The inception of the gambling industry in Eastern European countries occurred much later than in their Western counterparts. Consequently, the market is not firmly established, and the adoption of responsible gaming rules is progressing at a slower pace in Eastern Europe. Compounding the issue is the inclination of industry entities to sidestep taxes or navigate around stringent government regulations, resulting in the gambling sector often operating within the ambiguous realm of the "gray" zone.
Development of Gambling in Eastern Europe
Discerning general trends in the overall development of gambling across all Eastern European countries proves challenging. Each nation possesses its own set of laws and market characteristics. Furthermore, the impact of the pandemic and the continual evolution of gambling legislation in various countries have significantly influenced the regional situation and the level of gambling revenue.
Most of the laws governing gambling in Eastern European countries were enacted during the 2000s. It is widely acknowledged that a significant portion of the revenue is derived from illicit markets. Notably, the Czech Republic, Poland, and Romania boast the highest turnover of funds within the Eastern European gambling industry. The Baltic countries—Latvia, Lithuania, Estonia—distinguish themselves with the best legislative framework and adherence to responsible gaming principles.
Countries like Georgia and Armenia are currently undergoing active development and seeking investments. The most lucrative markets, employing "gray" profit schemes, are found in the Czech Republic, Poland, and Romania. Ukraine only lifted its complete ban on gambling in 2020, and the high taxation rates have led to regulatory challenges, with numerous companies evading taxes through collaboration with banks and government officials.
Hungary is acknowledged for possessing a well-organized gambling market that aspires towards transparent regulation and a responsible approach. In the Russian Federation, gambling is restricted to five regions. The Balkan markets, particularly the Serbian market, are currently being cultivated by major industry players from Western Europe and America and are considered the most promising.
Advantages of the Eastern European Region for Gambling Investment
The Eastern European region stands out as an active and promising market, offering favorable conditions for investment in the gambling industry. Most countries in the area are in the process of forming their markets, presenting an enticing opportunity for large international companies to make substantial investments.
Key advantages include:
• Diverse approaches to legalization and IT development: Eastern Europe exhibits varied approaches to legalizing the gambling industry and implementing IT solutions for online gambling. The markets in these countries are still evolving, resulting in low competition and highly favorableconditions for business development and scaling, both in traditional brick-and-mortar establishments and the online gambling sector. This dynamic environment acts as a stimulus for the comprehensive growth of the industry.
• Simplified taxation system in Ukraine: Ukraine offers a simplified taxation system in the gambling sector. However, the challenging military-political situation in the country has diminished its overall attractiveness, particularly for companies seeking to operate within regulated frameworks. Conversely, for entities operating in the "gray" zone, the Ukrainian market has become a particularly intriguing region.
• Attractiveness of the Baltic countries: The Baltic countries, including Latvia, Lithuania, and Estonia, emerge as one of the most attractive segments of the region. These nations boast simplified entry into the iGaming market, a low tax rate, and favorable legislation in the gambling sector, emphasizing responsible gaming practices.
• Georgia as a tourist hub: Georgia stands out as a tourist destination that draws players from Turkey, Bulgaria, Romania, and Russia. Despite recent legislative tightening in the gambling sector, it remains a favorable territory for investments in land-based gambling, leveraging its appeal as a tourist region.
