In December and January, a wave of police raids swept across Ukraine under the guise of combating illegal gambling. In addition to underground casinos and gambling houses, law enforcement also targeted a perfectly legal industry—state lottery operators. The state budget suffered tens of millions of hryvnias in unpaid taxes following this "raid"—and this, oddly enough, was the only result of the attack on lottery operators. Now that the dust has settled, it has suddenly become clear that the police had no legal basis for closing the lottery kiosks. They were forced to return the equipment they had seized from the companies—without apology. The argument goes, there were orders from above, nothing can be done.
Of course, no one expected an apology. But the question of whose interests were served by the thousands of officers involved in a senseless and merciless special operation that inflicted enormous losses on the state budget remains relevant today. The Ministry of Internal Affairs itself prefers to remain silent on the matter, looking down in shame. It seems they were simply "swindled." The answer became obvious when a completely unexpected and uncharacteristic surge in the advertising market, uncharacteristic for these times of crisis, was discovered. More precisely, at the height of the attack on lottery operators, players in one illegal but very lucrative industry—bookmaking—showed unexpected advertising activity.
Over the past few months, the bookmaker "Favorit" alone has increased the number of visits to its website from 2 million to over 22 million per month. This is the result of an unprecedented advertising campaign for this industry and given the current situation in Ukraine. It's difficult to say how much was spent on this, but based on market prices, it could be between 17 and 40 million UAH. Experts note a direct shift to bookmakers from customers who previously preferred state lotteries. Deprived of their usual game after police raids on lottery operators, many Ukrainians have chosen to play on bookmakers' websites. The difference between these industries may not be significant for players. But for the state, it is a colossal difference. After all, lottery operators pay taxes and are able to control gambling habits, preventing them from becoming addicted to gambling, while bookmakers are not.
The bookmaking business has been illegal in Ukraine since the spring of 2009. However, this doesn't stop the three largest companies—Favorit, Pari Match, and Marathon—from collecting over UAH 2 billion annually in Ukraine. Moreover, they operate essentially offshore. All Ukrainian bets are collected on these companies' websites. These websites, or rather the servers hosting the software, are not physically located in Ukraine. This allows the three giants of the bookmaking industry to formally claim that they do not violate Ukrainian law. In our country, they own only trademarks. And they also exclusively promote these trademarks in their advertising. For example, Pari Match's TV promotion costs in 2015, according to some estimates, could reach approximately UAH 5 million.
Apparently, bookmakers' income in Ukraine allows them not only to easily evade taxes but also to launch attacks on competing industries. Only those who paid and collected the money know how much the bookmakers spent on organizing the police crackdown on lottery players. But the nature of the raids and their sudden end leave no doubt—they were carrying out an order.
This casts new light on the Ministry of Finance's suspicious reluctance to address the licensing of state lottery operators for two years now. Either a Cabinet order or a Ministry of Finance order is missing to issue licenses. Within the finance ministry itself, the burden of responsibility for these matters is being passed from one deputy minister to another. The "harassment" began during the tenure of the previous Minister of Finance, Oleksandr Shlapak. At the instigation of then-Deputy Minister Vitaly Lisovenko, he made perhaps the most foolish statement of his career about the illegality of the lottery market. It was then that the canard was launched, which is still circulating in political circles.
Meanwhile, the Prosecutor General's Office has already taken an interest in the Ministry of Internal Affairs' bizarre crackdown on the lottery business, which has resulted in particularly large-scale losses to the state. But, as always happens in such cases, the people who commissioned this disgraceful scheme have every chance of getting away with it. After all, these companies don't even operate in Ukraine. It just so happens that the majority of their website visitors are Ukrainians. If they manage to avoid responsibility this time, they will likely continue to use the enormous tax savings they've earned to organize large-scale crackdowns, using law enforcement agencies as bait.
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