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A Trojan Horse? The New Kazakh Gambling Legislation Needs a Closer Look

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A Trojan Horse? The New Kazakh Gambling Legislation Needs a Closer Look

The betting industry in Kazakhstan is profitable, making the question of who controls its profits of utmost importance.

A Trojan Horse? The New Kazakh Gambling Legislation Needs a Closer Look
Credit: Depositphotos

The Kazakh parliament is turning back the clock as it mulls new legislation that would regulate the betting industry in the country. A draft law, which has been framed as a public health bill, will raise the legal age for placing bets to 25 (the highest in the world) and will ban civil servants from partaking. 

Yet, oddly, the parliament seems to be going back and forth on one controversial amendment in particular: the creation of the Betting Account Center (known in Kazakh legislation as the “BAC”).

The BAC itself has many functions. One of the powers that will be bestowed upon this entity is the control of the betting market. This is the part that is most worrying. Indeed, if the law passes, the BAC will receive the rights to determine market participants and, crucially, obtain 1.5 percent of all profits from the Kazakh gambling market.

Casinos, betting agencies, and bookmakers have a long history in Kazakhstan. Betting clubs gained a foothold in the region back in the Soviet era when they started off as underground gambling clubs. Legislation against gambling started to come into place around 2017, given the sector’s public unpopularity.

The BAC was first suggested in parliament in January 2020, under legislation that was ostensibly designed to target ludomania, that is, compulsive gambling. The legislation promised to introduce severe advertising restrictions for gambling entities, an increase in the gambling participation age to 25, and access limitations for individuals with financial delinquencies.

Back in 2020 Exirius LLP, an opaque private Kazakh company, and PayBox, a Kazakh payment processing company, won a previous tender to establish and manage all of the functions of the BAC.

But all activities around the BAC came to a halt when the Kazakh vice minister of culture at the time, Saken Musaybekov, was fired for accepting bribes from pro-BAC lobbyists. The lobbyists were found to have represented the interests of Exirius and Paybox. As such the legislation was paused.

Given the checkered history behind the BAC, in 2022 two Kazakh deputy prime ministers, Serik Zhumangarin and Erlen Zhamaubaev, gave directives to the Ministry of Culture and Sport to exclude references to the BAC from all future draft legislation.

However, this seems to have been ignored. 

The legislation’s new arrival into parliament has made the industry jumpy once more. There is suspicion that the newly polished legislation, targeted on public health, is just a cover to introduce a BAC that will damage the country once more.

The business community is scared of speaking out. Bookmakers are too afraid to complain without fear of intimidation, harassment, or surveillance. The most notable instance was in 2019, when a Kazakh independent bookmaking company, Olimp, held a press conference against the introduction of the BAC. 

Immediately following the press conference, the owners were arrested by the government as members of “organized crime syndicates.”

The pressure has been unrelenting; in 2023 several more employees of the Olimp company were extradited from Germany and Serbia on suspicion that in 2014-2019, they were part of an organized criminal group. But the charges appeared trumped up and motivated by their whistle-blowing. Olimp’s lawyers are working to mitigate the punishment and relatives of those convicted have appealed to President Kassym-Jomart Tokayev to have the case reconsidered. 

Therefore, it is unsurprising that the industry is newly nervous. From their perspective, in a move reminiscent of “Old Kazakhstan,” the new legislation appears to be a Trojan horse for the takeover of the betting industry within the country by certain interested parties.

The betting industry in Kazakhstan is profitable, and is expected to generate about $500 million in turnover by 2025. One of the major ties between gambling and the economy is taxes. Betting houses and institutions pay taxes on their annual revenue, and this generates funds that can be used to improve other sectors of the economy.  

According to the latest statistics, the Kazakh Ministry of Finance revealed that in 2020 betting contributed around $94 million to the state budget in the form of taxes and fees. This made up 0.1 percent of the country’s GDP. Further, the International Center Analysis of the Gambling industry reported that in 2020 the turnover generated from online casinos in Kazakhstan amounted to $150 million, which is 25 percent more than in 2019. According to H2 Gambling Capital, Kazakhstan ranked 77th in the world in terms of the volume of the gambling market, with a share of 0.03 percent of global turnover.

The casino and betting industry in Kazakhstan has a long history and has survived different stages of the country’s development. A number of tech entrepreneurs are active and have built legitimate businesses that contribute to the emerging Kazakh economy, with their potential to drive economic growth and job creation.

If the BAC comes into play, it would have sweeping powers to control the industry, and, if placed in the wrong hands like before, could push out all the legitimate and local gambling companies in Kazakhstan. Not only that, it could potentially ensure the dominance of a select few business interests. 

There are valid reasons for the oversight of industries such as betting, but it is important that this oversight be fair and transparent – that businesses in this sector are protected from abuse. The BAC’s history in Kazakhstan is concerning, as is the resurrection of the idea. The current legislation must be properly scrutinized to ensure it is not just a Trojan horse for the BAC, and ensure that the BAC isn’t merely a form of market capture.