Countries with proper state-regulated gambling business have their budgets filled with revenues enough for the governments to implement social, humanitarian, cultural or sport projects. At the same time, they are able to support social stability keeping taxes on a relatively low level. Meanwhile, stringent restrictions and well-established control system in gambling business prevent casinos and slot machines from spawning.

In the meantime, this activity did not become a revenue source of the state budget of Ukraine. Tendencies of its shadowing and minimization of revenues of the budgets of all levels were not eradicated. Instead, socially disadvantaged people are whipped up in this sphere in mass, quick bucks are made, crime rates deteriorate in the country.

Having considered the findings of the analysis of the status of the state regulation of gambling business in Ukraine, the Accounting Chamber Board concluded that practically no changes had occurred in the sphere since the last audit in 2007: the Cabinet of Ministers of Ukraine, the Ministry of Finance of Ukraine, the State Tax Administration of Ukraine, the State Committee of Ukraine for Technical Regulation and Consumer Policy have neither established integrated system of the state supervision of organization of gambling nor ensured proper state regulation in this sphere within 2007-first quarter of 2008.

It was emphasized at the Accounting Chamber Board meeting that the primary causes were passiveness of the mentioned state bodies on legislative and regulatory determination of the respective state policy fundamentals, lacking state body that coordinates activities of all other bodies in ensuring the state regulation of gambling business, inappropriate responding to conclusions and proposals of the Accounting Chamber. The Accounting Chamber auditors have found out that despite acceptance of conclusions and proposals of the Accounting Chamber on the previous audit, the Cabinet of Ministers and the Ministry of Finance did not organize their implementation and engage other state bodies exercising regulation of gambling business by particular directions.

Legislative and regulatory framework of gambling business is incomplete and improper and disputable issues are unsolved. According to the auditors, the roots are the following: after rejecting the governmental bill Verkhovna Rada of Ukraine did not consider any bill on gambling business regulation submitted by the people’s deputies. The Cabinet of Ministers of Ukraine, in its turn, did not elaborate new special law on regulation of gambling business and the Ministry of Finance of Ukraine as well as other state authorities did not fulfill their functions of improvement of the standing laws and initiating of the new laws.

The auditors stated that functions of the state regulation of gambling market of Ukraine were contained in many regulatory documents which are scattered among numerous central and regional authorities. However, system of exchange and concentration of information on the number of entities subjected to state regulation of the bodies, their licenses, financial performance, their relations with budgets of all levels was not established.

The audit has found out numerous cases of the Ministry of Finance of Ukraine violating the standing legislation and regulatory acts while exercising the state regulation functions of gambling business through its licensing. Supervision of the Ministry of Finance of Ukraine over compliance with license conditions of gambling business is small-scale and ineffective. The audits covered only 0.4% of licensees of the Ministry of Finance of Ukraine in 2007 and first quarter of 2008.

Function of the state regulation of gambling through patenting by the State Tax Administration of Ukraine is ineffective since it is not coordinated with licensing function of this activity by the Ministry of Finance of Ukraine. Consequently, about two thousand entities conduct gambling activity with trade patent but without proper license of the Ministry of Finance of Ukraine. Taxation of gambling business under general conditions is inadequate, does not generate the state budget revenues and meet the international standards.

The auditors stated that Ukraine had not introduced internationally applied certification system of slot machines with due consideration of requirements, namely on gains size. Consequently, over 120 thousand non-certified slot machines are operated in Ukraine which triggers large-scale fraud.

The Accounting Chamber experts concluded that the Ministry of Finance and the State Tax Administration had not used all available means to increase revenues of the state budget of Ukraine from gambling source, had not given due consideration to scrutinizing of unprofitable performance of gambling businesses and, eventually, had not ensure proper revenues of the state budget.

According to the auditors’ estimates, compliance with and improvement of the standing legislation and regulatory framework on licensing coverage of all gambling businesses and their divisions, introduction of payment transactions recorders and compulsory acceptance of special payment means could enable unshadowing of UAH 3 to 7 billion of gambling revenues and attracting of additional over UAH 4 billion to the state budget.

The Accounting Chamber Board has resolved to inform the President of Ukraine, Verkhovna Rada of Ukraine and the Cabinet of Ministers of Ukraine about the audit results bringing forward respective recommendations on efficiency raising of the state regulation of gambling business.

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