Ukrainian Regulator Investigating Gambling Operators’ Illegal Russian Ties

November 11, 2022
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The Ukrainian Regulatory Commission on Gambling and Lotteries (KRAIL) has teamed up with the Security Service of Ukraine to launch a probe into the potential ties between Ukraine-based gambling industry players and persons and entities based in Russia.

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The Ukrainian Regulatory Commission on Gambling and Lotteries (KRAIL) has teamed up with the Security Service of Ukraine (SBU) to launch a probe into the potential ties between Ukraine-based gambling industry players and persons and entities based in Russia.

The Russian invasion of Ukraine has pushed Kyiv to ban local companies from maintaining such ties, but, despite this decision, the Ukrainian authorities believe that some Russia-backed entities are still present in the Ukrainian gambling market.

“Information received from the Security Service of Ukraine may indicate the presence of indirect relations of control by residents of the Russian Federation over the activities of certain organisers of gambling,” the Ukrainian regulator said in a statement.

Acting on this information, “the Commission has begun to check such information and the authenticity of the information in the documents submitted by the licensees to obtain the relevant licenses” to run gambling operations in the Ukrainian market, KRAIL said.

Representatives of the two institutions recently held a working meeting “with the aim to agree on an effective mechanism of cooperation with regards to the implementation of measures aimed at neutralising threats to the national interests of Ukraine,” according to the statement.

The regulator did not disclose which companies are covered by the probe, but it emphasised “the inadmissibility of any ties between organisers of gambling with aggressor states” that “carry out armed aggression against Ukraine.”

If such “violations by gambling organisers are detected, the license [of the violator] will be revoked. The Commission's position on this issue is unchanged: no licensee who does not comply with the requirements of the law will operate in Ukraine,” according to KRAIL.

Last month, the Ukrainian regulator said it had received a number of requests from local industry players to define “a clear list of municipalities that belong to temporarily occupied territories on which, under martial law, the activities of state lottery operators and gambling organisers are prohibited.”

KRAIL has also reminded local industry players of their obligation to pay their annual licence fees in spite of the martial law the country’s authorities introduced in the aftermath of Russia’s attack against Ukraine.

To accompany the enforcement effort, on November 8, 2022, KRAIL opened a consultation on a draft law "On the Peculiarities of Implementation of State Regulation in the Sphere of Organization and Conduct of Gambling Games and in the Lottery Sphere during the Legal Regime of Martial Law".

The purpose of the draft is to support and provide additional guarantees to gambling operators for the conduct of activities under martial law.

As of late September 2022, there were eight casinos and 60 slot halls licensed to operate in the Ukrainian market. However, due to the ongoing war, only five casinos and 39 slot halls were open to local players, according to data released by KRAIL.

Since the war began in February, KRAIL has prepared a list of 38 Russia-linked entities that have provided their services to Ukraine’s inhabitants. The list comprises 26 bookmakers and lottery operators, three Russian state-owned lottery operators, eight casinos and slot halls and one financial service company. Most recently, the agency shut down the Ukrainian operations of Russian bookmaker 1xBet.

A gambling industry consultant told VIXIO GamblingCompliance that “there is a rather large ongoing reform in the [Ukrainian gambling] market” which “can also be considered as somewhat of a reaction to the 1xBet scandal”.

Earlier this month, the Ukrainian regulator said that, between January 2021 and October 2022, KRAIL collected more than UAH2.436bn (€66m) in gambling tax revenue from the country’s industry players. However, of these, the agency collected only UAH856.5m this year as a result of Russia’s invasion and the resulting challenges to running gambling operations.

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