Ukrainian officials seeking to oust Russian actors from its gambling industry are going to emulate the methods of the US authorities in the 1980s when they rooted out the Italian mob from the casinos of Las Vegas.
Gambling was legalised in Ukraine after a 10-year ban shortly before the full-scale invasion in February 2022 and has since continued to be a profitable avenue for Russians who want to make money in the country and collect the personal data of Ukrainian gamblers.
The gambling regulator in Ukraine started revoking licences in September 2022 and in spring this year Volodymyr Zelenskiy sanctioned over 400 individuals and legal entities related to Russian gambling businesses, including five Ukrainian gambling companies.
Banks and other financial institutions suspected to have been aiding the laundering of gambling profits on behalf of Russian oligarchs have also been a focus.
But the exploitation of the sector remains a threat to which the authorities say they are determined to respond, despite concerns that even the supervising bodies have fallen foul of Russian influence.
Olena Vodolazhko, a member of Ukraine’s Gambling and Lottery Regulation Commission, said the regulator had received an invitation to Nevada from the US Gaming Control Board to discuss reforming the Ukrainian system and kicking out Russian influence.
“American regulators are very important for us. Because, you know, what I saw when, for example, I visited the Lithuanians, Switzerland, the Netherlands’ regulators: they started their regulating in the market when they didn’t have such challenges as the mafia or some influence of another country. But the United States had, so I think their experience … can be very valuable for us.”
She said Ukraine hoped to follow the “best practice” of US regulators and law enforcement organisations when they cooperated to oust the mafia from Las Vegas.
“We have partners inside the country, the security service of Ukraine, and they help us with information about connections which the Ukrainian operators still have with the Russian Federation.”
The law legalising gambling in Ukraine in 2020 permitted casinos and slot machine halls to open in hotels and enabled online gambling and bookmaking. The commission was established as a regulator with an advisory body. Russian gambling organisations and legal advisers linked to oligarchs soon moved in.
Amid allegations of continued Russian influence in the sector after the invasion, Boris Baum, the head of an advisory body to the regulator, was forced from office in July 2022.
He left the country, reportedly for Cyprus, after media reports claimed that he had sought to assist a company with Russian ties in their efforts to gain a licence. He denies any wrongdoing.
“He is not in Ukraine,” said Vodolazhko. “And we don’t have any connection with him since the time that we fired the older council. Now we have another council.”
The Italian mafia played a key role in the development of the casinos and hotels in Las Vegas, but a turning point came in the 1970s, when the FBI launched investigations along with the regulatory bodies into the involvement of organised crime.
The Mob also faced pressure when Nevada passed the Corporate Gaming Act, which made it easier for corporations to run casinos.
Vodolazhko added that a major task was to shrink the possibilities of money laundering by reforming the systems for collecting and analysing the movements of currency.
“If they will have some influence, in our gambling industry or some other industry, of course, it will help them to kill us,” she said. “You know, I think now it’s the challenge for every public servant and for every Ukrainian citizen to combat the influence of Russia, because any opportunity for them to make money or to gain influence makes them stronger.”
