Ukraine Blocks Offshore Casino Platforms Operating from Russia

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Ukraine President Volodymyr Zelensky vowed Monday that his troops won’t retreat from Bakhmut, the devastated Eastern Ukrainian city that Russian forces have sought to capture for more than six months. Though far less impactful to the ongoing war, Ukraine also announced this week that it’s taken steps to rid Russian businesses of being able to electronically enter the country via online channels.

A man carries a young girl on his shoulders in war-battered Ukraine. Ukraine recently began cracking down on illicit offshore gambling networks that target Ukrainian gamblers. (Image: UNICEF)

Officials with Ukraine’s Security Service, in conjunction with the country’s Gambling Council, said Monday that hundreds of illicit online casino websites operating from outside the country’s borders have been successfully blocked. Internet users in Ukraine supposedly can no longer access those unregulated, illegal iGaming platforms.

Zelensky lifted Ukraine’s prohibition on brick-and-mortar casinos in 2020, but only one casino has since opened — the Billionaire’s Casino in Kyiv inside The InterContinental Hotel. The luxurious boutique gaming room offers about 50 slot machines and 16 table games.

Zelensky’s gambling law allows casinos only inside hotels. The minimum age to gamble is 22 years old.

The COVID-19 pandemic followed by Russia’s invasion of Ukraine has kept additional gambling developments on hold. After Russia began invading Ukraine beginning a year ago last month, Zelensky ordered all in-person gambling, including inside small poker clubs, to be suspended. Such wagering activities remain suspended indefinitely.

iGaming Purge

Zelensky’s 2020 liberalization of gambling additionally authorized gambling over the internet. The law requires that iGaming operators acquire an internet gambling and betting license from the Ukrainian Commission for the Regulation of Gambling and Lotteries, and adhere to all relevant regulations.

To qualify, an iGaming firm must not be owned or controlled by a Russian company or citizen. The entity must also not own shares of any Russian company or have significant shareholders residing in a jurisdiction that’s on the Group of Seven’s Financial Action Task Force black or grey lists. Notable countries on those lists include North Korea, Iran, and the United Arab Emirates.

After an applicant’s online operations undergo testing and demonstrate compliance, Ukraine requires a one-time payment of approximately $1.3 million for an iGaming license. Gross gaming revenues collected by online casinos are subjected to an 18% tax.

Despite its regulated online gaming industry, Ukrainian officials have said that since 2020, rogue, offshore sites have continued to target the country. And many of those illegal platforms are operating from Russia.

Protecting Legal Market

Ukraine’s recent attack on illegitimate offshore gaming websites is to assure that the country’s land-based casinos and legal iGaming platforms aren’t wrongly impacted by illegal operators.

But the Ukrainian Gambling & Betting Association says the country isn’t doing its members any favors by recently announcing that tax payments and other financial obligations won’t be delayed, as requested. Ukraine’s Cabinet of Ministers said last month that the Billionaire’s Casino and legal iGaming sites must pay their duties for 2022 before April.

Companies that invested in the legal land segment have not even begun to recoup their investment, and today they remain closed,” said Mykola Melnyk, a spokesperson for the Gambling & Betting Association. “It’s very painful that the changes initiated by the Cabinet of Ministers will, unfortunately, affect investments, which are already very difficult to bring to the Ukrainian market.”

Russia’s invasion of Ukraine has resulted in more than 42K deaths, with an additional 15K people missing. The property damage of the war is estimated at north of $350 billion.

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