Having invested in the creation of legal casinos in Ukraine, international gambling operators are perplexed why the shadow sector is still flourishing in the country. This is evidenced by the content of the Storm International management’s press conference on Michael Boettcher’s Shangri La casino in Kyiv operation’s results.
So, Michael Boettcher, the Shangri La founder, a British businessman, expressed surprise that any taxi driver knows where illegal casinos are, but they have never heard of legal ones – after all, such establishments cannot be advertised.
Boettcher claims that there was a case in Shangri La when the manager of a “shady” Kyiv casino came to the establishment to return “his” former players.
The businessman considers Ukrainian legislation tough for legal gambling operators. In addition, the law does not protect them from “shadow companies” that evade taxes.
Boettcher recalled that the casino pays 18% income tax, 10% gross gaming tax, 19.5% winnings tax and 1.5% military tax. In addition, the state seeks to tax the players.
According to the executive director of Storm International Darren Keane, because of such steps, the budget of Ukraine runs the risk of being left without revenues, because foreigners will not come to our country.
Foreign players can fly to 5-6 more countries where casinos work. Everywhere they take the winnings for themselves. But not in Ukraine. When you go to Ukraine, you pay 20% of the winnings tax. This is a huge barrier that hinders the development of the industry. Also, an obstacle to the arrival of foreign guests is the limit of UAH 50,000, which is set for bets in the casino in cash.
Michael Boettcher is convinced that Ukraine has a good chance of becoming a “casino hub”. But for this, it is necessary to remove corruption risks and solve the problem of underground casinos. To do this, make more friendly laws for the gambling business and close illegal casinos. Legal gaming complexes bring “white” millions of investments. And the illegal business, which turns back “black” millions, is a product of corruption for millions. According to experts, added Darren Keane from Storm International, Ukraine is losing huge sums due to the shadow gambling sector.
The chairman of the public association “Support for the Legalization of Gambling Business” cites the shocking scale of the shadow gambling business: one illegal network brings in 0.5 billion hryvnias of profit monthly, and there are about 2 thousand such networks in total.
For comparison, the total amount of proceeds from the sale of licenses to conduct legal gaming activities for the entire period of the relevant permitting law has barely exceeded UAH 636 million.
Experts believe that law enforcement and the state regulator represented by CRAIL (Commission for the Regulation of Gambling and Lotteries) should take a tougher stance against “shadow” gaming operators.