On April 15, an expert meeting in the Majilis sparked an intriguing discussion on the law project aimed at amending certain legislative acts in Kazakhstan regarding gambling, lotteries, and lottery activities.
The President of the Self-Regulatory Organization of Bookmakers of Kazakhstan, Rauan Kenzhalin, highlighted the main issue for the state in this field - the presence of "offshore" foreign gambling companies operating without Kazakh licenses. These companies illicitly create thousands of web portals targeting Kazakhstan, attracting clients through aggressive online advertising, leading to involvement of minors, gambling addiction growth, and the transfer of trillions of tenge abroad.
According to estimates, the volume of the illegal industry exceeds 1 trillion tenge annually, emphasizing the scale of the problem. While no country has fully solved this issue, successful regulatory practices show that a comprehensive approach is effective. Active methods of combating include blocking illegal internet resources and financial transactions, while passive methods involve legalizing and liberalizing legislation.
SRO representatives propose several measures, such as introducing a "white list" system instead of the current "black list," aiming to facilitate payment organizations in verifying transactions.
This change would not require any additional costs from the government since there already exists a unified register of gambling entities holding licenses, as emphasized by Rauan Kenzhalin.
He further explained that the current "black" list system, which involves blocking illegal gambling operators after identification, is flawed. By contrast, the "white" list would allow payment organizations and banks to automatically filter out those not listed, deem them illegal, and block transactions.
Moreover, efforts to combat payment manipulation to conceal the true nature of transactions are proposed. Existing systems do not eliminate the risk of using fake codes, known as MCC (merchant category code). As a result, funds obtained from illegal online casino activities may be transferred to bank accounts under different codes, disguising the payment purposes.
The introduction of a white list system for regulating payments related to gambling and betting, along with legislative obligations to counter payment manipulation, is seen as one of the most effective measures in combating illegal gambling. This approach aims not only to address issues with illegal gambling but also to comprehensively tackle money laundering and terrorism financing.
Additionally, SRO advocates suggest setting the minimum age for participating in gambling activities at 21, rather than 25 as proposed in the law project, aligning with the age limit of 21 for purchasing tobacco, alcohol, and lottery participation.
The application of similar restrictions for gambling and betting is deemed reasonable, ensuring a uniform approach to age policies, according to Rauan Kenzhalin.
In Kazakhstan, over 1.1 million young individuals aged 20 to 25 exist, and restricting their access to legal gambling may lead to increased use of illegal online platforms, diminishing youth protection.
Furthermore, SRO deems it essential to carefully refine prohibitions on debtors' participation in gambling activities, ensuring that restrictions on rights and freedoms are proportionate to the goals and interests for which they are introduced.
The potential implementation of a Betting Account Center was also discussed. Entrepreneurs expressed dissatisfaction with this proposal, as it essentially entails establishing a private intermediary company between the state and the gambling industry, which would take a percentage of each bet and duplicate the functions of state agencies. Such duplication could provoke conflicts of interest between the private LLC and the Financial Monitoring Agency of Kazakhstan, the Tax Committee, and the Ministry of Tourism and Sports, as noted by Rauan Kenzhalin.
The function of responsible gaming control, which the Betting Account Center aims to assume, is already carried out by state agencies, gambling entities, and their clients, as highlighted by SRO.
The additional "tax" in the form of commission retention to support sports also raises questions. Rauan Kenzhalin pointed out that firstly, the funds would not solely be directed towards sports but also towards maintaining the private intermediary company. Secondly, bookmakers already comply with all tax laws (around 110 billion tenge in 2023 alone) and voluntarily sponsor various sports and public projects.
Timur Zharkenov, Deputy Chairman of the Board of the National Chamber of Entrepreneurs of Kazakhstan "Atameken," expressed concern about the idea of establishing a private intermediary company that would retain a percentage of each bet in the gambling sector. Zharkenov opposed the introduction of any single operators in the market, emphasizing that such practices hinder healthy competition and could negatively impact the business environment.
