Corrupt Ukrainian Gambling Regulator Caught

Corrupt Ukrainian Gambling Regulator Caught. The unnamed member of KRAIL was arrested on the suspicion of accepting a bribe of $90,000. (Image by Bill Oxford on Unsplash)

A member of Ukraine’s gambling regulator has been arrested by the Ukrainian authorities for blackmailing and reportedly receiving bribes to manipulate licensing decisions.

According to news outlet Kyiv Post, an unnamed member of KRAIL (Gambling and Lottery Regulatory Commission in Ukraine) was arrested and detained by authorities on the suspicion of accepting a bribe of 90,000 dollars (76,777 Euros/65,850 pounds) to grant gambling licenses. According to the report from the office of the Special Anti-Corruption Prosecutor on August 20, the arrested person is a high-ranking member (an acting Chairman) of KRAIL. The detained employee was confirmed to have received the bribe from an unknown source in exchange for approving licenses and gaming permits.

Possible Suspect Named – Getting to the Bottom of the Matter

Although the suspect was not identified, Ukrainska Pravda (Ukrainian new outlet) stated that the suspect may be Evgeny Getman who is a former head of the commission but still a current member. Undercover operatives from NABU (the National Anti-Corruption Bureau of Ukraine) allegedly caught the suspect red-handed last week. Although investigations are still ongoing to get other people who were part of the organized crime, NABU stated that its detectives received information about an existing system that members of the commission used to receive bribes to issues gambling licenses and permits during the summer. The law enforcement agency further explained that it formed a set of undercover detectives to carry out covert investigative actions.

The undercover detectives found evidence to prove that a member of the regulatory body offered to approve business premises and grant licenses in the Zaporzhye region and city of Chernihiv for operation as gambling establishments after he received an estimated 90,000 dollars. Reacting to the news, KRAIL cautioned citizens against making premature conclusions since the suspect has not been legally convicted by a court which makes the suspect still innocent until proved otherwise.

About KRAIL – An Authority Designed to Regulate the Growing Ukrainian Gambling Market

KRAIL was set up just last year (November) as an independent organization to be led by Ivan Rudyi (former General in Ukraine special forces) after Ukraine legalized gambling to overturn the 11-year ban the country earlier placed on gambling from 2009-2020. A fire in a Dnipro gaming hall that killed 9 people necessitated the gambling ban. However, illegal live casinos thrived all through the ban period and even reached an annual collective income of about 1 billion dollars by estimate. So the government legalized gambling in 2020 to eradicate these seedy establishments and also generate revenue to its budget. KRAIL has already issued out forty licenses since the start of 2021 including licenses issued to 7 high-rise hotels in Kyiv like the Fairmont Grand Hotel. KRAIL revealed last month that it has blocked a total of 594 illegal gambling websites as part of its effort to fight against illegal gambling in Ukraine.

In July, Ukraine’s legislature also passed a bill to set a 10 percent tax rate on all gambling forms. Licensing fees set by the Ukrainian government are the highest in the world, thus, only the wealthiest people can afford it. Similarly, a business that wants to open a casino has to purchase a license that is valid for only five years although the cost can vary depending on the type of building and the city in which it is located. For example, up to 2 million dollars must be paid before one can get a license to open and operate a casino in a 150-room hotel. Sometimes it costs 10.4 million dollars and the casino must pay an additional 2, 000 dollars for each slot machine and 30,500 dollars for each game table.

Experts in Ukraine have suggested that gaming revenue can increase up to 30 billion dollars which represents 15 percent of GDP in the coming years if the country can attract more investors. However, many details need to be worked out especially as there is no vote yet on gambling tax laws and the industry is now largely tax-free. It is easy to see why business owners will love to cut corners and prefer to bribe officials to influence their license approval. However, the arrest of a top member of the regulatory body will hopefully expose the other shady deals going on in KRAIL.

Looking to the future: The commission knows it must do everything within its power to curtail such occurrences because it tarnishes its image and represents an embarrassing setback for the gambling market.

 

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