Over 900 illegal gambling halls shut down as Ukraine prepares to legalize gambling

Ukraine’s law enforcement shut down more than 900 gambling halls since Ukraine’s government moved to end illegal gambling in the country in late December, Prosecutor General’s Office of Ukraine reported on Jan. 10.

While gambling is illegal in Ukraine, thousands of illegal gambling halls have operated in Ukraine masked as lottery offices.

In December, parliament tried to pass legislation to regulate their work but failed. After that, Ukraine’s President Volodymyr Zelensky said all the gambling halls must be shut down immediately.

So far, Ukraine has initiated nearly 440 criminal proceedings against owners of the gambling halls and seized 11,600 slot machines and other equipment.

Overall, there are around 5,300 illegal gambling establishments in Ukraine, including lotteries, bookmakers and casinos, according to Oleksandr Okolit, head of the National Police’s Strategic Investigations Department.

The gambling business has been banned in Ukraine since 2009, but starting in 2012, the number of illegal gambling halls started to increase rapidly. Their owners used legal loopholes after the Ukrainian parliament – then controlled by the Party of Regions of Ukraine’s fugitive president Viktor Yanukovych – relaxed the gambling ban.

Currently, 715 mobile teams of investigators from the National Police are constantly monitoring the gambling business.

Before, Zelensky repeatedly declared that only casinos in five-star hotels should be allowed in Ukraine.

The decision to close the gambling halls came after the lawmakers in the parliament failed to adopt the draft law on the legalization of gambling on Dec. 19.

However, just two weeks after the raid had started some gambling halls begun to disguise themselves as karaoke music halls and internet cafés, Ekonomichna Pravda reported on Jan. 6. Only adults of 18 and older are allowed to visit such “karaoke places.”

On Jan. 9, Danylo Hetmantsev, the head of the committee on finance, taxation and customs policy in the parliament, forecasted that Ukraine’s state budget could receive around $190 million in 2020 if gambling business was legalized in the country.

“Only illegal establishments that still exist today will have losses because of this law,” Hetmantsev claimed in an interview with the Radio NV on Jan. 8.

However, few industry players think positively about each of the two existing bills on the legalization of gambling business. Anton Avdeev, a representative of MSL, one of the Ukrainian lottery operators, is sure that both laws – if adopted – will be detrimental for lottery business in Ukraine.

MSL calculated that, according to the bills, entering the gambling market will be too expensive.

If one decides to open a lottery even for a year, they will have to have nearly $21 million ready: some portion of it will form the company’s capital; the rest will have to be spent on licenses and bank guarantee.

In addition, it is Ukraine’s gambling regulator who decides in which bank a lottery owner will have to store money.

For casinos in Kyiv, the amount will range from $5.8 million to $8.2 million, depending on the law adopted. For 25 slot machines in a given gambling hall, the payments will constitute from $1.37 million to $2 million.

“Lotteries, as the safest form of gambling, will get a red light,” Avdeev told the Kyiv Post.