Ukraine’s cyber-cops have busted a major online casino technology hub, as the government continues to prepare the ground for its regulated online gambling market.
On Monday, the Cyberpolice of Ukraine announced the arrest of an undisclosed number of individuals working for a “turnkey online casino creation and technical support services” operation in Kyiv. The operation reportedly had over 80 staff supporting over 20 illegal online casinos with around half-a-million customers.
The unidentified company was ostensibly set up for the development of legal online games and support services but in reality charged would-be gambling operators US$20k for a bare-bones online casino product with a full marketing service available for an additional $100k monthly fee. The group reportedly earned up to $500k per month through its illegal services.
Last week, Ukraine’s Minister of Internal Affairs Arsen Avakov said that cybercrimes had increased 250% over the past five years, necessitating greater coordination among the country’s law enforcement agencies. But illegal gambling is also flourishing offline.
Earlier this month, Kyiv prosecutors announced the dismantling of two illegal land-based gambling operations. One offered electronic gambling machines in the basement of a venue posing as a currency exchange, while another offered similarly illegal products from an instant lottery shop bearing the (formerly) popular Kosmolot brand, which was shut down by the state last year.
Such operations prevail in part due to the willingness of local authorities to avert their eyes, for a price. On September 10, the Security Service of Ukraine arrested a local prosecutor and police chief in Cherkasy who permitted an illegal gambling venue to operate for bribes totaling UAH20k ($700) per month.
In August, President Volodymyr Zelensky signed legislation that will greatly expand the country’s legal gambling market, including the first locally licensed online gambling operators. Last week, the government created the Commission for the Regulation of Gambling and Lotteries, a seven-member panel with 230 support staff tasked with processing applications from would-be licensees. The Commission is expected to start work in November.
However, applicants are still waiting to learn several undetermined aspects of Ukraine’s new gambling market, including what levels of taxation their operations will face. No doubt these and many other unanswered questions will be front and center at the upcoming Ukrainian Gaming Week event November 26-27 in Kyiv.