Before beginning to build a house on a raw piece of land, you first have to clear out the weeds and overgrowth that would otherwise prevent the construction of a solid, well-built home. Ukraine is at that stage now, contemplating the building of a new legalized gambling industry. While the talk often sees setbacks as a consensus on the subject can’t be found, illegal gambling has flourished across the country and law enforcement officials are working diligently to control the surge. According to a report by Ukraine’s Prosecutor General’s Office, over 900 illegal gambling facilities have been shut down in just a little more than a month.
Ukraine lawmakers tried to pass a legalized gambling bill last month before it was axed. The idea was to allow the country’s more than 5,300 illegal gambling halls to apply for licenses, but resistance to the idea was strong and the bill was scrapped. At the same time, Ukraine President Volodymyr Zelensky ordered that the illegal facilities be closed.
There are reportedly a great number of law enforcement investigative teams scouring the country for illegal gambling, ready to pounce on any that are found. The battle has been complicated as those venues moved further underground, masquerading as internet cafés or karaoke bars. According to Alexander Okolit, Head of the Strategic Investigation Department of the National Police of Ukraine, “There are currently 715 mobile teams in the staff of the Investigative Unit and the Strategic Investigation Department. Mobile groups are constantly monitoring, as well as preventative measures to prevent illegal gambling.”
He adds, “In total, there are about 5,300 illegal gambling establishments in the state, including lotteries, which have lost the opportunity to work in the legal field since the resolution of the Cabinet of Ministers. It’s also about bookmakers, casinos and other gambling establishments.”
As other countries have already realized, the easiest way to help eliminate the vast network of underground illegal gambling spots is to legalize the activity. This is not just the only way to protect consumers, but it means the state can capture a huge amount of tax revenue. In the case of Ukraine, that amount is estimated to be around $190 million this year, according to the head of parliament’s committee on finance, taxation and customs policy, Danylo Hetmantsev.
The Economic Development and Trade Ministry adds that around 33% of the country’s gross domestic product is off the books. Given that Ukraine’s economic output in 2019 was about $155 billion, there’s a lot of unclaimed revenue the country is missing.