Ukraine’s Gambling Sector Rocked by KRAIL Bribery Scandal

The recently re-regulated gambling industry in Ukraine is in turmoil after a member of the Commission for the Regulation of Gambling and Lotteries (KRAIL), the country’s gambling watchdog, was arrested on bribery allegations. Following thorough investigations conducted by detectives of the National Anti-Corruption Bureau Ukraine’s (NABU), a KRAIL official was detained on Friday, 20th August, on suspicion of receiving a bribe.

Ukraine’s federal anti-corruption unit confirmed the arrest of the member of KRAIL, stating that the suspect was charged with “receiving an illegal benefit in the amount of $90,000”. Part 4 of Article 368 of the Criminal Code of Ukraine prohibits any official from accepting a proposal, promise, or receiving an illegal benefit.

Details from the warrant of arrest NABU received under instruction from Ukraine’s Special Anti-Corruption Prosecutor’s Office indicate that the KRAIL official “demanded funds for assistance in granting permits and licenses in the gambling business.”

Former Acting Chairman of KRAIL Could be the Bribery Culprit

Ukraine’s NABU also disclosed that it’s been conducting what it referred to as ‘covert investigations’ throughout the summer of 2021. These investigations led to the unearthing of a high-level corruption syndicate within the ranks of gambling industry officials.

Based on Ukraine’s federal anti-corruption unit report, there exists “a system of obtaining illegal benefits in especially large amounts for the issuance of permits and licenses for the right to engage in gambling.” Documented evidence from the NABU points to an illegal scheme where the KRAIL member had received illegal benefits to influence the decision-making process of the gambling watchdog. Large amounts of bribes were particularly used to influence the issuance of licenses for gambling premises in the cities of Zaporizhzhia and Chernihiv.

While the suspect’s name hasn’t been revealed to the public, Ukrainian media outlet Ukrainska Pravda speculates that Evgeny Getman is the possible suspect based on information provided by NABU. In its media briefing, the NABU reported that the KRAIL official was “acting chairman of the Commission” at the time of committing the offense. Thus, according to Ukrainska Pravda, Getman could be the culprit as he held the role of acting KRAIL chairman during the summer.

As the investigations continue following the arrest, KRAIL has been quick to respond to the matter and warn citizens against:

Quote

“...premature conclusions, since the presumption of innocence, enshrined in the provisions of Part 2 of Article 2 of the Criminal Code of Ukraine, protects a person from criminal punishment until his guilt is legally proven and established by a court conviction.”

With a high-ranking official of the KRAIL detained, this is yet another tarnishing setback for Ukraine’s gambling sector following its re-establishment. In September last year, the Ukrainian Security Service (SBU) arrested a pair of officials from the Smila Raion region over corruption charges. According to reports, the two officials had been complicit in letting illegal gambling operations run under their noses.

Ukraine’s Re-Established Regulated Gambling Market Continues to Take Shape

The KRAIL is considered a vital market requirement as the Ukrainian government works to establish the Ukrainian Gambling Law. It was formed in November 2020 as an independent organization, and Ivan Rudyi, a former general of Ukraine’s special forces, was appointed to head the gambling watchdog. Gambling had previously been banned in Ukraine since 2009 following a fatal fire that claimed the lives of 9 individuals in a gambling hall in Dnipro city.

Until now, only three operators – Vbet (BetConstruct), Parimatch, and Cosmolot have received legal online gambling licenses. Meanwhile, incumbents whose license applications were rejected have called out the regulator for not explaining why they were denied the licenses. KRAIL has also awarded 40 5-year gambling permits to land-based establishments across the country, including seven high-end hotels in Kyiv.

Last month, a 10% tax rate on all forms of gambling was approved by the state legislature despite the controversy that it would have a negative impact on local budgets and the state at large. In the same month, KRAIL reported that it had blocked a total of 594 illegal gambling websites that previously operated in the country before market re-regulation.