The President stated that it is necessary to adopt a law that will regulate the gambling business in Ukraine.Volodymyr Zelensky statedAlmost immediately after coming to power. And although the head of state was ready to do so back in the summer, the deputies were in no particular hurry. For example, the president was eager to have the law drafted by October 1 and passed by December 1. But the deadlines kept getting missed, so it ended up taking almost six months to draft the law, and the vote took place on December 19.
But here’s the most interesting part. After all the deputies had voted, it turned out there weren’t enough votes. And as a result, the law was NOT passed!
Despite the Servant of the People party giving it its all and providing 200 votes, the total was 213. The required number was 226.
Ultimately, the law was sent back for revision. Although this sounds quite mundane, President Zelenskyy was extremely indignant, not to say furious, at this outcome. He saw this course of events as a genuine act of sabotage, backed by very specific individuals who were desperate to see the new law passed.
“Yesterday, the Verkhovna Rada failed to pass a law legalizing gambling. We know who’s behind it. Don’t you want to play by transparent rules? Don’t you want to work in a civilized manner and pay into the budget? Well, let’s do it differently,” Zelenskyy wrote on Facebook the day after the vote.
But before we figure out how this is “different,” let’s figure out why (and who) dislikes the idea of bringing order to Ukraine’s gambling industry so much.
Is Ukraine’s gambling industry unwilling to be transparent?
The TV series “Servant of the People” already depicted a situation where the Rada repeatedly reversed the president’s fine decrees or endlessly postponed the vote. This continued until the deputies received calls from “unidentified individuals,” after which they all unanimously voted “yes.” Zelenskyy clearly assumes that the reality is the same today: someone simply doesn’t benefit from regulating the gambling industry in Ukraine, and it is these “individuals” who influence the Rada’s decisions.
Who’s on the suspect list? You don’t have to be Sherlock Holmes: experts believe that the regulated gambling industry in Ukraine is a thorn in the side of only three to five companies. Specifically, those that currently control the entire gambling industry in Ukraine.
Lottery operators battle for $5 billion
A brief explanation of what’s happening in Ukraine’s gambling industry today:
- In general, the gambling business was banned back in 2009.
- An exception is made for national lottery operators (those same 3-5 companies).
- These lottery operators have practically flooded the entire country with gambling. Every other building has a sign saying “Play Here” or “Lucky Lottery.”
At the same time, the line between the lottery and gambling business is very blurry.As in Kazakhstan, a slot machine differs from a lottery machine only in color. And this “legal loophole” allows lottery operators to extract enormous profits from the population—up to $5 billion per year, which is 10% of the entire Ukrainian budget!
The problem is that these revenues never reach the budget. Despite the fact that the operators appear to be legal, not all of them operate according to clear and transparent rules, let alone strictly comply with tax laws.
And even more so, not to mention the fact that, in addition to legal lottery operators, there are dozens of illegal or semi-legal ones in the country that have no connection with the licensed ones.
Or, on the contrary, they do. Figuring out who works for whom and who pays whom is hardly possible under the current state of affairs. This is precisely what led the president to conclude that changes must be made holistically.
As for the main “moguls” of the Ukrainian lottery business, these are the following companies:
- Ukrainian National Lottery (exists only with foreign investment, owned by a British citizen).
- MSL (99% of shares are owned by a Cypriot company).
- Patriot (100% shares in the hands of a Cypriot company).
And again: it doesn’t take a detective’s talent to spot a simple but effective scheme for funneling enormous amounts of capital abroad. Nor does it take a master of deductive reasoning to deduce the extreme reluctance of the ultimate beneficiaries to part with such money or even pay a portion of it in taxes.
And also to assume that interested parties have sufficient financial resources to influence officials and even deputies.
Why was the law rejected?
However, it may not be that simple. The question “Why wasn’t the law ultimately passed?” elicits many different opinions.
“There’s really nothing to vote for. The bill is so flawed that it turns the entire market into a sham,” says Elena Mochalova, head of a public organization supporting the legalization of gambling in Ukraine. That is, the organization that should be primarily pushing for the law’s passage. However, the bill’s poor quality is the main reason why it received almost no support from lawmakers outside the ruling party.
