Fresh focus on gambling sector – in EU and elsewhere

When the news broke in January that the Kazakh government is planning to pass a new gambling law that will create a private third-party regulator called the ‘Betting Account Centre,’ (BAC) a heated debate among betting and casino owners started.

The current debate is particularly timely as it also comes at a time with efforts being made in the European Union and its EU Member States to introduce more robust anti-money laundering guidelines for Europe’s online gambling sector. 

One objective of the European Gaming and Betting Association (EGBA), the EU-wide body representing Europe’s leading online gaming and betting companies, is to help foster higher industry standards.

The EGBA hopes to raise standards in areas such as anti-money laundering, safer gambling, and collaboration.

Notable initiatives in the past 12 months include the introduction of robust anti-money laundering guidelines for Europe’s online gambling sector,work towards the standardisation of markers of harm at European level and initiatives to foster collaboration within the sector on crucial topics such as cyber security.

But reform is firmly on the agenda not just in the European Union but in other areas, including Kazakhstan.

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It, too, is seeking to enact radical changes in the sector, though this is proving rather more controversial because, it is suspected by some at least those with extensive political connections in the region may have used their leverage to obtain “behind the scenes” advice or outright support for introducing the BAC.

A version of the Kazak law was originally proposed back in 2020 with the goal of making the flow of funds more transparent and collecting more taxes. The BAC was proposed as a collaboration between a low-profile private company and the Ministry of Culture and Sports, the current regulator of the gambling market. Later in November 2020, a Kazakh payment processing company entered the mix.

The pace of developments after the law was introduced was rapid but there was not so much as a notice period for the gambling business community to at least get their take on whether it would be beneficial for them. The draft law was abandoned at the last minute in mid-2021.

How this has all unfolded is quite Kafkaesque and it begs the question: should business leaders consider using informal contacts to, for example, achieve sector-friendly changes in legislation instead of doing it the standard way?

At the heart of the matter is an age-old dilemma: where to draw the line between "normal" lobbying on behalf of an individual company or an entire sector and outright asking for favors by offering favors in return.

If history serves as a preview, industry heavyweights in Kazakhstan tend to quietly operate in the corridors of power. This,some argue, is reminiscent of “old Kazakhstan, the one where some generate significant profits and dominate lucrative sectors of the country’s economy. 

But, it is argued, the ‘The Law on Gambling business’ that is due to come into force on June 8 2024 goes much further than that. The government has long argued that overall “problem gambling” rates are high among the younger generation in Kazakhstan but it is suggested that the measures put forward in the government’s recent draft law on gambling reform are likely to affect only a small proportion of gamblers.  If there is a powerful lobby working to affect the government’s plans, it is not the industry leading it.  

Critics say that the new regulatory landscape could result in the gambling industry being aggressively controlled and legitimate companies in the sector pushed out or forced to cease operations.   

Whatever the truth is, opponents of the reform say the creation of the BAC does not help solve the root of the issue and that the emergence of BAC and its purported role is emblematic of a wider and growing relationship between Kazakh politics and the gambling industry.

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