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November/December 2016 // PUBLIC GAMING INTERNATIONAL //
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Credit for navigating MSL through these
many years of adversity goes to one person
—Georgiy Lozhenko. MSL success is pos-
sible due to his leadership, moral sense of
purpose and strong will, and strategic vision.
Mr Lozhenko practically saved the Ukrai-
nian lottery market in the 1990s, navigating
the transition from government-owned and
operated to private ownership and market-
driven economy. There being no mechanism
for an orderly transition resulted in severe
economic and political insatiability. Mr
Lozhenko continues as the President and
Chair of the Board of MSL.
January of this year was a most diffi-
cult time. New high taxes were introduced
and then financial sanctions were imposed
against MSL and another Ukrainian lottery
operator, with the intention to block our ac-
tivities and provide exclusive conditions for
another operator in the lottery market. Mr
Lozhenko held fast to our principles with
confidence that doing the right things and
with commitment to the principles of the
European Lotteries, the Ukrainian lottery
market would return to a normal situation.
His energy and mission were embraced by
all employees and helped to us survive and
protect the company and the team of profes-
sionals who are dedicated to operating MSL
with integrity and dedication to serving the
people of Ukraine. Over the last two years,
the Ukrainian Army and the Ukrainian peo-
ple harnessed an iron will to resist the forces
of terrorism and disruption. So too has
MSL. I am pleased and honored to serve the
people of Ukraine with Mr Lozhenko. On
the eve of Georgiy’s jubilee, and on behalf
of my colleagues in MSL, I wish him all the
best. I believe that it is important that young
professionals who come to work in our in-
dustry know about the work ethic and forti-
tude of legendary individuals who have done
so much to protect the integrity and sustain-
ability of lotteries all around the world.
—Evgeniy Vlasenko
GEORGIY LOZHENKO:
LEADING MSL THROUGH 25 YEARS
OF CHANGE
Paul Jason:
How have things changed
since our last interview of September 2014?
Evgeniy Vlasenko:
The last
two years were a time of unrealized
hopes. A western-minded govern-
ment came to power. We expected
this to improve cooperation from the
Ministry of Finance, and facilitate the
development of the market based on
the principles which the EL (European
Lottery Association), and the Europe-
an Union as well, proclaim. But after
a succession of three Finance Minis-
ters, each bringing in a new agenda
and new set of priorities, not much has
changed. New taxes were introduced
in January of 2015. Before that, lottery
operators paid tax based on GGR and
now it is based on turnover. In parallel
with that, a tax on winnings was ap-
plied. The operators, not players, are
responsible for correct calculation and
collection of this tax. The tax is appli-
cable for all wins, even minimal prizes.
And on top of all that, a new tax on
profit for the operators was introduced.
These changes that may have been in-
tended to increase net proceeds to the
government have had, not surprisingly,
the opposite effect.
Our costs have increased to manage
these changes. Imagine the burden on
the operator to adjust the central system
and ERP system to correlate all prize
payouts with the winner, calculate the
tax that is due, withhold the correct
amount from the payout, and report
and remit the taxes to the government.
We had to do that in two days! And
changing the tax from GGR to turnover
crippled our high-payout games like
sport-betting and video lottery. Players
are not happy that they do not get their
prize in full as before.
One might have decided to simply
discontinue business operations un-
der those conditions. But not us. We
hoped that once the negative impact of
these new conditions was observed by
the government officials, i.e. the drop
in sales and taxes collected, they would
amend the onerous rules and tax struc-
tures back to what it was in 2014. That
would enable us to generate more sales
and net taxes again. It was in 2014 that
Crimea was annexed by Russia and war
in the Eats caused despair, uncertainty,
and lack of confidence about the future
in Ukraine. This provoked a decline of
the market and decreased the interest
that people had about lotteries.
EU Sanctions against Russia for its fail-
ure to comply with the Minsk peace agree-
ment which calls for Russia’s withdrawal
from Ukraine are still in effect. And I
just read today that EU and NATO of-
ficials do not expect Russia to fully comply
in the near future. What is the condition
in the Ukraine now? Are people able to go
about living normal lives or is there fight-
ing and disruption? What does the future
look like to you?
E. Vlasenko:
In terms of the Minsk
agreements and obligations of the op-
posing sides, I would leave conclusions
to the politicians and governments.
One thing is factually clear—norms
of international law are not followed,
Ukraine does not control 450 km
(300 miles) of its eastern border, and
Ukrainian Hrivna is replaced by the
Russian ruble in the territory which
is under terrorist occupation. These
are facts which also point at who is re-
sponsible for financing and managing
the actions which create such political
and economic instability.
Ukraine is in a very unusual situation.
People from all different nationalities,
religions, and cultural backgrounds
have been living peacefully here for so
many years. Nobody thought about the
different backgrounds, we all just lived
as equals, as friends and countrymen.
Now we just want this military turmoil
to stop so we can return to normal life.
Ukraine borders with Moldova on
the south. And between them there
is an unrecognized territory called
TransDnister republic. It had been
a part of Moldova but is now going
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