Taking the plunge: Cosmolot’s CEO on how the Ukraine gambling market is shaping up

Last month, the Commission for Regulation of Gambling and Lotteries (UGLC) in Ukraine awarded the first online casino licence to former lottery brand Cosmolot (previously known as Kosmolot).

The firm is led by CEO Sergey Potapov, an entrepreneur in the social gaming space who decided to switch over to online gambling. He has built and scaled a team which specialises in customer acquisition for the CIS markets.

Here Potapov talks about how he plans to differentiate the Cosmolot brand and the regulatory and compliance questions that still remain within the market.

EGR Compliance: Can you give us some background on the Cosmolot brand, how do you plan to differentiate it from the competition?

SP: For the last year I have been actively involved in how we would be positioning ourselves within the market. And thanks to the efforts of the team, we have a clear target in our mind. We want to be the most trusted online gaming brand in Ukraine.

We will shortly be launching a massive brand campaign across TV, radio, print and offline channels. At the core of our marketing and product communication are Simplicity, Balance and Playfulness.

Call it whatever you want but these are our guiding principles. Currently most of the communication in the local market focuses on ‘Big Wins’ or the ‘Win with us’ angle. Cosmolot plans to challenge that and to focus on the ‘Entertainment’ aspect.

Our team is aligned on the fact that ‘gambling’ is something that has a specific space and time in our customers day-to-day life. There is a time, length and reason for our products to be consumed by our customers. We are to remain on the sidelines of their day-to-day lives and should they choose to play, we will provide them with all necessary features to do it in a safe and fair manner.

EGR Compliance: What will the Cosmolot product offering look like when you launch?

SP: We decided to start with casino as commercially and operationally I have been able to gather a strong team in this area. But it is highly likely we will be expanding our product portfolio by the end of this year to poker.

I will not rule out sports betting, but it is a bit too early for me to confirm when we will be doing that. We have partnered with a strong platform provider to ensure that we meet all the compliance requirements.  There will be a huge selection of games for our players and I am confident that our promotional offers will be of remarkably high quality.

EGR Compliance: How would you describe your competition currently? Any forecasts on how the market will shape?

SP: Like I mentioned before, the grey nature of the market has allowed local brands to operate for a while. I would say I am excited to be competing with brands like Parimatch which deserves compliments for building a successful brand locally. You are highly likely to see at least three to four brands fighting for the top slot in sports betting and around six to seven casino-focused brands by the end of this year.

Most of the brands you will see will have a strong CIS presence and that will be their advantage over any international operators who wish to compete in Ukraine.

Branding, I believe, will the most crucial factor in deciding the top three positions in this market. And our aim is to be a consistent second in the next couple of years.

EGR Compliance: Could you describe the landscape of the online gaming market in Ukraine right now?

Sergey Potapov (SP): It has operated as a grey market for quite a long period of time. The operations were mostly based under the supervision of the lottery commission which did not take a strict view of online gaming. It is a welcome change, one that will bring more choices, transparency and options for the Ukrainian players.

I expect the competition to heat up in the next few months with lots of local applicants and at least two to three international competitors. The market is not saturated and there is enough room for growth both for established and new brands. I expect it to go through the same cycle as other regulated markets where cost of acquisition will rise sharply, player values will be tough to maintain and eventually consolidation. But then there is a lot of time left for that to happen.

EGR Compliance: Do you have any concerns about the fact that no taxation system currently exists for licensed operators?

SP: Currently the taxation system is the most delicate, unresolved aspect of the regulation. However, a really good step has been taken by the regulators to talk to potential operators and get their opinion on how to bring about clarity. So right now, we have presented our opinion and concerns and are waiting for the next round of talks.

EGR Compliance: What sort of technical requirements would you expect to apply to operators?

SP: I believe the technical requirements will evolve as the regulation matures. It is unwise to expect that everything will be crystal clear from the beginning. Data privacy, platform certifications and game certifications in my opinion are inching closer to the European standards.

EGR Compliance: Are you concerned that in being the first operator to receive a licence, you will become used as an example for the new regulator’s potentially punitive measures?

SP: I think we have a big responsibility now to show the way in terms of compliance, but no I am not concerned really about it as we have tried our best to do the due diligence required for the licence. We are in communication with the regulator around areas which are not clear and asking for their opinion instead of forming our own. The intention is to stand out as an example in terms of compliance.