Although the gambling business has been banned in Ukraine since 2009, gambling halls are on practically every city street. Pretending to be lottery offices, these places allow gamblers to sidestep the country’s gambling ban.
The legal loopholes that allow the shadow businesses to operate started to open up in 2012, when the Ukrainian parliament, then controlled by the Party of Regions of Ukraine’s runaway former president, Viktor Yanukovych, relaxed the gambling ban.
The lax law featured no effective mechanisms to regulate holders of state-issued lottery licenses. That allowed operators to open gambling halls under lottery licenses.
It has produced a bonanza for fraudsters, who open online gambling saloons under the guise of lottery offices, and for those who cover for the illegal business while allegedly milking it for bribes.
As a result, the state budget gets only about $2 million a year in tax revenue from actual lotteries, and $4 million more in taxes paid by lottery winners.
Meanwhile, owners of illegal gambling halls masking as lotteries get about $1 billion in undeclared cash, according to the Anti-Monopoly Committee’s representative Agia Zagrebelska.
“That money could have gone to the state budget, to finance the construction of stadiums, schools,” Zagrebelska told the Kyiv Post. “But instead, it ends up in someone’s pockets.”