A second possible reason why the law ultimately failed to pass was the lack of consensus among deputies on its intended form. Initially, approximately seven different versions were submitted for hearing. However, only one was put to a vote—and the authors of the other six, naturally, disagreed with this approach.
“Most likely, this reaction was caused by the fact that a compromise was not found between the parliamentary groups and a single law was not passed,” Mochalova believes.
Some deputies, such as Irina Vereshchuk, are even claiming that the only reason the law wasn’t passed was due to technical difficulties: participants in the hearing simply didn’t understand which specific law they were supposed to vote for, and so they clicked the “no” button.
Although in the same film “Servant of the People,” the deputies also constantly encountered “technical difficulties” when it was necessary to pass a law that was objectionable to certain individuals.
Zelensky strikes back: 500 gyms have already closed!
The most interesting part of this failed law’s history is its consequences. Zelenskyy was right to warn that the conversation would be “different.” That same day (or rather, that night), he ordered Interior Minister Arsen Avakov to CLOSE all lottery parlors in the country.
“Everything” in this case means “absolutely everything.” And within 24 hours.
Apparently, the effect was significant. Police immediately deployed on “night watch,” so that by the morning, Ukrainians saw many empty or closed lottery parlors.
And yesterday, Advisor to the Minister of Internal Affairs of Ukraine, Volodymyr Martynenko, cheerfully declared that there is no longer a single operating gambling establishment in the entire country.
“They’re gone. All the establishments are closed. And if it turns out that such an establishment is still open, I would ask that you report it to the police,” he said.
According to Martynenko, police have confiscated 4,500 lottery machines worth a total of 50 million hryvnias (135 million rubles) over the past few days. They have also opened 250 criminal cases related to the illegal organization of gambling businesses.
As the official explained, the reason for the night raid was very simple:
- Previously, the government had permission to organize electronic lotteries.
- The permit was then revoked in the hope that a new law would establish the rules.
- When the law failed, there were effectively no rules left in Ukraine to allow lotteries to operate.
- If so, they had to be closed immediately.
Prime Minister Oleksiy Honcharuk added that 150 gambling establishments were closed on Friday night alone, and that most of them were small organizations without any licenses:
“These establishments enter into distribution contracts with state lottery operators. They use these contracts as cover, but they install ‘slot machines’ on their premises, which are prohibited by law.”
At the same time, experts emphasize that for a witch hunt to be carried out quickly and successfully, the list and addresses of “witches” must be prepared in advance. In other words, the police knew in advance who to rush to arrest if such an order was given.
There is also no doubt that the police would hardly have launched a raid on their own initiative if the order to “carpet bomb” lottery halls had not come directly from the minister and the president.
“There was a terrible dressing down, after which the president called Avakov and accused him of having his people sabotaging the presidential bill. Avakov responded: ‘If you think so, then I’ll shut down all gambling establishments in the country altogether,’” is how one MP describes the events of the evening of December 19.
Is it true that the lottery business will not return?
Despite the force of the lightning bolt Zelensky unleashed on the recalcitrant lottery operators in his anger, there are serious doubts that it burned them to the ground. 500 closed gambling establishments is certainly a good thing. But there are estimates that there are around 40,000 of them in Ukraine. If so, then there are, to put it mildly, quite a few survivors.
According to Elena Mochalova, law enforcement often works in tandem with lottery operators. A common practice, for example, is to call the operator in advance and inform them of an inspection, allowing them time to lock the door and post a “closed” sign. An even more common practice is to open the door only for customers who have been prearranged by phone or messaging app.
It turns out that all the measures taken by the president are aimed primarily at intimidating businesses and forcing operators to crawl to the president’s office asking for some kind of law to be passed that would allow them to operate.
However, so far, it seems no one is rushing to make such requests. So law enforcement still has time to search the country for any gambling establishments they’ve accidentally overlooked.And for the deputies – to further develop the law.
Leave a Reply