Unlawful gambling dens proliferate in Ukraine: Understanding the factors contributing to their increase
In the heart of Ukraine, a shocking unveiling has taken place — over 30 hidden casinos were brought to light, lurking in Transcarpathia and the capital. The authorities, armed with determination, carried out 14 raids, exposing these shady operations without a single legitimate license in sight. Even during the imposed curfew, these establishments remained open, buzzing with activity around the clock.
Towards the end of July, the KRAIL shared a chilling statistic — a whopping 750 sites offering illegal gambling in the first half of the year. One may think that legalizing the gambling industry, coupled with regular checks and the formation of new regulatory bodies, would pull most gamblers out of the shadows. Yet, it seems that the cat-and-mouse game between the authorities and these underground gaming dens continues. Here's why:
- Unfavorable Tax Rates: After a player's winning, he's expected to pay a hefty 18% NDF and 1.5% military tax, leaving him with funds that might not even surpass his initial deposit. Moreover, the act of withdrawing money itself is taxed, turning a non-winning situation into a losing one for the player.
- Exaggerated Licensing Fees: As per the current legislation, entrepreneurs must pay for an annual license three times, a steep price that many find unaffordable, especially during times of conflict. Even though a draft decree is in the works to implement the State Online Monitoring System, its arrival is yet to be seen.
- ComplexTax Calculations: The authorities' stance on gambling this winter has made it challenging for business representatives to calculate their tax obligations accurately. The Parliamentary Tax Committee, led by Daniel Getmanets, aims to collect an additional 7 billion hryvnias in taxes from the gambling business for the previous year, creating uncertainty and unease among enterprises.
- Issues with KRAIL: The commission often fails to reach a quorum, causing the issuance of licenses to be put on hold indefinitely. For instance, there was no quorum from February to July this year, resulting in operators losing potential earnings while they wait. The Government plans to address this issue by disbanding KRAIL, but for now, that remains a future prospect.
On a brighter note, KRAIL has decided to unify the registers, and the Dutch-style gambling system in the Netherlands brings approximately 1 billion euros to its national budget annually. However, the struggle against Ukraine's rampant illegal gamblingscape appears to be an ongoing battle, entwined with organized crime networks, corruption, and the country's ongoing instability.
- In the midst of this ongoing struggle against illegal gambling, some argue that lowering unfavorable tax rates could attract more gambling businesses to operate within the legal framework, thus minimizing the patronage of casinos operating without a license.
- With the high costs of licensing fees and the complexity of calculating taxes, it is possible that the financing of such illicit casinos stems from the financial sector, either through money laundering or unregulated financial transactions within the business industry.
