How online casinos avoid taxation through “deposit returns”

Returning deposits instead of paying out winnings is one of the most widespread schemes in Ukraine’s gambling sector. The mechanism is simple: an operator accepts a bet, but when the player receives money back, the company declares it not as a winning (which is subject to taxation) but as a “deposit return.”

This mechanism was at the center of a recent high-profile decision by the Shevchenkivskyi District Court of Kyiv, which canceled additional tax assessments for Kosmolot and recognized more than UAH 4.5 billion (approx. $110 million) as deposits. The ruling has intensified doubts about the effectiveness of state oversight and highlighted how legal loopholes are used in the industry.

Who stands behind Kosmolot

According to open sources, the company’s owner is believed to be businessman of Russian origin Sergіy Tokarev. His business interests go beyond gambling. Through affiliated structures, he invests in venture funds and startups.

Sergіy Tokarev

Notably, Tokarev is also connected to the Kyiv School of Economics (KSE): the institution’s premises belong to companies linked to his charitable foundation. KSE’s president, Tymofiy Mylovanov, is a former economy minister and currently a member of the supervisory board of the state-owned defense conglomerate Ukroboronprom.

Tymofiy Mylovanov

In her asset declaration, Prime Minister Yuliya Svyrydenko reported a monthly salary of $6,000 from KSE.

Yuliya Svyrydenko

Transparency questions and the scale of losses

Taken together, these facts fuel debate among experts about the transparency of financial flows at the intersection of gambling, education, and the defense sector.

The head of the parliamentary finance committee, Danylo Hetmantsev, has stated that in 2024 alone Ukraine’s budget lost more than UAH 20 billion (approx. $488 million) in tax revenues due to gambling schemes. According to him, in 2025 the amount has already reached around UAH 10 billion (approx. $244 million).

Danylo Hetmantsev

Although gambling was legalized back in 2020, the online monitoring system that was supposed to prevent such abuses has still not been launched. The Ministry of Digital Transformation, led by Vice Prime Minister Mykhailo Fedorov, has repeatedly postponed its implementation, and now the system is expected to become fully operational only at the end of next year.

Mykhailo Fedorov

Ukraine’s gambling market continues to expand, but questions about its tax efficiency and its potential corrupting influence on adjacent sectors — from education to defense procurement — remain unresolved.