this sector will help eliminate corruption, make the market more transparent, and increase budget revenues,” stated the Ministry of Digital Transformation in explaining the rationale behind the reforms.
Looking ahead, Ukrainian officials are considering innovative approaches to gambling regulation. Deputy Minister of Digital Transformation for IT Development Oleksandr Borniakov has indicated that future plans may include leveraging artificial intelligence to detect gambling addiction patterns and enhance the existing register of gambling addicts. However, he cautioned that such advanced features would not be implemented immediately, as the primary focus remains on establishing the new regulatory framework and ensuring its effective operation.
Addressing Gambling-Related Social Issues
The reformation of Ukraine’s gambling oversight coincides with growing concerns about gambling addiction, particularly among military personnel. In March 2024, Ukrainian soldier Pavlo Petrychenko (who passed away in April 2024) spearheaded a petition calling for stricter regulations on online casinos, highlighting how many soldiers turn to gambling as a stress coping mechanism, often leading to addiction. The petition garnered the necessary 25,000 signatures within hours, demonstrating widespread public concern about the issue.
In response, President Zelenskyy urged authorities to gather comprehensive statistics on gambling addiction among service members and subsequently enacted a decision from the National Security and Defense Council implementing restrictions on online gambling.
The regulatory overhaul has also introduced significant changes to gambling advertising. New restrictions include a complete ban on gambling games and bookmakers advertising, valid until the adoption of comprehensive legislation combating gambling addiction. Online advertising will be permitted but must not target consumers under the age of 21, while television advertisements will be restricted to between 11 PM and 6 AM. Sports-related gambling sponsorships will remain permitted, but with limitations.
The Ukrainian government’s comprehensive approach to reforming its gambling regulatory framework reflects a recognition that effective oversight requires addressing both the economic and social dimensions of the industry. By establishing PlayCity and implementing these wide-ranging reforms, Ukraine aims to create a gambling sector that contributes positively to the economy while minimizing social harm and eliminating opportunities for corruption and foreign influence—a challenging but necessary balancing act for a nation navigating complex economic and security challenges.
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