The Ministry of Statistics of Ukraine continues fight with illegal online gambling business. The competent authority cooperates with Apple and Google to promptly block illegal applications after relevant appeals. Last year, at the request of the Ministry of Digital, these technogiants blocked 118 mobile applications of illegal casinos: 92 in the App Store and 26 in the Play Market. In addition, by order of the State Special Forces of Ukraine, it was deleted 4,460 online casino sites. However, this struggle resembles a game of “cat-and-mouse”: one site is closed, and new ones appear in its place.
The scale of the problem: how big is the shadow gambling market in Ukraine
According to official data, last year in Ukraine operated 12 licensed casinos located in Kyiv, Lviv, Odesa and Dnipro. In 11 months of 2024, the legal gambling business paid more than UAH 16 billion in taxes to the budget, which is 70% more than in the previous year.
However, even legal bookmakers and online casinos are controversial. People are worried about the possible rise of gambling addiction and the ethical issues of gambling advertising. Some experts say there is a need to strengthen controls and take additional measures to protect vulnerable groups.
IA “FACT” already wrote that the shadow gambling market in Ukraine has reached dangerous proportions, turning into a real epidemic that undermines the economy and destroys the lives of thousands of citizens and their families.
Underground casinos contribute to the development of ludomania – a pathological addiction to gambling. Due to the lack of control, people lose large sums of money, accumulate debts and destroy their families by gambling. According to WHO, about 1% of the population suffers from gambling addiction, and this number is increasing due to the availability of illegal gambling.
The number of Ukrainians suffering from gaming addiction is rapidly increasing is growing. According to the Commission for the Regulation of Gambling and Lotteries, during the three years of existence of the Register of Ludomaniacs, 3,871 people were included in it, and 87% of them – in 2023. This indicates an eightfold increase in the official number of dependents over the year.
It’s no secret that illegal gambling establishments are often used to launder money obtained through crime. About 54 billion hryvnias are “laundered” through such schemes every year, which is a third of the turnover of the gambling business. This not only harms the country’s economy, but also promotes the development of organized crime.
Despite the legalization of the gambling business in 2020, illegal casinos are still operating without paying taxes or following the rules. In 2023, Ukrainians every day lost about 400 million hryvnias, which in the annual equivalent is 140 billion hryvnias. For comparison, about 50 billion hryvnias were collected for charity during this time. These figures show how big a problem illegal casinos are.
Illegal gambling establishments not only destroy the lives of citizens, but also cause significant losses to the state budget. According to the SBU, the volume of gambling business in Ukraine is 140-180 billion hryvnias annually. Every year, due to the illegal gambling market, the budget of Ukraine loses about 12 billion hryvnias. In 2022, legal bookmakers and online casinos paid only about 730 million hryvnias in taxes and another 1.2 billion hryvnias for licenses. This is very small compared to the volume of the illegal market.
According to journalistic investigations, in 2022, the state did not receive at least UAH 25-30 billion in taxes from the gambling business. These funds could be directed to the development of medicine, education or defense of the country.
Fraud schemes are traps for unsuspecting players
Illegal gambling operators use sophisticated methods to hide their activities. Among other things, this is rebranding – a frequent change of names and brands to avoid detection by law enforcement agencies. No less popular is the use of VPN – the use of virtual private networks to hide the real location of servers and users, which makes it difficult to track them. In some schemes, front companies – fictitious legal entities are involved in order to legalize income and circumvent legal restrictions.
One of the most indicative cases – exposure illegal gambling business organized by the founders and employees of the bank. They used logos of famous brands and copies of websites to attract players’ funds in the amount of about 5 billion hryvnias, which were then legalized.
Another popular “loophole” – after blocking the main site, illegal casinos quickly create “mirrors” – copies of the site on new domains. This allows them to continue working despite the bans. In 2023, more than 2,500 such sites were blocked, but the problem remains relevant.
Underground operators quickly use modern technologies, moving their casinos to messengers, in particular, Telegram, and the darknet. This makes it difficult to detect and block them, creating new problems for law enforcement officers. Cyber police warns, that such platforms can be used for fraud and identity theft.
Many illegal online casinos are registered in offshore jurisdictions – Curacao, Malta or the Isle of Man. This allows them to avoid Ukrainian legislation and tax obligations. It was last year discovered more than 1,000 such illegal sites operating on the Ukrainian market.
Users of illegal online casinos often become victims of fraud. Such sites may reduce the chances of winning or not pay out any winnings at all. There is also the risk of personal data and financial information being stolen. The lack of license and control makes these casinos dangerous for users.
The experience of other countries in the fight against illegal casinos
Despite global efforts, illegal gambling continues to harm the economies and societies of many countries. To combat this problem, European countries and the United States use different strategies, combining laws, technologies and international cooperation.
To combat illegal gambling, some countries have implemented advanced digital solutions that are not yet applied in Ukraine. Among other things, these are online monitoring systems and blocking of financial transactions. State systems of online monitoring of gaming operators’ activities allow in real time detect violations and respond to them.
In some jurisdictions, regulators cooperate with financial institutions to block payments between players and illegal operators, making it difficult for the latter to operate. The introduction of similar tools in Ukraine could increase the effectiveness of the fight against illegal gambling and contribute to the development of the legal market.
Many countries have severe penalties for organizers and participants of illegal gambling. For example, in the UK, the Gambling Commission can impose heavy fines on operators who break the rules or operate without a licence. This helps reduce the number of illegal operators and increase accountability in the gaming industry.
Detect suspicious transactions related to illegal gambling, financial monitoring helps. The Big Money Transaction Reporting System helps track and prevent money laundering through illegal casinos in the United States. This allows for effective monitoring of financial flows and detection of illegal transactions.
To limit access to illegal online casinos, European countries use special technologies. So, to block such sites, the regulators of the United Kingdom cooperate with Internet providers. They also block financial transactions between players and illegal casinos, which makes their work more difficult.
Fines, automatic blocking of illegal online casinos and spreading digital literacy to protect against online fraudsters
Domestic legislation applies to organizers of illegal gambling provides fines up to 850 thousand hryvnias. However, taking into account the millions of transactions of underground casinos, such sanctions look like a light slap in the face. It is worth revising the legislation, increasing fines and predicting real prison terms for violators.
As for blocking sites, this is only a temporary solution. Illegal operators are quick to create “mirrors” and use VPNs to bypass bans. It is necessary to implement more sophisticated monitoring systems and cooperate with international organizations to exchange information about violators.
Many Ukrainians do not even know that they are becoming victims of shady gambling platforms, risking their money and sometimes their personal data. Meanwhile, illegal casinos continue to enrich themselves with impunity by exploiting people’s gullibility.
How much longer are we going to let them do this? How many lives must be lost before society realizes the extent of the threat? This danger can only be faced by joint efforts. Information campaigns that will teach how to recognize fraudulent resources, strict countermeasures, an active citizen’s position – this is what can change the situation in a complex. Everyone has the opportunity to join the struggle.
Tetyana Viktorova
